Good morning all, and welcome to Bankinter Q2 2022 results presentation. Our CFO, Jacobo Díaz García, will guide you now through the figures, and we will follow with a Q&A session afterwards. Thank you.
Good morning, everybody, and welcome to this presentation of Bankinter's earnings for the Q2 of 2022. As usual, the related financial statements were posted on the CNMV website a few minutes ago before market opens. All related documents can also be found at this time on the Bankinter corporate website. As we will see through this presentation, the Bankinter group has been able to close a very strong first half of the year in one of the most complex years, with all sort of macroeconomic uncertainties that makes difficult to anyone to predict the near future. What is clear to me is that the strong commercial performance has continued during this Q2 , and that this is clearly reflected in balance sheet volumes growth and in our income and pre-provision profit performance.
Thus, we can say that the positive start of the year in Q1 has continued during the Q2 . Our main highlights of the first half have been group's net profit close at EUR 271 million, showing an 11% increase from a year ago, excluding the accounting impacts of the Línea Directa spin-off during the first half of last year, and more than compensating Línea Directa's 2021 regular contribution of the first four months. Return on equity reached 11.6%, quite above 2021 performance. Improved income growth, supported by a strong customer activity reflected in volume growth in loans and deposits, also by the start of the positive repricing of our loan book, mainly in corporates. All that resulted in an operating income of EUR 963 million, up 5% year-on-year. Fourth, efficiency.
Efficiency remains under control as of June, bringing PPP profit to EUR 535 million, a 6% growth over last year. With solid asset quality and solvency indicators maintained unchanged, with almost flat NPLs from December 2021, coverage of provision reaches 65% and CET1 fully loaded ratio at comfortable levels, above our long-term guidance of 11.5. Every quarter, a brief comparison of first half key financial indicators. Group's total loan book continued to grow by 8% to reach EUR 72 billion thanks to a strong corporate demand and the mortgage production. Also, in this quarter, consumer finance maintains the positive reaction shown in the Q1 .
Gross operating income at EUR 963 million grew by 5% with respect to June 2021, showing the strong resilience in the main incomes coming from the business, net interest income and fees, and particularly in this quarter, a more negative other income and expenses with a relevant impact from regulatory charges in the quarter, the Resolution Fund. After a seasonal cost increase, we were able to keep operating expenses growth under control, allowing pre-provision profit to continue growing at 6% year-on-year. NPL ratio shows some improvement in line with all asset quality indicators and loan growth, despite the more complex economic situation. It dropped by 23 basis points from a year ago to 2.11% in June 2022. Coverage ratio keeps improving, now at 65%, a 2.3 percentage points increase over the previous year.
Profit before taxes, like for like, that is only of the banking activity before the extraordinary discontinued operations in 2021, went up by a remarkable 30% over last year to EUR 374 million. Therefore, Group's net profit stands at EUR 271 million, an 11% increase from a year ago, not taking into consideration the extraordinaries of Línea Directa spin- off in 2021. The capital ratio came at a pro forma level of 11.9%, that we'll detail afterwards, and stands comfortable above our long-term guidance of 11.5%. As I did mention, return on equity reflects this improvement performance and shows an 11.6%, clearly ahead of the figure of last year and above the cost of capital for the industry. We will follow the usual agenda.
First, our H1 and quarterly results, then risk management, to end with a review of the different businesses in the period. Moving to our income statement, here's the P&L account for the H1 of 2022 compared to 2021. Remember please, that during the H1 of 2021, Línea Directa was part of the group until April 2021, and that their contribution to the P&L was accounted under discontinued operations with EUR 936 million as of June 2021. This compared to zero for this 2022 H1 , and from now on, the comparison will not have any Línea Directa impact, only the current dividends from our remaining 17% stake. Our income statement shows positive trends in the main lines of revenue, net interest income and fee income.
Other operating income and expenses shows a small negative in line with the growth of the Single Resolution Fund contribution charged this quarter. Group's net interest income shows a positive trend to the seasonality of the quarter in a number of days, although it mainly reflects the lending growth and also client margin improvement. It is up by 4% from first half 2021. Despite the very volatile market behavior, and thanks to the increased support of our commercial activity, fee income reaches EUR 303 million, and shows a continuous strong growth of 15%. Other operating income, as I did mention, was negative EUR 6 million, and EUR 17 million higher than a year ago, mostly due to the Single Resolution Fund contribution. Total gross operating income at EUR 966.3 million went up by 5% from 2021.
The quality of incomes remained very high, with an increased contribution from Portugal at EUR 82 million by 9%, and the EVO and Avant Money contribution of EUR 18 million and EUR 36 million, growing at 35% and 25% respectively. Group operations costs remained somehow under control in Spain and elsewhere. Thus, despite the seasonal cost increase, the group continued to improve its efficiency ratio. Group total costs grew by 4% in the first half, mainly from personal expenses that went up by 4.4% due to the salaries, annual review, and performance incentives in the H1 . At the same time, general expenses went up by 3.9%, showing good control in overall expenses. This increased income above the cost performance allowed PPP to increase by over 6% from a year ago, showing a very strong resilience. Loan loss and other provisions are down 26%.
