Good morning from the Banquintas team, and welcome to our Third Quarter Results Presentation. As usual, our CFO, Gloria Landiet, will summarize the details and will follow-up with a Q and A session at the end. Thank you.
Thank you, David. Good morning, and welcome to Ankinter's twenty seventeen third quarter results presentation. The related financial statements were filed with the Spanish Securities Market Commission before market opened. You may access several related documents and files on our corporate website. I'd like first to summarize the quarter's main financial indicators.
Gross operating income reached $1,394,000,000 euros in the first nine months of the year, up 10% from the same period last year. Without Portugal, gross operating income growth would have been 6%, a higher rate than in the first half of twenty seventeen. The Group's NPL ratio has fallen by two basis points since June to 3.72% and by 47 basis points in September or 11%. Minus Portugal, our NPL ratio stands at 3.33%. The group's net income stood at €376,000,000 down 6% year on year due to €124,000,000 in extraordinary bad will included in the income of the same period last year.
Factoring out Portugal's total contribution in both years, net income would have been grown by 15% from the same period of 2016. The fully loaded common equity Tier one ratio at 11.5% has grown since June by 19 basis points considering these weighted assets performance and dividend distribution in the period. The group's annualized sorry, climbed 1.6 percentage points from a year ago to 12.3% and is best in class among listed banks in Spain. We will start by seeing Banquintas Group's financial results as well as its risk management performance. I will conclude with a quick review of the performance of our various strategic business lines.
Here, we present Banquinter Group's total P and L figures together with a like for like comparison not including our franchise in Portugal, because as you know, it has only been part of the group since April 2016. Net income in the first nine months totaled €376,000,000 down 6% from a year ago. On a like for like basis, that is without Portugal, net income would have been €358,000,000 up €46,100,000 or 14.8% with respect to last year. In the last twelve months, the group's net interest income has increased by 10.8. On a like for like basis, this would become a 5.3% increase in the same period.
For another quarter, our net interest income has remained resilient despite the low for long interest rates environment. Year to date fee income was up 14.2% from the same period last year. Minus Portugal, fee income growth was still strong at 11.5%. This continues to demonstrate the solid performance of our Corporate Banking business. It also reveals a favorable market environment for our assets under management that has contributed to this growth.
Including LDA, other non interest income from customers is accelerating its growth rate up to 7.3% without Portugal. Trading income was close to €50,000,000 down €6,000,000 from a year ago, holding at record low levels. All in all, Banquinter Group's total gross operating income amounted to $1,394,000,000,000 euros up by almost 10% year on year or a very resilient 6.2% without Portugal. Costs continue to grow, although at a slower pace than income. This growth is still mainly due to strategic investments.
Operating expenses increased by 7.4 year on year or 4.9% without Portugal, both according to plan. Cost of risk fell by 3.7% in the last nine months amounting to 157,000,000 Moreover, without Portugal, costs by 7.8% from a year ago. Finally, in the first nine months, the tax profit fell by €30,000,000 offsetting most of the extraordinary bad will from 2016. Without Portugal, net income would have increased by 15% from a year ago. On a quarterly analysis, our P and L account shows positive income trends.
Net interest income this quarter reached €260,000,000 €12,000,000 less than the second quarter, mainly due to a smaller contribution from Portugal's extraordinary NII. In a better comparison, NII grew by 4.3% from the same quarter last year. Income was down 5.3% from the previous quarter due to the summer seasonality as usual. However, it was 10.4% higher than the same quarter last year due to improved business performance. Other operating income increased by 46% in a non comparable quarter on quarter due to the Resolution Fund contribution in the second quarter and by 8.9% when compared to the same period last year.
In short, third quarter gross operating income increased by €16,600,000 or 3.7% from the previous quarter and by 8.5 versus the same quarter last year. Operating expenses for the period went down from the previous quarter and up from the same quarter last year, allowing pre provision profit to grow by 10.114.5%, respectively. Provisions and cost of risk continue to diminish both quarter on quarter and over the same quarter in the previous year. Finally, quarterly net income grew by almost 16% from the previous quarter and more than 18% over the same quarter of 2016. Excluding the extraordinary bad deal, each and every quarter's recovering net income has been below this third quarter figure.
