Hello, good morning, and welcome to CaixaBank's Financial Results Presentation for the Second Quarter of 2022. We're joined today by the CEO, Gonzalo Gortázar, and the CFO, Javier Pano. In terms of format, for first-time viewers, just a reminder that we aim to spend around 30 minutes with the presentation, with 45 to one hour after that available for live Q&A. You should have received instructions via email to participate in that. Let me just end very quickly by saying my team and I are available after the call, and without further ado, let me hand it over to Gonzalo.
Thank you, Eddie. Good morning, everybody. Let me start with the highlights of the quarter. The main highlight is the level of activity we have had. At the sort of final phase of the integration, we're showing the strength of the franchise, no? Volume has been given the trends in the market pretty good. We saw results this morning with 3.2% growth in performing loans and with a positive development in terms of long-term savings inflows EUR 2 billion. Obviously, pretty bad markets and AUM are down because of mark to market. In the full quarter, we have actually attracted EUR 20 billion, if we include customer deposits together with this EUR 2.1 billion of net inflows, no?
Pretty good level of activity. Net income grows and here we have higher revenues, cost savings coming from the integration and lower impairments, all sort of working in the right direction. You have the statistics there of a 6.9% reduction in costs, 2.1% increase in revenues. In terms of NPLs, very large drop in the quarter from 3.5% to 3.2%, aided by both organic trends and sale of a mortgage portfolio in an attractive market. Coverage has increased.
We keep now EUR 1.26 billion of unassigned collective provisions, so we still have a very significant buffer for potential deterioration of the economy or for the likely deterioration of the economy. Bear in mind that on top of that, we have, round numbers, another EUR 600 million of PPA from the Bankia transaction. So you add all that, is more in the region of EUR 1.8 billion of provisions that we have to face deterioration in the macro environment. Finally, solvency, obviously in this quarter, you're seeing the impact of the full deduction of the share buyback, still at a level that is above our targets and reflecting, as I'm sure you'll see, the good level of activity, significant increase in the lending portfolio and hence on RWA.
I was saying that this is the quarter where integration tasks were still a part of what we had to do, and that is the case, but I would say this is the final quarter where a significant part of activity is dedicated to integration, no? If you look at what we see is the commercial model is working. We have a growth again in our relational client base, significant. We have finalized or achieved the redundancy target that we had in place, the 6,450 departures. We will have a few more at the end of the year, but that's in line with what we were forecasting. The branch network, 1,500 branch integrations that are done now by the end of July.
There will be some further branch integrations during the year, but we have already achieved the targets that we had in our business plan associated to the integration. As you saw during the quarter, we reached an agreement with Caser and Helvetia to acquire the 80% of Sa Nostra Vida that we did not own, which will close in future quarters. It means that basically now all the decisions with respect to the reorganization of insurance and other JVs coming out of the transaction have been agreed. Activity on the lending side has been particularly remarkable. Here you see mortgage production up 58%. If you compare the first half of this year versus last year, and in the quarter, you see an up 79%.
These are quite remarkable numbers. I'm sure we'll discuss later on, but the MyHome campaign has made a big difference, and this has been gaining strength during the year. It's actually shown its full impact on this quarter. On the consumer lending, there's good growth, 21% vis-à-vis last six months or the first six months of last year. Second versus first quarter, also some growth. On the business lending, again, you see 57% growth in the six months period. If you look at the last quarter, it's actually 54%.
It's clearly a very strong rebound of activity where we are recovering the full strength that we had and where we, as you know, we had a couple of weaker quarters in the middle of last year. Now I think the message is the franchise is at full speed, particularly on the business front, you know? As a reminder that associated to the MyHome campaign is not only mortgages, but also significant sales of protection insurance and of other consumer lending, including Wivai and solar panels that have been evolving very, very positively. The market share on new lending that we have, and these are figures up until May, as the June figures are not available, is 21%.
This is now, I think, the level that we had targeted to reach. We'll see how this evolves in the next few months. The other thing to mention is we have also gained market share on the business lending side during the year 13 basis points of increase, and this has actually accelerated in the second quarter. Very good news in absolute terms, and I think very good news in terms of a clear confirmation of an inflection point, and clear potential of the enlarged franchise, sort of leaving behind integration times, you know? Customer funds, as I said before, it's fairly volatile market. What can I say? You know that better than I do.