Cost of risk allowances of EUR 106 million are down 16%, still below our guidance of cost of risk for the year, and other provisions of EUR 45 million in the period are 44% below last year. Again, within our guidance for these type of provisions. After the expected reduction in provisions, profit before taxes stands at EUR 374 million, 30% more than a year ago. The EUR 86 million increase in our profit before taxes more than double last year pre-tax profits coming from Línea Directa recurring activity of EUR 40 million. This shows a clear performance toward our objective of compensating the insurance profits from Línea Directa as soon as 2023. After taxes, the group posted net profit of EUR 271 million. This is 76% below of last year, including the full Línea Directa spin-off accounting.
Excluding that is like for like, it is an increase of 11% from a year ago. After the close of 2022 H1 , we believe that the references, these results are clearly in line for achieving our objective for the full year and make reachable our goal of EUR 550 million net profit by 2023. As you know, we are expecting some details about the new contribution for the banks in Spain recently announced, although we had no information yet. However, the necessary caution of the future evolution of credit risk under this complex macro scenario, coupled with the difficult geopolitical and sanitary situation, make us to fine-tune a little bit our guidance at the end of the presentation. On a quarterly comparison, we can see a very positive evolution of the main lines of income.
NII growth over 8% quarter-on-quarter, and over 6% over the year, as well as fee income growing 7% in the quarter and 16% year-on-year. Seasonal operating costs increased by 6% quarter-on-quarter, and 6% over the same quarter last year. All this results in a pre-provision profit that remains resilient, increasing by 1%. After much lower credit risk provisions, profit before taxes of banking activity has grown by 26% in respect to the same quarter of 2021. Finally, quarterly net profit came at EUR 117 million, up 21% or EUR 20 million from the same quarter of 2021.
The group's total loan book grew by 8.3% from a year ago, bringing EUR 5.5 billion in net loan growth to reach EUR 72.4 billion. Growth in the quarter comes well-balanced between our mortgage business, including EVO Banco in Spain, Portugal, and Ireland, our consumer finance business, and the corporate banking business. Loan demand in corporates continued to show improvement from last year's stagnant performance after the end of the government programs to provide liquidity to companies. Although Q2 s always show strong growth in lending from increased activity, the EUR 2.7 billion net increase in this quarter is ahead of the EUR 2.3 billion of last year, despite some slowdown in mortgage lending in Spain that we will comment later.
On the contrary, consumer loan book is picking up in all geographies, and a restored corporate loan demand in Spain has made possible to post a first half loan growth of EUR 4.3 billion. In Spain, lending growth maintained the pattern from last quarter when it started to pick up. It grew by 5.6% year-on-year, well over the 0.9% from the sector as of May 2022, bringing market share increase in both household and corporate loans. For corporates, loan growth has been 7.2% year-on-year, with a strong contribution from working capital facilities, supply chain and international trade finance, and almost negligible from Next Generation EU funds.
Retail deposits continue to perform strongly in all geographies at 13% year-on-year on over EUR 9 billion to EUR 77.5 billion. Moving on, net interest income started to show a more positive trend due to interest rate increases. It grew by 5.5% over the same quarter a year ago, and by 8% from last quarter. This is mainly due to increase in loan book in the quarter, over 50% of the growth, and the start of the repricing of our loan books, mortgages in a small proportion, and the corporate loan book with the other 50% of the growth. In Portugal, NII grew by 14% with respect to the same quarter of 2021, and by 10% with respect to the previous quarter. The contribution of Avant Money to our NII continued to grow.
It contributed EUR 19 million to the group NII this quarter versus EUR 14 million the same quarter of last year, or 34% growth. Same happens to EVO. The NII contribution has been EUR 8.4 million this quarter versus 6.3, that is 32%. The improved trend in our NII during the first half is mainly driven by loan growth together with an improvement in customer margin the last month of this quarter. The customer margin improved by 6 basis points from last quarter, thanks to eight basis points increase in credit yield and two basis points increase on cost of deposits, marking the Q3 of 2021 as the turning point in customer margin expansion.
Cost of deposits increased by 2% in the quarter has only to do with the wholesale funding and swaps related to this, since the customer deposit cost continues at minimum, with no signs of change for the moment. The four basis points customer margin increase year-on-year is not coming from the positive repricing of Euribor. This is only started in May, June this year. It has to do with the increase in lending rates in mortgages, corporate and consumer finance. For the Q3 and onwards, we will start to see a positive repricing of yields on the mortgage back book and on the corporate loan book 12-month reference rate.
All this together with the increase in mortgage fixed rate and growing corporate and consumer lending activity at higher rate make clear to us a very positive trend of the net interest income going forward. Moving to the ALCO portfolio, the group ALCO portfolio show an increase in the period of less than EUR 1 billion to total EUR 10.3 billion. As of July 1st, most of the portfolio sits under amortized cost with no impact in capital ratio, and only EUR 1.6 billion stays in the fair value portfolio. Its compositions remain unchanged, with Spanish government bonds being 50% of total, other sovereigns, mainly Italy and Portugal, 25%, and the rest mainly corporate bonds. Other portfolio characteristics improved slightly in the quarter, with an average maturity of 8.6 year, average duration of 4.3, and average yield at 1.5.