Manquinter Group's volume targets for the year are still on track despite the negative seasonality of the third quarter and continuous decreases in lending across Spanish banks, down 2.2% year on year as of August. McIntel continues to be the exception to this trend and its loan book grew by almost €2,000,000,000 or 3.7% in the last twelve months and €200,000,000 in the last quarter. Customer retail funds decreased by €1,200,000,000 this quarter, mainly in paying deposits as a result of our close to zero rate policy following the summer and the gradual transfer from deposits to mutual funds. Nevertheless, in the last twelve months, organic growth remains at over 4% year on year, outperforming the sector and increasing our market shares in both in Spain and Portugal. As of the week of October 16, customer retail deposits were back at €47,000,000,000 following to strong weeks of growth in light of recent market movement.
Despite negative euro rates, net interest income continues to show positive trends growing by 10.8 year on year in the last nine months and by 4.3% if we compare this quarter to the same quarter last year. These growth rates would be 5.34.2% without Portugal. The quarter on quarter comparison still shows resilience at 1.1% growth. In the graph at the bottom left, you can track Portugal's recurring contribution to net interest income. This third quarter, 73% of total net interest income came from recurring business in Portugal.
The rest came from NPL recoveries from the corporate loan portfolio acquired from Barclays. This extraordinary net interest income in Portugal is seeing a downward trend, but will continue throughout the rest of the year as well as the following year. With all this in mind, our full year guidance continues to be of mid to high single digit net interest income growth for the group and mid to low single digit growth for Spain. The graph on the right reveals that for another quarter and despite record low yield curves, our customer margin excluding Portugal with high quarterly volatility remains at 1.85%, down two basis points regarding June, but with a positive trend year on year. Notice that the inflated contribution to credit yield from Portugal's nonrecurring NPL recoveries is trending downward.
Customer margin is resilient despite the reduction in credit yield, down 15 basis points from the last quarter, 11 basis points in Portugal and four basis points in Spain, and only seven basis points down from a year ago. This is thanks to the reduced cost of liabilities by one basis point quarter on quarter to a record low and by 16 basis points year on year. Our time deposit back book continues to shrink in size and cost. It now represents less than 20% of total retail deposits. The back book price stands now at 21 basis points, the same price as the front book.
Mortgage and corporate financing credit deals continue to be under pressure by increased competition with a very low and stable cost of retail deposits and improved cost of wholesale funding at around 20 basis points. All this led us to believe that our customer margin will remain somehow resilient in the coming quarters. Our ALCO portfolio's contribution to net interest income continues on a slow downward trend. The total ALCO portfolio amounted to €5,800,000,000 with an average yield of 2.7% and an average duration of two point eight years, being the average maturity of this bond seven point six years. 66% of them are Spanish government bonds.
Due to this portfolio's long term maturity profile, we should expect a 15% trending to 12% contribution to our net interest income in the next two years. Unrealized capital gains total approximately €500,000,000 mostly in the hold to maturity portfolio, still with an average maturity of five point five years and a 3.7% yield. Net fee income continued to show a strong quarterly and annual trends, growing by two digits year on year. The €6,000,000 reduction in group fees for the previous quarter is only due to summer seasonality in corporate and transactional fees. Overall, the group's total nine month fees, excluding Portugal, reached €287,000,000 from €257,000,000 a year ago.
This is an organic increase of €30,000,000 or 11.5%. Portugal continues to register between eight and nine million euros per quarter contribution to fee income. Fees from assets under management, the largest contributor to net fee income by over one third increased by an excellent 20.5% year on year. This is due to the strong volume growth in mutual funds and export portfolios and the extra quarter with Portugal. Payment and collection fees, the second largest contributor, were up 13% from a year ago, thanks to a higher corporate customer activity.