On the right-hand side of this slide, you can see our market share evolution. We've gained market share in pension plans, mutual funds, and savings insurance during these six months, like we did last year. Again, we have the full commercial power of our franchise, working here. In total, growth is 0.7%, and obviously markets have been taking a negative toll year to date, as Javier will elaborate later. On insurance protection, MyBox continues to be a big success, 25% growth in life risk and 44% in non-life risk. You can see diversified with household, health, motor, burial insurance and some other categories.
In total protection insurance revenues are actually up 10%, year-on-year. Very, very good performance. Hence, loan spectacular growth, in particularly new production. On the customer funds, very good performance on off balance sheet and on balance sheet as well. You see protection insurance also working at full. Great quarter for activity. When we look at the net income, you see the 17.1% growth. Revenues are basically stable, so we're still having negative headwinds in NII, and Javier will get into that detail. Obviously, there's a lag period between the change in rates and our NII.
We have been able to offset with other revenues, fees, commissions, insurance. All that has allowed us to end up with +6% in revenues. Then the big contributors to the growth in net income, as I said, recurrent expenses and loan loss charges allow us to move to the 17% growth. Credit quality, I was looking at the 3.2% and realized that the last time we were below that level was 2008. Gives you an indication of the cycle. This has been achieved despite the fact that the ICO loans were maturing in terms of their moratoria for principal payment, mostly in May and June. The impact of this end of the moratoria has been minimal.
We only have 3.7% of ICOs as non-performing now, and a part of that are just paying and are unlikely to pay, but they are currently performing. It's a pretty good, it's a pretty good number. We have with the figures of July, we see no sign of deterioration there. It's been clearly very good news. That's why our cost of risk continues to be at low levels and coming down. The active reduction of NPLs has also allowed us to increase NPL coverage, maintain this level of unassigned collective provisions that I mentioned earlier. Just as a reminder, we have a also very high level of collateral in our loan portfolio, one of the highest in Europe.
It's a very comfortable position from which we can face a more difficult environment. Capital again at good levels, well above our targets and also in real levels. In terms of the macro environment, during the quarter, we have reviewed the expectations for GDP for 2022 and 2023 to 4.2% and 2.4%. In all honesty, we have had positive news on the economy today. Early this morning, the levels for the second quarter of the Spanish economy were much higher than we anticipated. I think there's clear upside on that figure for this year. However, there is obviously also downside on the figure for 2023.
What we've seen last week on gas prices is suggesting that this number is likely to be adjusted downwards in the future, as most commentators, as the year goes by tend to have new projections that are worse. Time will tell. Inflation. We had bad news today, again, close to 11%. It's still a fairly complex environment, one which we have reflected here, but where there are elements looking at 2023 that suggest that things can deteriorate. The reality is, the news today is that both our activity clearly our asset quality, payment performance, also early defaults are down to record levels in history.
Payments with our credit cards in throughout Spain with our cards, again, very good level during the second quarter. July, more or less in in line. So we are having a very good numbers. We're having very good numbers right now, but obviously we all know that the things are going to be worse down the road. The fact that we continue to have lower leverage than our European peers, as you see both business and families, and certainly much lower than what we had before the previous crisis, is also a sign of comfort for us that whatever it happens, I think both Spain and certainly CaixaBank are going to be less impacted than some of our close countries and some of our peers, no?
This is what we see in terms of the economy, and I just want one final comment. We continue to progress on our ESG agenda. I think highlights of the quarter as we were leading the league table for sustainable financing in EMEA, which is obviously quite remarkable given that our size and the scope of our operations would not necessarily suggest that we should be leading this league table. It's very comforting to see that we are actually being able to lead the pack for at least these six months. We continue to be actively working in terms of financial inclusion through our volunteers and with the Caixa Foundation, helping particularly in the Ukraine situation in terms of microcredit and social accounts.