After another quarter with very volatile bond markets, the fair value portfolio again negatively impacted our CET1 ratio, as we will see later in the capital section. Related to this, you should know that once we had our financial statements audited on the June 13th , we have updated on July 1st, our ALCO portfolio business model, and now 85% of the bonds are booked under the amortized portfolio with an additional EUR 600 million booked under amortized cost. This reclassification will reduce or has reduced considerably the impact in the capital ratio from the coming quarters. Moving into fees, fee income performed in line with our guidance during the first half, despite lower assets under management in the period. Thus, fee income was EUR 10 million above the previous quarter, and it continued to show growth of 16% over the same quarter last year.
Fee income main contributors continued to be assets under management, payment and collections, equity, et cetera. The fees from AUMs were able to grow despite a very negative market effect in the period. Other fees more related to activity, either corporate or either retail, continued to grow strongly as reflects the solid 14.5% growth over a year ago. Now, total fee income accounts for 32% of operating income. The largest contributor to fees is asset management fees, 34% of total fees, and still growing by 11%. A strong commercial activity during all the first half helped to offset the continued market volatility by keeping net inflows in positive until May. The strong market effect, above EUR 3 billion in the period, make our AUMs to end only EUR 100 million above those at the end of the H1 of 2021.
The second contributor to fees is payments and collections from corporate and individuals. Performance has been very strong, and they have been growing by 31%, improving the growth rate. Still positive trend in client trading and custody make fees grows by only 1% to EUR 60 million. In the following section, in other operating income and expenses, the largest negative is EUR 69 million in regulatory charges, showing a strong increase in the Single Resolution Fund contribution this year. Gross operating income for the quarter stood at EUR 463 million, an increase of 3% from a year ago. Quarterly comparison, it was reduced due to the resolution fund contribution in the quarter. On the H1 view, we can see a 5% growth over the Q1 of 2021, and 11.6% over 2020.
Portugal and Ireland, and EVO, have been increasing their contribution to the group's operating income. The first grew by 9% from last year, and the second grew by 29%, continuing the improved trend of business in both countries. The third, EVO, grew by 35% following their business plan to become profitable pretty soon. The chart on the right shows the breakdown of the contribution to income, where net interest income represents 69%. Moving to costs. Group operating cost in the H1 total EUR 428 million. They are up 4.2% from the previous year, and up EUR 12 million, or 6%, from last quarter. Personnel expenses are up 4.4% due to performance incentives in the H1 , and 2022 salary increase. General and administrative expenses, plus amortizations, are somewhat under control by growing 4%.
We are straight in our plan to maintain the long-term group cost to income below 45%, always trying to improve efficiency in all our businesses and geographies. We continue to do so in Portugal, now with efficiency of 53%, and in Avant Money at 56%. EVO is still in a negative efficiency, although improving very much. At the same time, our very efficient Spanish business standalones keeps improving efficiency to 42% in the last 12 months. With all this, pre-provision profit for the H1 show EUR 535 million, or 6% up from H1 , and 14% from H1 2020. A very strong performance coming from our customer business in all geographies. It is remarkable the improved performance of EVO under its current business plan, cutting by more than 40% their losses.
Cost of risk in the quarter finished at 31 basis points of total credit exposure, with only one basis point increase from the Q1 . H1 , cost of risk ended at 30 basis points, or EUR 116 million. Seven basis points lower than a year ago, and nine basis points lower from 2020 due to the asset quality stabilization with increased exposure. As of today, we have no evidence of any negative impact in asset quality indicators, even after the end of the moratoria to individuals in Spain and Portugal, and after the end of the majority of the ICO loans end of grace period, as we will see later. We expect this good behavior will continue during the H2 of the year. However, in order to anticipate potential credit deterioration, we have updated our IRB models and set more restrictive minimum harder levels.
Therefore, we have been actively promoting a Stage 2 migration in the last two quarters, mainly in Bankinter Consumer Finance and in small and medium-sized enterprises, with almost no impact in provisions. Thus, for the full year 2022, we continue to see a stable cost of risk with some upward pressure in the second half, but without the possibility of extraordinary provisions related to macro adjustment scenario. We now see cost of risk close to 30-35 basis points at year-end. We will review overall guidance at the end of the speech. On provisions for litigations, the ones from FX mortgages portfolio continue to fall and show a reduction of close to 50%. We think that for the full 2022, they will keep a similar downward trend to be maintained at 10-15 basis points of total risk.
In the next slide, our quarterly profit before taxes of the banking activity reaches EUR 160 million, growing 26% over a year ago. For the H1 , it reaches EUR 374 million, up 30%, and more than 6 x that of 2020. Group's net income of the recurrent business in the H1 reaches EUR 275 million, EUR 71 million, up 11% from a year ago, including the recurring contribution from Línea Directa business, and 1.5 x from that reported on the H1 of 2020. In return on equity, it starts at 11.6%, clearly outperforming that of June 2021 and 2020, including the recurrent contribution of Línea Directa in both years. We expect this trend to continue towards achieving the highs of 2019 return on equity very soon.
For the full year, we expect group's return on equity stands above, of course, cost of capital. Excluding intangibles, the group's ROTE is at 12.3%. We change section, we move into credit risk, liquidity, and solvency. Non-performing loans continue their flattish trend, despite a more difficult and unknown new economic cycle. Total NPLs went down by EUR 29 million from June 2021, and this includes the approximately EUR 100 million last quarter NPL sales in consumer finance and Portugal. With respect to last December, are up by only EUR 11.5 million to a total of EUR 171 million. Portugal NPLs came down EUR 18 million in the quarter. Avant Money in Ireland brings only 0.4, and EVO in Spain down EUR 3 million in the quarter.