Equity brokerage and custody fees both increased by almost 13% year on year. Insurance fees also grew by 24 from a year ago, owing to new mortgages and the contribution of Banquista Portugal. Finally, fees paid to our independent financial agents and partners grew by 13% year on year, showing continued potential for both additional distribution channels. Since 2013, when our new business model of Private Banking and Corporate Banking took off, fee income has grown at a cumulative average annual rate of 13%. In the third quarter of twenty thirteen, fee income represented 17% of total operating margin, while today it represents close to 22%.
This positive fee income performance clearly points us towards the mid to high single digit guidance growth in 2017 provided that the market environment remains stable. Other income increased by 6.3% from a year ago. Linea Directors insurance margin once again proved to be the largest contributor here, up 11.8 in the last twelve months, thanks to a good performance in motor and home insurance. This accounts for 21% of the group's total gross operating income. The chart also highlights the recurrent 20% increase in regulatory charges during the period, which includes the second quarter contribution to the resolution fund.
All in all, gross operating income of $1,394,000,000 euros is up 9.7% from September 2016. The main contributor here is net interest income at 56.7%, followed by fee income at almost 23% and other income from customer business at 17%. Lastly, non customer related income from trading and institutional activities remains at its lowest levels in years with a mere €50,000,000 in the first nine months or just 3.6% of total income. Total customer related business in both Spain and Portugal has grown by 11% in the last twelve months, showing the improved quality and recurrence of our earnings. Our operating costs have increased by 3% from the same quarter last year.
In Manquintas Spain, costs have come down by 3% in the quarter and are flat year on year. In Linea Director, the increase in marketing expenses and sales force growing by 6% to handle the sales growth has led to a 10% increase in expenses year on year. Lastly, operating costs that are franchise are also flat from the previous quarter and up by less than €05,000,000 from a year ago. Compared with last quarter, total operating expenses in the group fell by 2.2% or €5,300,000 Finally, the jaws ratio has widened by 15% year on year. The cost to income ratio in our banking activity remains at 46.8%, including amortizations.
Our guidance for yearly group cost continues to be in the low to mid single digits based on our stable cost control between quarters. This slide shows Pankinter Group's quarterly performance in terms of cost of risk, which has continued to fall. The way Banquinter calculates cost of risk includes all impairments as well as foreclosed asset sales. At 32 basis points, the quarterly cost of risk decreased by three basis points, exceeding our expectations. Nevertheless, going forward, we continue to consider 40 basis points as a medium term guidance for our cost of risk throughout the cycle.
Finally, our annualized ROE grew again, reaching 12.3%, up from 10.7% a year ago, up from 10.9% in December 2016. It continues to be best in class among listed banks in Spain. We will now analyze the main risk management indicators, which cover credit and liquidity risk as well as solvency. Asset quality maintains its downward trend. Non performing assets have decreased due to small NPL entries and much lower early delinquency balances, down 23% year on year.
Portugal also reduced its NPL balance by 15% year on year, remaining flat quarter on quarter. As of September, the group's total non performing loan balance amounted to €2,150,000,000 down 8.6% from a year ago, maintaining previous quarterly trends. Our NPL ratio continues to decrease and stands now at 3.72%, down 47 basis points or 11% from a year ago. Bankinter Spain's NPL ratio fell to 3.33%, less than half the NPL ratio in the Spanish banking system. NPL provisions remained at €1,000,000,000 holding our coverage ratio very stable.
Our foreclosed asset coverage has increased to 45% from 38% a year ago. Lastly, our total problematic assets coverage make us feel comfortable ahead of the new cycle. Our foreclosed asset portfolio, including Portugal, shrunk by 16% from a year ago. Almost 15% corresponds to residential property, while the rest is heavily split between commercial and land property. Asset sales in the last nine months accounted for just about 30% of the portfolio at the beginning of the year with average discounts improving from 39% a year ago to 36% today.