We have this social DNA, which I think is very special, very much a differentiating factor, and which we try to make sure we put in value as much as we can, particularly when we have noise, as you know, in Spain about how do banks contribute to problems of others. We have a great scorecard, and here are some of the facts that we have to make sure we continue to do, but also to make sure we continue to communicate to society. That's all from me. I'll leave it to Javier. Thank you.
Okay, thank you. Very good morning from my side. As always, some further details on the balance sheet and the P&L. The loan book, very good performance, this second quarter of the year. You may see the performing loan book up by 3%. Note that we have this second quarter, the usual seasonal impact from advances to pensioners. Having said this, the performance is really sound across the board. Remarkably, loans to businesses also tied to the capital markets, probably helping on that front. I would say that with quite a strong organic evolution.
On mortgages, you may see on the central chart, year to date, the performing loan book minus EUR 400 million, but this is the leveraging at a much lower pace than in the past, thanks to the success of our MyBox commercial offer. Remarkably, even in this second quarter, up by 0.4% our mortgage portfolio. Moving to the ALCO, you may see that the size of the portfolio has increased slightly to EUR 71 billion, but we need to take into account that this second quarter, we have had EUR 4 billion maturities. Thus, we have deployed into the market close to EUR 5 billion, clearly at much better market levels. We had clearly opportunities during this volatile period.
As a consequence, the yield of the portfolio at 0.6%, up 10 basis points in one quarter, and the average life and duration approximately circa five years. You may see the maturity profile still at EUR 3.8 billion pending this year, basically in the fourth quarter. As we already outlined it in our strategic plan, you may see an increase of the diversification of the portfolio, and as you may see, a decrease of the weight of Spanish government bonds and an increase on basically Eurozone core economies and other. But in any case, with strong credit quality. You may see also on the right-hand side the evolution of our funding costs. Remember that last quarter, we had a reduction of the spread due to market developments.
We have been able to lock in that spread, and as you may see, 74 basis points over six-month EURIBOR, now having it floating, the major part of this funding. Moving to the customer funds. The most remarkable is the market impacts on our long-term savings, but at the same time, very remarkably with long-term savings net inflows, EUR 2.1 billion. This is basically EUR 1 billion per quarter approximately. What this speaks well about the strength of our this business franchise and we expect that we can keep with this trend in the coming future. You may see interestingly, on the right-hand side chart, the evolution of our average AUMs. You may see the second quarter already below the average of last year.
Obviously, this affecting already quarter-on-quarter our fee revenue evolution. We also display here the volumes by the end of the period, and clearly below that average. It's true also that during the month of July, markets have been performing, so this figure probably will have been recovering recently. Obviously, this has the consequence of some headwind going forward on this revenue line, unless markets recover. Now moving to the P&L to the financial consolidated income statement. The most remarkable in my view is net income EUR 866 million, up double digits both year-on-year and quarter-on-quarter. It's about higher revenues, lower costs, and lower provisions.
On revenues, you may see total revenues up by 2.1% year-on-year, also quarter-on-quarter doing well, and also core revenues. On that front, remarkably, NII resumes growth in the second quarter, up by 3.6% quarter-on-quarter. Fees on mid-single digit growth, I would say year-on-year and quarter-on-quarter. In this case, with a strong activity on the recurring fee front, which has clearly offset any market impacts on AUMs. On life risk, positive trends. I would say that we have very good organic evolution on that line, and obviously on a year-on-year basis, boosted by the consolidation of 100% of Bankia Vida. On non-core, we have had another strong second quarter on trading.
Obviously, a different perimeter in terms of some financial stakes that result in a lower contribution from equity-accounted, but this is well known. Then, on costs, much lower costs, obviously in line with guidance and reflecting a personnel-related cost synergies. On top of this, I would say that loan loss charges very contained at below EUR 150 million, and as a consequence of this net income at EUR 866 million. Looking at our activities in Portugal. I would say that this is a success story that continues. You may see the evolution on NII, 7% year-on-year up. You may see the continued positive evolution of the loan book across, I would say all segments.