The group's NPL ratio reduced to 2.11%, the lowest point since 2008, and 23 basis points lower from a year ago, mainly due to stable NPLs figures while increasing the loan book and the sale of the NPLs in consumer finance and Portugal. In Spain, NPLs stands at 2.3%, 10 basis points below a year ago, and one basis point from last December. The ratio continues to be way down from the sector average at 4.19%. In Portugal, NPL ratio declined to 1.3% or only EUR 110 million of NPLs.
As shown in the chart on the right, the NPL ratio in Spain went down to 1.9% from households, and much lower level than last year, and also for corporates came down 10 basis points to 2.6%. In the next slides, total provisions for non-performing assets keeps increasing to EUR 1.183 billion, a 1.5% increase from last year. All this had a relevant impact on our provisions coverage, which now it stands at 65%, up five points more than a year ago. Coverage for foreclosed assets were also improved to 55%, a 10.3% increase, and clearly above the average discount of our sold assets. The foreclosed asset portfolio is 30% smaller than a year ago, or EUR 62 million less. The portfolio amounts to EUR 145 million.
Total sales in the period amount to EUR 42 million, or 25% of the stock at the beginning. We sell most of our repossessed assets through our commercial network with an average discount on sales at 41%. Moving into capital, our fully loaded CET1 ratio stands at 11.85% under a pro forma basis once considering the new composition of the ALCO portfolio since July 1st. Since last December, our retained earnings bring an increase of 34 basis points, taking into consideration the accrual of dividends at 50% earnings. Capital consumption of risk-weighted assets has been 23 basis points due to the growth in the loan book, and other small items, a positive five basis point impact in the period. All this brings our CET1 ratio to 12.21% before market valuation adjustments.
This is a good representation of a strong organic capital generation. Valuation adjustments since December 2021 have been 36 basis points negative impact, and this is net of 13 basis points due to the ALCO new composition in the Q2 of this year. Our ALCO portfolio during this H1 contributes with negative 18 basis points, just only three basis points in this quarter, and the impact in the insurance portfolio from our remaining Línea Directa stake by 18 negative points. That is seven basis points negative in this quarter. Total capital ratio remains at 15%, a very comfortable level, and the leverage ratio went at 4.1. Finally, the 21.1% ratio for MREL remained well ahead of 18.7% requirement for 2022.
Moving into liquidity, recovery increases in our customer deposits keeps our funding gap in negative territory from EUR -2.5 billion a year ago to EUR 6.4 billion commercial gap. This negative gap in Spain more than offset the gaps coming from Portugal and Ireland, both having higher lending than deposits. As a result, loan-to-deposit ratio reached a record of 92.3%. As the Telco total stake remains stable at EUR 14.2 billion, and we account the interest earned at the three-year average of 87 basis points, thus avoiding any step-down in the year 2022 and 2023. Now let's review the performance of the main business lines very quickly.
Moving into the corporate banking activity, the corporate loan book in Spain and Portugal grew by 7.4% year-on-year or over EUR 2.3 billion in the period. It increased by 7.2% in Spain, while the sector grew by 0.9%. This growth started in the Q1 of the year and has increased during the second, mainly in working capital financing due to the pickup in internal demand. The increase of raw materials and supply chain, and most probably some anticipation of financing needs ahead of an interest rate raise. In Spain, in this Q2 , loan book increased by EUR 1.4 billion or 7.2% to EUR 28.8 billion. This growth has made us to increase our market share to 5.8% from 5.4% a year ago.
Loan growth from June 2021 has been different by business segments. 8% in large corporates, 7% in mid, and only 1% in SMEs. Total ICO loans with the state guarantee as of June 2022 at EUR 6.4 billion have been granted mainly in medium and small corporates. Only 40% of them extended maturity or grace period, and all of them have come to the end. As of June, total ICO portfolio loan had only 2.2% NPLs and 6.9% became Stage 2. Some indicators of a strong commercial activity during the first half, our new loan production climbed 27%, corporate payments up 28%, and collections by 26%. Once again, international banking with the trade and supply chain finance loan book growing at a stunning 26% to EUR 7.8 billion.
This activity has become one of the most relevant sources of income from corporate banking. Its operating income of EUR 106 million has increased by 28% from a year ago, and today represents over 27% of total corporate incomes. In wealth management, in this next slide, customer assets keep growing on a continued commercial activity, adding both wealth services, private and personal banking. Assets under management remain almost flat in the year. The commercial activity was more than offset by the negative market effect in the customers, in the customers' patrimony in this difficult market environment. Total assets from customers in both segments reached EUR 82.7 billion, up from EUR 75.4 billion last year.
The strong commercial activity measured by net new money in the quarter shows a total EUR 4.4 billion increase, split between EUR 2.9 billion in private banking and EUR 1.5 billion in personal banking. Market effect has been very negative year to date, bringing a negative impact of EUR 3.1 billion in private banking and EUR 1.5 billion in personal banking. Moving into retail banking, during the quarter, there has been again a strong activity, although slowing down in mortgage new production. Salary accounts balances continue to grow. They are up 17% from a year ago. Mortgage origination in the period of EUR 3.4 billion was 15% above the last year and almost doubling the H1 of 2020, thanks to the increased contribution of Ireland and Portugal and EVO.