Our fully loaded CET1 ratio increased to 11.5% from the previous quarter and has increased by 35 basis points year to date. Capital generation through retained earnings was 61 basis points during the period, almost tripling the capital consumption due to the loan book growth. The fully loaded ratio is still within our guidance of around 11%, well above regulatory requirements for 2017. In facing terms, the CET1 ratio stands at 11.8 with a total capital ratio of 14.4% as of September. Lastly, our leverage ratio remains very stable.
In short, Mancinter continues to be comfortably capitalized considering its risk profile and growth pattern. The loan to deposit ratio has maintained very stable year on year, but improved 110 basis points since December. The liquidity gap of our Portuguese business decreased by almost €2,000,000,000 since it was acquired. It is now stable at a very modest level of €600,000,000 Even in absorbing this amount, the group's total liquidity gap fell by €500,000,000 during the year. The maturity profile of our wholesale funding remains unchanged with no concentration in any of the coming years.
Maturities next year account for just 600,000,000 from a cover bond in February 2018. Following the success of our subordinated debt issue in the first quarter, we do not have any plans for additional wholesale financing for the rest of the year. Banquintas liquidity buffer is quite substantial and has increased over the years. Now liquid assets amount to €10,600,000,000 with an additional 7,500,000,000 in cover bond issuance capacity. We will now look at the main customer business indicators from the last quarter.
The contribution of various business segments and non customer areas to total income remained clearly diversified and balanced in the period. Main contributors have been Corporate and SME Banking at 30% and Commercial Banking with individuals, including private and personal segments, at 27%. Banquinter Consumer Finance contributed 8%, while 7% came from Bankinter Portugal. Lastly, Corporate Centers, Treasury Capital Markets, ALCO management and other non customer business only accounted for 7% of total operating income. Banquinter's corporate and SME lending continues to outperform other Spanish banks with 5.3% net growth year on year, a 4.3% increase in Spain despite the 3.7% decrease in loan book across the banking system as of August.
Not only the quantity, but also the quality of such growth is reflected in our loan book distribution. Almost 80% comes from mid corporate and SMEs, growing at 11.66.2%, respectively. Only 22% comes from large corporates, growing at 2.1%. At the same time, site and term deposits grew by 15% in both mid corporate and SMEs at cost of one or two basis points and decreased 7% in large corporate. The leader has muted your line.
Believe that we can maintain or improve this growth rate in the last quarter of the year based on our current pipeline and our increasing market share in new lending now close to 6%, well above our natural market share in this business. Our Corporate and SMEs Banking business model focuses on building long term relationships by offering value added products and services to our more than 90,000 more 90,000 corporate customers. This transactional business generates fee income, liquidity and greater customer engagement. Some key indicators in this business such as tax payments, direct debit and separate transfers from companies grew in the period by high double digits. I would like also to remark the growth in corporate customer acquisition at plus 9% over the first nine months.
The main contributor to the gross operating margin in this segment is our international trade business growing by 21% from a year ago. It reached €103,000,000 in the first nine months of the year. Private Banking business continued to perform extremely well with net new money growing by €2,000,000,000 year to date. Including market effect, customer assets in Private Banking grew by €3,000,000,000 in these nine months. More importantly, 90% of this growth relates to advisory products that now represent 42% of total assets.
Customer acquisition, up 16% in the period, continues to be one of the main drivers of the growth in this business segment. Assets under management and custody in Personal Banking reached €20,500,000,000 up 15% over the third quarter last year with €1,500,000,000 in net new money in the period. Discretionary management and mutual funds still constitute 31% of total assets in this segment. Customer acquisition in the nine month period grew by 27% from a year ago, a robust performance that shows the success of the business plan for this crucial segment of customers. Adding both businesses, Private and Personal Banking, we are now managing around €55,000,000,000 from our customers.
In Retail Banking, we continue to grow with regards to our better known products. Payroll accounts now stand at €6,400,000,000 up 26% than a year ago and now growing in Portugal as well. In mortgage loans, we see levels of new lending that are similar to the previous year despite falling total loan book figures across the banking system. Thus, we continue to hold a relevant 6.5% market share in new mortgage lending in Spain. Fixed rate mortgages continue to represent close to 20% of new mortgage lending, which is still below the market average at 38%.