On fees, also 10% year-on-year, also growth quarter-on-quarter. With a very well-contained cost base, this results into higher operating leverage and the pre-impairment income up by close to 17%, year to date, which compares to last year. At the same time, very low credit losses, with an NPL ratio at very low levels, 2.3% stable, and this results into EUR 55 million of net attributable profit on our activities in Portugal. Let's move now to the details. This positive NII evolution this second quarter up 3.6%, obviously on a year-to-date basis or year-on-year is still having the headwind from lower rates as we have had in the past. It's about the counter, but interestingly, it's basically client NII.
We have a strong tailwind from average volumes and also a wider balancing margin. This is basically the explanation. ALCO pretty neutral, although we have increased the size of the portfolio and better yields, this has been offset by wholesale funding that is repricing faster and also foreign exchange money market and also one week less of the special interest rate period from TLTRO. Interestingly, bottom left, you may see the evolution of our back book yield that has already improved by two basis points, and clearly this is set to continue as we reprice our portfolios.
You may observe that the front book loan yield has come down by 20 basis points, but basically this is due to the strong weight of CIB lending this quarter. Actually, 40% of the new production has been from CIB and obviously at tighter spreads than the average. As I said, margins improving. All in all, although in the third quarter, we will still have the impact of lower contribution from TLTRO, going forward NII is clearly set to improve. On fees, very good performance. We have had more than EUR 1 billion, so we are over EUR 1 billion, the EUR 1 billion mark during this second quarter, growing by mid single digits across the board, comparing quarter-on-quarter, year-on-year.
You may see recurring banking fees contributing. This is everything related to transactional activities. This is about credit card, foreign exchange. You may see bottom left, the debit and credit card spending that clearly is improving. These are our figures over the same period in 2019, and this clearly has been quite a positive development during this second quarter that we expect may continue into the third quarter with, on that front of payments, with our good summer season. On asset management, already having quarter-over-quarter some impact on lower balances due to market effects. On insurance distribution, we have had more focus on life insurance during the second quarter. It was, on the contrary, in non-life during the first quarter.
You may see for this reason this negative evolution quarter-on-quarter. We are quite upbeat on future evolution on this business, as you know well. Also wholesale banking doing very well up 30% quarter-on-quarter. For the rest of our core revenues you may see other insurance revenues here on life risk. You may see that we are on a quarterly basis at an all-time high of EUR 209 million of revenues. This is 3.7% up quarter-on-quarter. Also the equity-accounted of our insurance activities obviously reflecting non-organic impacts. The consolidation from now on of Bankia Vida and other impacts well flagged on SegurCaixa Adeslas.
This drives our core revenues up, quarter-on-quarter and also year-on-year, and year-to-date, obviously still feeling some headwind from NII earlier in the year. On costs, everything is doing according to plan. We are on track to meet our guidance for the year. Remember EUR 6 billion for this year. We have basically personnel related costs as the restructuring process feeds in. Also in general expenses, we have cost synergies. On depreciation, we have an increase basically derived from the change in the CapEx mix towards more IT, and obviously this drives up depreciation. Also remember the intangibles from Bankia Vida we already flagged on our investor days.
As a consequence, higher revenues, also contribution from costs, our pre-provision profit up by 10%, year to date, and our recurring cost to income also improving by 1.3 percentage points, on a 12-month trailing basis for this quarter. Loan loss charges at very low levels, very well contained. You may see that our annualized cost of risk is 20 basis points. We are on track also to meet our guidance for this year, circa 25 basis points. Remarkably, the CEO has already mentioned, this quarter, we have allocated EUR 214 million of unassigned reserves to specific provisions. This is a process driven by the semi-annual IFRS 9 risk model update.
Afterwards, we still keep an ample unassigned buffer of EUR 1.25 billion. Moving to the balance sheet, on NPLs, we have a steep reduction. It has been aided by portfolio disposals, but it's EUR 1 billion less of non-performings. As a consequence, the non-performing loan ratio now at 3.2%. We keep a very sound NPL coverage ratio at 65%. You may see that the improvement in terms of NPL ratios across the board. I would remark on residential mortgages, minus 50 basis points year to date to 3%. It has already been mentioned, but it's remarkable. A brief comment on our ICO exposure.