In Spain, our market share in new mortgages is now at 8.2% as of April 2022, coming from 8.7% as a result of the increase in rate for fixed mortgages. For sure, more profitable and with a better quality, since only 54% of mortgages granted last month were fixed and at a much higher rate. Their average loan to value continues in the mid to low 60s. Despite this change in behavior, the mortgage back book keep growing and reached EUR 32.8 billion, which is an increase of 6.3%, while the rest of the market grows at 1.4%. Our asset management business reduced its growth trend since the beginning of the year in all categories, but it is still EUR 100 million over June 2021 in total funds managed.
All this is due to market impact in the asset valuation and particularly in third-party funds. Despite another difficult year, quarter, assets under management volumes were maintained from a year ago to reach EUR 36.8 billion. In the case of own managed mutual funds, net new money in the H1 quarter has been positive till May and been able to offset the huge negative market effect, bringing the total mutual funds managed to EUR 10.6 billion or only EUR 400 million below December 2021. Let's move to the geographies. Portugal, the loan book grew by 10% to EUR 7.5 billion, and retail funds at EUR 6.5 billion, up 19%. Growth in loan book was in both corporates, 13%, and retail, 9%. Our balance sheet at EUR 3.8 billion remain almost flat from June 2021.
On the income statement, operating income for the business grew by 11%, and costs show a 5% increase in line with our plans for improving efficiency. All the above brings pre-provision profit up by a strong 14%. Finally, after EUR 7.4 million normalized loan loss provisions with a very small impact of EUR 2.5 million from extraordinary recoveries, Portugal profit before taxes posted EUR 13 million, 16% increase from last year. Now, after more than five years since the acquisition, Bankinter Portugal shows an efficiency ratio of 54%.
Moving into consumer finance, our Bankinter Consumer Finance subsidiary at the end of the quarter total loan book of EUR 4.4 billion, 41% up from a year ago, with a new production of EUR 0.8 billion in the quarter, clearly recovering from last year's stagnant situation. Geographically, the total loan book includes EUR 1.5 billion from Ireland, Avant Money, growing by EUR 529 million in the H1 of the year, and EUR 353 million from Bankinter Portugal, growing by EUR 77 million in the period, and the rest is EUR 2.5 billion in Spain, where the loan book grew by EUR 300 million in the H1. You can see in the graph the breakdown by type of financing. Personal loans represent 51% of total, growing by 28.
Transactor credit cards outstanding represent 18% of total, with 16% growth. Revolving credit cards now stays at 10% of total. Below 10% of total. EUR 432 million, down by 11%. Household mortgages production in Ireland was EUR 341 million since June 2021, and now represent almost 59% of total loan book in the country and a market share of close to 10%. We feel very comfortable with the asset quality indicators. NPL ratio as of June stands at 4.6% from 7.3. Provision coverage at 85. Cost of risk at 2.2, very much, below the one of 2021, which was 3.6.
Finally, the risk-adjusted return now over 6% for this short-term business and very efficient distribution made us believe that the future contribution of this business will continue to increase. Regarding specifically, Avant Money in Ireland, it is remarkable that since they have started the household mortgage lending business in September 2020, they have been able to reach 10% of new mortgage production in June 2022. Plans are to increase and more than double the EUR 400 million mortgage production in 2021. During this H1 of the year, mortgage drawdowns came at EUR 462 million, slightly above our target.
This new activity, together with the recovery of the consumer finance activity, where personal loans have grown by EUR 53 million or 19% in the period, and credit card outstanding growing at 5%, has made the loan book to increase by 2.4% in a year, and at the same time improve their good asset quality ratio. Now at 0.48% NPLs with cost of risk of 4.73. New mortgage granted from December were EUR 467 million. This is 25% more than a year ago. The book now is up EUR 2.2 billion. Net interest margin jumps by 27%. Consumer and personal loans came slightly up to EUR 76 million from EUR 55 million a year ago.
As of management ratio, NPL ratio stands at 0.5, 0.555 or just EUR 14 million in NPLs, with a very low cost of risk of EUR 1.2 million. In P&L terms, EUR 18 million operating income, still not enough to cover the EUR 28 million of operating expenses in the period. Here we bring some indicator of our ESG plan, a strategic and transversal plan with specific actions and targets to be developed. A summary of measures taking into consideration of the bank's ESG environmental performance in the quarter are, first of all, the environmental dimension. We have completed a climate stress test performed by the ECB and in Group two of four and ahead of the average of Spanish banks in Group three. Some new steps have been taken towards business product lines.
We have created a financial solution for Bankinter Consumer Finance to provide households anticipated financing from the Next Generation EU funds to improve the energy efficiency of their homes. We put together an alternative investment option, which is called Ecualia, to invest in several projects related to the circular economy. In the social dimension, some measures have been taken in the initiative, A Bank for All, related to work and web accessibility for the visually impaired collective. Within the social dimension, new programs to seek and retain young talent for the staff have been implemented at the same time that we have signed with SECOT to develop specific program to reinforce senior talent at the bank.