Total of balance sheet funds performed well in the year, rising by 10.2% year to date to almost €26,000,000,000 and by 13.4% against September. Most assets under management and mutual funds, up 16.5% year to date and 22% year on year. Overall, this growth is concentrated in equity, long term fixed rate and guaranteed funds. Money market funds diminished 7% in the year. Third party funds accounted for 57% of the total portfolio, a very different profile to most of our local peers.
And now a quick review of Palcinter Portugal. Its loan book grew by 7% year on year to €4,700,000,000 Its Commercial Banking loan book, mostly in residential mortgages, amounts to 3.9 percent sorry, 3,900,000,000.0 or 1.6% growth year to date. Corporate lending stood at EUR $850,000,000, growing by 11% since December and 41% in the last twelve months. Our market share in total lending in Portugal is 2.4 with an outstanding presence in new residential mortgage loans where our market share is close to 6%. Banquintet Portugal's retail deposits grew by 8%, thanks to our new product offering in Portugal, including payroll accounts and treasury accounts for corporates.
Our market share in deposits in the Portuguese market stands at 2.3%. Concerning the new production, it is 3.8%, while in corporate deposits, it has reached 7.5%. Banquinter Portugal's P and L account shows a pretax profit of €24,800,000 in the last nine months with incomes at €102,300,000 and operating expenses at €64,100,000 Still 36% of the incomes have resulted from non recurring credit loan recoveries. Cost to income stands at 63%, including extraordinary income. Going forward, cost should remain mostly flat, while recurring revenues should be expected to rise due to increasing volumes.
Therefore, in the near future, Portugal's efficiency levels should improve to a cost to income more similar to that of Banquinter Spain. Bankinter Consumer Finance maintains robust growth, attracting 218,000 new customers in the last nine months, 25% more than a year ago. Lending balances have increased by 41% year on year to €1,300,000,000 At the same time, cost of risk and NPL ratio, both crucial KPIs in this business, have performed according to plan, standing at 1.97.3% respectively. As regards to Linea Director, the last nine months saw similar trends to the previous quarters as policies and premiums continue to grow by high single digits, almost 9%. Total policies reached €2,700,000,000 Furthermore, both Motor Insurance and Home Insurance sales outperformed sector growth, rising by 7.414.4%, respectively.
Total issued premiums climbed 8% from a year ago. Motor insurance premiums increased by 7.1% over the sector average of 3.6%. Home insurance premiums increased by 14.9% despite 3.4% growth across the sector as of August 2017. Our combined ratio improved once again during the quarter and the year. This is mainly due to some delays in the Varemo full implementation, particularly in high severity claims.
On the other hand, the increased requirements for the less severe claims have helped reduce fraudulent claims and related costs by more than 15%. LDA's combined ratio at 81.1% continues to be second to none in an industry with an average combined ratio well over 90%. This strong combined ratio represents an opportunity to increase growth in new business and continue to gain market share. Also in this last quarter, LDA announced the launch of a new line of health insurance products called VIVATH with a view to increase both the number of customers and cross selling among existing customers. LDA has now more than 2,740,000 customers.
The impact of such an initiative this year is minimal within yearly expenses at approximately €2,500,000 Finally, here is Linea Elekta stand alone P and L in accordance with insurance accounting regulations. Its underwriting result continued to show the strength of the business growing 20% in the last twelve months. The increase in operating expenses, mainly marketing and sales force, reflected the growth in the number of policies sold in the period. Finally, income fell by 5% year on year on the back of the long for last interest rate environment. Its technical coverage ratio remained stable at 135% with its Solvency II ratio at a reasonable 221%.
All in all, Linea Directors net income climbed 8% to €76,900,000 reaching an outstanding ROE of 35%. And finally, in this last slide, you have a brief recap of the main figures this quarter. That is all I have for my part. Thank you all for your attention, and I will now take any questions you may have.