23% of our original ICO loans granted have already amortized or been prepaid. Of the remainder, circa 80%-85% are repaying principal. The major part of them will do so by the end of the year, and only 3.7% of the ICO loan exposure is classified under stage three, and I would say 40% is unlikely to pay, but still paying. Moving to liquidity, not much news on that front. Very ample liquidity position. You know very well our metrics, liquidity coverage ratio over 300%. A net stable funding ratio at 150%, a remarkable figure. On MREL, complying comfortably with requirements, with an MREL buffer at 250 basis points.
You know that our funding plan, as we were pretty clear on the Investor Day, is focused on the rollover of upcoming maturities and also the diversification of the investor base. Thus, you can expect us also issuing into foreign currency, something we have already been doing, and also our U.S. dollar MTN in place to do so in the future. Finally, solvency on that front, we closed the quarter with CET1 transitional IFRS 9 well above our targets at 12.2%. We have the well-flagged impact of the share buyback fully deducted from regulatory capital ratios, minus 84 basis points. 22 basis points of organic capital generation, obviously impacted by strong loan growth.
Actually, -18 basis points has been the impact of risk-weighted asset increase, the impact from dividends and AT1 coupons, and then -8 basis points from markets. Basically, this is the negative impact from the fixing portfolio as accounted as fair value OCI. With this on top, we have 25 basis points from transitional IFRS 9, ending with an MDA buffer over 400 basis points. Brief comment on our tangible value per share, obviously impacted by the dividend payment in the month of April. Not taking this into account, you may see good progression, and ending the quarter at EUR 3.75.
Well, as you know, finally, we continue progressing, executing our planned EUR 1.8 billion share buyback and now executed over 50%. Well, thank you very much. I think that we may be ready for questions. Thank you.
Yes. Thank you. Thank you, Javier. Thank you, Gonzalo. It's time to move on to Q&A. Let me just please remind everyone to keep your questions brief. We have a long list of people waiting on the queue. With that, operator, let's have the first question, please.
The first question is from Francisco Riquel of Alantra. Please go ahead.
Yes, hello. Thank you for the presentation. My first question is about loan growth in Spain. You have recovered five percentage points of market share in new mortgage lending this quarter. Some local peers claim that you have been aggressive in pricing, particularly in fixed rate mortgages. I wonder if you can comment on the pricing of the new lending and also on the overall profitability of the MyHome offering. On corporates, we have also seen fast growth. I wonder what is driving this growth, if it is working capital financing, given the rising inflation or large ticket loans in CIB, and also what is the average yield on the new corporate lending. The second question is on the NII guidance for 2022.
You mentioned EUR 6.1 billion- EUR 6.2 billion. If you can update on this outlook, which I think should be exceeded given the tailwind from EURIBOR is still to show up. Then, what would happen if you were to incorporate the forward yield curve with a static balance sheet? What's the uplift to NII? Thank you.
Thank you, Paco . I'll make some comments and pass it on to Javier. On the mortgage side, we have obviously been very successful by refocusing the attention of our people on the mortgage product, while including it in this whole home ecosystem offering. The campaign has been very successful in terms of volumes and also very successful in terms of its overall profitability. With respect to the mortgage portfolio and to the mortgage pricing in particular, we have obviously been competing and adapting to the financial market. Again, when you look at the share of new production, 21%, compared to the back book that we have at 24% plus, it's actually very reasonable.
Obviously, I think as the interest rate evolves and moves upwards, which has happened during the quarter, but then obviously in the last few weeks, there's been a different view or a moderation of that trend. We will continue to adapt to the actual market and remain prudent, but at the same time remain commercially focused and aggressive on mortgage. I would expect that we continue to compete successfully in this part of the business. Some of our competitors, because we have been so tight in pricing for a few years, may have forgotten what it is to compete with us on the mortgage market like in other places, no?
We're a tough competitor, and obviously, if we are playing appropriately hard, the market notices it, no? That's clear. Beyond that comment, for guidance and corporate yields, et cetera, Javier, please go ahead.