On the governance dimensions, we continue to follow the good governance code with one of the highest percentage of women in the board of directors, 45.5%, as well as independent members, 44.5%. We're coming to an end. A brief recap. A strong set of improved management ratio, return on equity 11.6, efficiency at 44.4, NPLs at 2.1. Strong commercial activity in an increasingly difficult economic scenario with improved loans and deposits growth over previous quarter. We maintain a comfortable asset quality and solvency indicators and a great financial performance, more than offsetting the Línea Directa income in the past, increasing our proximity to the target of 23.
Okay, after closing a very successful first half in commercial activity, income performance and asset quality, and in view of a more complex scenario going forward, but with the intact ambition of keeping growing market share in all business, I will provide our best guidance for the 2022 year. Growth, we will continue growth expectations in all geographies. Portugal in retail and corporate loans and deposits. In Ireland, more growth in mortgages and improved growth in consumer finance. In EVO, strong commercial activity with a strong mortgage production and customer acquisition. In Bankinter Spain, we expect for the rest of 2022 that corporate loan demand and consumer finance and other non-mortgage retail lending should continue with a strong activity. On the contrary, mortgage lending will slow down in fixed rates, and this will reduce our overall new production of mortgages.
With interest rate increases already started, net interest income should move more positively. Now we see it between the mid to high single-digit growth, thanks to the steady and positive repricing of the mortgage and corporate loan book. Having said that, as you can see, there is a strong volatility in the Euribor in the past weeks. This is our new guidance, mid- to high single-digit growth. The increased activity in corporates and individuals, together with more stable markets for the rest of the year, should provide support to fee income growth and to stay in the mid single-digit as we predicted in the beginning of the year. Having said that, once again, there is a huge market volatility, and this could be reviewed in the Q3 .
For the time being, we do expect mid-single-digit growth at the end of the year. All in all, we confirm our expected group's operating income growth by mid-single-digit. Group's cost growth, although with some upward pressure, will remain under control. Pre-provision profit should remain resilient, and cost of risk, as I did mention, we set a new guidance of 35 basis points for the overall 2022 year, reducing five basis points from our initial 40 basis points guidance. Having said that, I'm open to answer any questions that you might have for me. Thank you so much.
Thank you, Jacobo. Indeed, we have a few questions already, as you would expect. Okay, the first one, for example, we've been asked by a couple of analysts whether we have any visibility on the terms of the proposed new tax on the banking sector.
Thank you. No, we don't have any details. We don't have any additional information. We do have the same information that you have. We do expect in the coming days or week to have much more visibility on these new taxes. I must say that we do consider this extraordinary contribution as unfair. It's been a complete surprise to us. We still need more explanation about the concept of the extraordinary benefits or profits that they are supposed to cover. As you can imagine, we keep a huge uncertainty around these new taxes. Bankinter has always paid taxes as any other Spanish company. We do pay, as you know, income revenue as everybody else.
However, the banking system in Spain has a higher corporate rate. We do pay 30% instead of 25% from other companies. In addition to that, because our role in our financial stability in the system, we do have regulatory charges related to guarantee funds or even resolution funds. Just a quick reminder that resolution fund is something which targets the bail-in of institutions not requiring public funds to recap. We do already have these type of charges. In addition to that, we have charges of deposits. Nothing to do with guarantee funds, nothing to do with resolution funds. In addition to that, we have charges in deposits. Since a couple of years ago, we do have to pay all the charges related to mortgage granting.
I do think that we do have already quite a lot number of charges. Just bear in mind that our profit after taxes, 50% is dedicated to retain earnings to reinforce our capital. Whatever additional taxes will be will be an additional tension in terms of our capital ratio. I think that we do have a lot of pressure to keep our capital ratios up. I think that the banking system has responded very strongly and very good to the last couple of crises. I think that there is a great opportunity to have a good financial system, a safe and sound financial system that can protect at least the Spanish economy from potential future crises.
I think the role of the banking has been splendid, outstanding, and that's why we do not really understand these new extraordinary charges. Sorry for this long answer, but basically we know nothing about this new tax for the time being, although we think it's completely unfair.
Very clear. Thank you, Jacobo. Back to the business. We have questions on loan growth appetite. Where do you want to grow, and whether we've been raising prices lately or remain competitive.
Okay, I think we do have our plans to grow. As I did mention, we are growing in all the businesses and in all the geographies. We do have appetite for growth. As I did mention, there is a slowdown in the growth of mortgage granting in Spain. This is due because we have adjusted our pricing in mortgages, basically. We have updated our fixed-rate mortgages pricing. We are at 3% our 30-year mortgage. Obviously, the demand is potentially a little bit lower, at least for some months. Apart from this, our appetite for growth is still there. I think in Portugal, we are doing an excellent job growing in retail and growing in corporate.
In EVO Banco, we're growing very well in mortgages with increasing interest rates. In Bankinter Spain, the corporate loan book, we are also increasing rates. I think we need to adapt to the new future that we have in front of us. In Ireland also, we are increasing in mortgages, as I did mention, also increasing in consumer finance activities. At the same time, we're also increasing pricing in mortgages in Ireland, of course, as well as in Spain, as well as in EVO, and as well in Portugal. In the corporate banking activity also, prices are increasing. It is not only just a repricing of the variable reference, it's also the fixed rate prices are increasing.
Okay, two more questions on lending. Whether we have any targets of growth for the business in Ireland? Also, whether we expect further growth in the consumer book, and also what makes you comfortable on growing that part of the book?