Thank you, Gloria, for that summary. We can start with a few questions you want on income related items. For example, could you please elaborate on our NII dynamics on the quarter given the recent volatility that we have seen on the especially on the Portuguese business?
Okay. Thank you, David. Well, the quarter has been another quarter defined by resilient net interest income with a 4% small reduction quarter on quarter, but this reduction has to do with the volatility in Portugal that I have mentioned during the presentation. Excluding Portugal, we can observe 1.1% growth quarter on quarter and a 5.3% growth year on year. So this is a very resilient NII.
This resilience is based mainly on a stable growth in volumes in the loan book with somehow a stable spread minus four basis points in the period in Spain and stable growth in the customer in our customer deposits at better cost. At the same time, the resilience is based on the reduction in the financing in the wholesale financing costs. We expect this trend will continue this year. So we will maintain our guidance of low to mid single digit for Spain. Probably in the next quarter, the volumes will increase the growth because of the positive seasonality.
And this is what make us to believe that make us believe that this guidance is going to be certain. Concerning Manginter Portugal, it's very difficult to predict the NII. They have a recurrent part, which is growing as the commercial activity increases. So in this point, we will are confident we are confident on the increase in this recurring part this year and next year, clearly. The nonrecurring part, which is related to the extraordinary recoveries from the purchase portfolio is now close to half the NII is very volatile.
Every quarter, the amount is extraordinary, so we cannot plan what is going to be the recovery for the next quarter. But what we know is that it has a clear downward trend. And finally, I have to remind you that we have this year one more quarter in Portugal. So this is another factor contributing to the final guidance for the group that we are waiting now, which is mid to single digit growth in this year. In absolute terms, around €1,000,000,000 For the next year, it's very early to say anything because we are now in the preliminary stage of our budget.
So I cannot give you a proper guidance yet.
Okay. Just a very specific one on if you could remind us of the ALCO portfolio strategy. We have seen a little increase in volumes there in the last couple of quarters.
Okay. Well, the ALCO contribution to total income continues to be very stable around 10% more or less. The size is €5,000,000,000 around €5,000,000,000 in the quarter can could have increased a little bit, but it's because we in some cases, are advancing the maturities. So this is very transitory increase. We have 42% of the assets in the whole to maturity portfolio.
And as I mentioned, the unrealized gains are 500,000,000 The average life is around three years, but the average maturity is longer, still seven point six years and the average yield is 2.7%. I don't know if the coverage rate, for example, continues to be more or less at the same level as the previous quarter, 12% to 15% of the NII. But I remind you that this will have a downward trend in the following quarters.
Okay. Thank you. We move to fee income now. Given the recent seasonality that we have seen in the last quarter, which is normally the case, can you comment on your guidance for year end?
Mean the fee income income. Fee Well, we maintain our guidance of mid to high single digit. The reason is that we continue observing the upward trend that has been constant during this year And that is due to the favorable market conditions on the one hand and the continued volume growth both in assets under management and in the business transaction with our corporate customers that has a lot to do with the commercial activity the increasing commercial activity in Banquinter. The third quarter figures have been negatively affected by the seasonality of this quarter. But when we compare on a year comparison, fees grew by more than 10% with respect to the same quarter last year.
Excluding Portugal, the organic growth was 11.5% in this nine month period. And including Portugal, the growth is 14.2%, but I remind you that we have one more quarter, one additional quarter in Portugal. And that means that as the Portugal quarterly contribution is around €9,000,000 per quarter, this is more or less the impact that this inclusion has in the total figure.
Okay. Moving now downwards to cost. COGS and expenses, what are we expect on the next few quarters there?
Well, as you know, the costs are following a downward trend in the year because of the fact that this year includes one more quarter from Portugal. So when this situation disappear, we will have the clear vision about the cost in the group. What I can anticipate to you is that we are waiting for a guidance of low single digit for the year. And if you will analyze the cost increase quarter on quarter, the figure is 3%, which is a more comparable figure than year on year. Excluding Portugal and LDA and concentrating on the cost in Spain, In the first nine months, this cost have increased by 3.4%.