We are very comfortable with our growth in Ireland. I think there is a good opportunity, and we want to capture it. There is an opportunity in the mortgage business. Even if we are raising rates in the mortgage in Ireland, there is still a good opportunity, and we want to capture. In the consumer finance business, as you know, the macro environment in Ireland is very positive. There is a double-digit growth in GDP, and there is a good opportunity to keep growing. The growth is focused in personal loans with increase in price, and as far as there is an opportunity, our appetite will be there. However, I must say, of course, that we are very focused on the quality of our risk and the quality of our growth.
Bear in mind that we keep focusing quite a lot on the type of clients that we have in Bankinter, which is mid to high net income people with very strong quality of assets, very good profile of clients, and this is something that has not changed, and this is something that will not change. The risk appetite is under very strict control in terms of quality.
Thank you, Jacobo. Moving on to the net interest income. It was up 8% quarter-on-quarter. Can you just explain to us how much of that was rates-driven or any other drivers or even any one-offs?
Okay, thank you. First of all, there is no one-offs, so this is a result, more or less 50% of growth, 50% of interest rate increase. This quarter, as I did mention, has one day more than the first one. We have more than EUR 2 billion more of gross loans in our books, so that is a very strong growth in this quarter. We have increased the average basis points of the average yield in the credit side. The pricing or the yield of the front book of the new production of mortgages is still higher than the back book. The positive repricing in mortgages has just started, and we will see the full benefit in the coming months, quarters.
There is more, let's say, more mix in the corporate banking book, and that is another indicator of source of increase of the average client margin, and basically all the volumes are growing in all the businesses and geographies. Personal loans are also growing with better yields. In addition to that, I must say that the volumes that we have at ECB account balances is pretty similar or even a little bit lower than previous quarter. That makes a positive flow also in the NII. Nothing extraordinary in this quarter. More or less half is due to higher volumes, and half is due to better prices. Incipient repricing of mortgages. Repricing in corporate loan book has already started, and we will see a full benefit of the repricing in the following quarters.
Great. Thank you. What's our prospect following on your very last sentence from the coming quarters in terms of NII?
Okay. As we have increased our guidance, as I did mention. We should see strong quarters in the coming future. We have already mentioned that we do expect for every 100 basis points increase, 10%-15% increase in NII in the following 12 months, so this is our best estimation of what we do expect for the future.
Thank you. Have we seen any changes to the rate sensitivity in the 12 months and 24 months?
No. As I did just say, for every 100 basis points increase in rates, we expect somewhere between 10% and 15% increase in the NII in the following 12 months.
Okay. Regarding the ALCO portfolio, can we expect any further increases in the coming quarters?
I mean, in terms of increases, now we are at EUR 10.3 billion of the overall size of the portfolio. We do have a measure, as you know, which is more or less twice our equity, two times our equity, so we should be somewhere between 10, not 11 billion, but basically we should be around EUR 10 billion- EUR 10.5 billion. That is the expected volume. We have always been very restricted with the size of our ALCO portfolio, as you well know. This has not changed. As our equity increases, as our balance sheet increases, we follow the same rules and the same percentage, so whatever increase in the ALCO portfolio is always under our risk appetite framework, and we shouldn't see any relevant increases in our ALCO portfolio.
Thank you. What was the rationale, the reason for the change in the business model of the fixed income portfolio, and whether you can also elaborate on the 13 basis points positive impact on the capital ratio?
Yes. In this first half of the year, and as a result of last year transaction of Línea Directa, we try to reduce the volatility of our capital ratios, and therefore we change the business model of our ALCO portfolio. We decide to change some allocation of some issues related to subordinated debt or senior preferred debt to senior non-preferred debt with a certain level of maturity. Whatever was over a certain level of maturity needed to be reclassified to the amortized cost portfolio. As a result of this management decision, taking into consideration during this first half of the year, we have reallocated or reclassified over EUR 600 million of fair value portfolio into amortized cost portfolio.
This has generated also reclassification of adjustments which represent 13 basis points that have moved from the negative fair value portfolio to the amortized cost portfolio, and therefore has been eliminated from the calculation of the CET1 ratio.
Thank you. Regarding the fee income, we've been asked whether there are any one-offs in the fees this quarter, and what do you expect for fee income in the H2 of 2022?
No, there is no extraordinary fees in this quarter. Everything is related to BAU. We do estimate good and strong commercial activity. As you all know and expect, we expect a quite strong summer season in Spain, so activity from corporates and activity from retail in terms of payment and collections, for example. We do expect a strong season. We do expect a good behavior in terms of endorsements or in terms of brokerage, or in terms of FX business, or in terms of insurance. Except the assets under management business, which is quite correlated to the market volatility, apart from that, we don't expect major changes. I think, for example, our international business activity, as I did mention before, is a good source of fees and something.
I mean, very strong behavior and nothing tells us that things will change in the coming months or quarters. Similar to the investment banking activity, I'm sure that we will launch new vehicles in the coming quarters. No major changes or neither any extraordinary expectation in terms of fees. I think the behavior is quite clear, nothing special, nothing new. The only great uncertainty is related to market volatility, which obviously will impact our fees in assets under management.
Thank you. Moving on to the expenses now. How much was the contribution to the Single Resolution Fund this quarter, and how much did it change from previous year?
The contribution this year has been EUR 15 million more than a year ago. The overall volume accounts for around EUR 55 million-EUR 60 million.
Thank you. What is your view regarding regulatory expenses going into 2024? Will they finally end?
Well, this is the expectation. We do expect 2023 also to be a strong year in terms of regulatory charges, and we did expect that 2024 will be the end because we reach the ceilings that were identified in the regulation that we had to meet by the end of 2023. We did expect that 2024 levels of guarantee fund or resolution fund will be at the top, and then that will be a very, quite more reduced year in terms of contribution with these type of funds. As you can imagine, there is a lot of uncertainty around this that we expect to be clarified in the coming days.
Thank you. How much of the growth in personal expenses is driven by variable compensation related to strong lending activity this quarter?
I don't really understand the question, but basically.
Sorry
The increase in the personal expenses.
Yes
Are due.
Is that related to lending growth, variable compensation?
It's more related to variable compensation, but also to fixed compensation because, as you know, our average staff in the group is even a little bit higher than a year ago, and we had a salary review in 2022 compared to a 0% salary review that we had last year. The increase is due to the annual review, but also to the better-than-expected performance. Once again, it has been an outstanding first half of the year.
Can you confirm that you expect costs to grow below revenues this year?
Yes, you know that this is our mantra. We need to meet this commitment, and, yes, our cost will grow below the level of growth of our income.
Thank you. A last one on this topic, cost to income. Is the 43% medium-term target still achievable in the current environment?
I think this is a commitment, and we would like to meet these commitments. You know that there is inflation pressures from everywhere, and we are trying to deal with them with a strong and detailed review of every single cost that we have in the organization. I wanted to remind you that our new geographies and new business are great contributors to this improvement in efficiency. We do have the Irish operation, the Portuguese operations, and the EVO operations, which are doing an outstanding job in trying to reduce their efficiency ratio. To reduce, I mean to improve. That means to reduce the figure. These will be the main drivers to drive down the efficiency ratio to that 43 level. We are not too far. We are at 44, and we are expecting still a good flow of income and growth in the coming quarters.
Okay. Regarding cost of risk, we have just updated our guidance for this year. Do you have any visibility for next?
Honestly, no. There is a lot of uncertainty. I guess that after the holiday season, at least here in Spain, we will see a reality of what's going on. For the time being, as I mentioned, we don't have any single indicator that let us, you know, be concerned about this topic. That's why we reduced the guidance to 35 basis points, and I do not have a real visibility for 2023. What I can tell you is, for the time being, we have not released any single euro of the overlay provisions from the COVID that we had in the past.
Okay. That, that's one of the follow-ups that we have. Before moving to that, have we seen any impacts from the update in the macro assumptions this quarter? Also, you can confirm the size of the unused macro overlay.
I can confirm that we have not used any single euro from this macro overlay, and as we mentioned in the past, this change in the macro scenario has not changed the volume of the macro overlay.
Thank you. Stage 3, we've been asked if the amount of ICO loans that we are reporting under Stage 3 is the full amount, or is only the non-guaranteed part by the ICO?
It is the full amount.
Thank you. Also, on the final one on cost of risk, what is driving the Stage 2 increase?
Yes. The Stage 2 increase, as I did mention, is driven by a change in the way we measure our internal ratings-based models. The first thing is that we have reviewed and updated all of IRB models in the bank. The second thing that we've done is that we have changed the minimum hurdle rate or levels of the probability of default to be considered a Stage 2 situation. We've been a little bit more restrictive in the level of change of probability of defaults from the moment where the loan or whatever credit transactions was granted and the current level of the probability of default, and this variation have been changed in terms of minimum required to be a Stage 2.
We've been much more restricted than in the past. That's why there is a higher volume, but at the same time, that's why there is no additional cost of risk because nothing has changed. It's just a new way to be more conservative in the way we approach our positions. The profile of the Stage 2 in, from a risk perspective, has clearly improved, because we have classified more volume from Stage 1 to Stage 2 with no additional cost of risk requirement.
Okay, any views on the TLTROs or any news there?
We have no news. The size is still there, and the comments, you know, in the coming quarter, the first, at the end of December, we have the first reduction of the TLTRO volume, and then we have every quarter in 2023 some reduction, and it will end up in the early 2023. Nothing has changed. The yield in average, as I did mention, was 87 basis points, and the average cost of the liabilities is at 36 or 37 basis points.
Okay, very final one. Whether you can elaborate on our growth outlook versus our CET1 level?
I think, as I did mention, there is a good and a strong organic capital generation, excluding the volatility of markets that has impacted our Línea Directa stake and our ALCO portfolio. Excluding that, as I have shared, there is a strong capital generation. In terms of outlook, we are not concerned about our level of growth for the coming quarters and the level of capital. We're still, let's say comfortable. The level of management buffer is still very high, and the quality of the risk that we are granting is within our risk appetite framework. No major news on that side.
Excellent. Thank you very much, Jacobo. Thank you all again for joining us today. The Investor Relations team obviously is at your disposal for any further questions. Goodbye.
Thank you very much. Keep safe, and I hope that you can avoid the heat that is, you know, taking over Europe and go quickly to the beach or to the swimming pool. Have a very nice holiday, and hope to see you soon back in October.