What and that means €14,000,000 Most of this growth is related to staff increases in bank inter consumer finance and above all in our digital team. The staff increases in Spain is around 3.4% or 160 people. And at the same time, the second driver of this increase in cost is the updating of our IT platform, although it's clear that most of these expenses are going to be incurred over time and will be activated. In Portugal, quarter on quarter cost increased by 10% sorry, 2%, but we expect that in the fourth quarter this will have a better performance. And finally, LDA operating costs are growing by 10% year on year and this is related to the marketing expenses and the sales force expenses related to the growth in sales, in policies and premiums.
Okay. Thank you. We now move on to cost of risk. We are getting questions on whether you are foreseeing any impacts coming from IFRS nine or the new regulations and whether that is going to impact our guidance for cost of risk, given the fact that we are already running on low 30s.
We are now in low 30s. Our guidance continues to be 40 basis points through the cycle. Perhaps we are being a little bit pessimistic, but we maintain this guidance because we are prudent. So far, the impact of IFRS nine is maintained at the same level as we anticipated last quarter, around 10 basis to 15 basis points in the fully loaded capital ratio at in January year. So a very, very small impact.
And taking it and if we consider the new agenda that is now announcing the ECB, we consider that the impact will be almost zero because the provision that we have now constitute in our balance sheet are or the provisions that we are doing are above the levels of these prudential provisions that are included in this agenda. So we are not expecting at this stage any additional impact. I would like to mention that this is a draft. We don't know how this will be the final version. But taking into account the draft, this is what we have seen.
That's clear. Thank you. Moving on to the insurance business, Linea Directa, whether we expect any changes there, whether we see the combined ratio on the high 80s as stable as something that we can maintain and whether we see any impacts coming from the new health insurance franchise.
Well, Linea Direkta has had a very good performance in the year every quarter, including with regards to the previous quarter. We have observed that some price pressures are reappearing in the market. But so far, the impact of these price pressures is almost zero. At the same time, the frequency continue to increase because of the growth in the car sales and because of the new Varemo. But again, the impact in Linea Directa's performance is being very, very reduced because we are being able we have been able, sorry, to compensate this negative impact by increasing our efficiency.
That's the reason why the combined ratio has improved in the quarter, has remained very stable, but has improved more than one percentage point in the year. So we plan to maintain this gap with the sector. We will continue increasing we will continue to increase, sorry, in the number of policies sold and maintaining also the gap with the industry so that we will increase our market shares. Finally, regarding the new business line, Vivas, and the impact in our net income this year, this is going to be a negative impact coming from the marketing expenses, but very small $12,500,000.0. The sale of policies is going according to our plan or even above our expectations.
But most of these policies will enter into force in the next year. That's why we are not seeing now the revenues, but only the cost. Okay.
Thank you. Last couple of questions. Given the buildup in capital in the last quarter, what shall we expect in the next few quarters there?
Well, as you know, because I have mentioned it to you before, the capital creation in the nine first months has been almost tripled the consumption by the increase in the loan book. This has to do with both things, the organic capital creation related to the net income growth, which is really very good in Manginter. But at the same time, it has to do with the fact that the loan book is growing slightly below the plan that we increase in the volumes and this will probably mean that the capital ratio will reduce a little bit against the current level. But again, above our target or our guidance of 11%, which is the ratio that make us feel comfortable taking into account the solid or sound balance around asset quality.
Okay. And any final thoughts on the political environment and any impacts we are foreseeing on the business or on our balance sheet? You already commented something there.
Well, I have to mention that our presence in Catalonia is very small. We have a very reduced market share of around 2% in deposits, even below 2% in deposits and below 3% in credit. So we don't expect to have a high impact in Spain. We wait that all what is happening there is going to reduce or to improve in the following weeks or months. So no, not too much to say, no anything to say.
Okay. Thank you for your comments. Thank you, everyone, for joining us today. That's all for now. As usual, the Investor Relations team is at your disposal for any further questions you might have.
Goodbye. Goodbye.