Good morning, Paco. Well, on the corporate front, the short answer in terms of yields, I was consulting the data, is that the yield for the new production this quarter has been 1.2%. The major part has been made at floating. So what you may see actually that the spread is a good one. You can derive the numbers of the risk-weighted asset intensity that has been approximately around 40% in terms of the new production this quarter. So you may see that, well, it's good business, profitable, always meeting our, let's say, profitability standards, you know, internally over 15%, generally speaking. So it has been broad-based, different sectors. So very good business in summary, you know.
To the key point, you know, which is NII guidance. Well, it's clear that we are starting the year with better average balances than initially expected. We were not expecting this pace of loan growth year to date. We don't think that into the second half of the year, this pace is sustainable, so probably we will face some slowdown, obviously for seasonal reasons in the third quarter, but obviously with more uncertainty ahead of us. On the other hand, we have ECB front-loading rate hikes. We saw last week 50 basis points instead of what was priced in the market, 25. Obviously this is having an earlier positive impact on our NII repricing.
On the other hand, we are not seeing any pressure at all in terms of deposit pricing, let's say deposit beta. On that front, there are not any kind of pressures. Well, those are the positives. On the other hand, you know very well that the third and the fourth quarter will be negatively impacted because we will no longer have the funding benefit at -1% from the TLTRO. This is approximately minus EUR 100 million per quarter, although we already had one-week impact during the month of June. But all in all, the situation is better, you know. Even considering what we already knew about TLTRO, no?
You mentioned it, we gave guidance for this year at EUR 6.1 billion-EUR 6.2 billion. We are now in a position to improve this guidance to EUR 6.3 billion-EUR 6.4 billion. We give a range because there are some uncertainties in terms of the pace of rate hikes, the impact this may have on money markets, et cetera. This is why I give you this range, no? You asked about beyond 2022. I would say that generally speaking, what we presented two, more than two months, two and a half months ago is valid, no? There is a lot of volatility in the rates markets in recent weeks.
Our base case, I would say according to the levels we are having as of today, is still valid because we have this, let's say, front loading in terms of higher rates into 2022. Into 2023, maybe pretty much the same or slightly lower, but the fact that you front load 2022 also has a positive impact into 2023. I think that the messages are the same. The messages in terms of deposit beta remain the same. I can reconfirm that as of today, we don't have any pressure on that front, and this is my view. Although you have not made the specific question, I would also add a comment on fees.
On fees, because actually it's to some extent related to NII, you know. You know that we had a part of our deposits, corporate deposits that were being, let's say, charged, or we were applying according to Spanish regulation a cash custody fee, you know. It was a balance, it has been a balance over EUR 35 billion. You know that now with rates at zero gradually in coming I would say months this fee will go, you know? Obviously this is gonna have a faster negative impact on fees than initially expected, no? Moreover I already mentioned, you know, we have had this correction in markets. Average AUM Assets Under Management balances have been negatively affected.
It's true that July is doing very well. Let's see, you know, the evolution in markets is difficult to forecast, as you know well, no? Obviously this offers also some headwind, you know, to some extent. For the rest, just taking the opportunity to comment on fees as I am already touching on that topic. The rest of the business is doing very well. You saw very good performance on transactional fees, everything related to payments, even foreign exchange, strong activity on that front. This is doing well. Everything related to non-life insurance that is accounted as fees, we expect to perform well. All in all, you remember that we gave guidance for the combined of fees plus insurance.
Thinking about only the fee part of this guidance, we think that we have the chance to be closer to EUR 4.9 billion instead of EUR 5 billion we gave as guidance. Basically, because those impacts from cash custody fees, plus the headwinds in terms of volumes on AUMs. Sorry for the long answer, but I thought it was interesting to give you the full picture on the matter. Thank you, Paco.
Okay, Paco, thanks for that. Operator, can we move on to the next question, please?
The next question is from Maksym Mishyn of JB Capital. Please go ahead.
Hi, good morning. Thank you for the presentation and the opportunity to ask questions. I have two. The first one is on cost of risk. Your full year guidance leaves room for an increase in the second half. My question is: what do you think should happen for this to materialize? Because so far there are no signals from asset quality deterioration, as stated by other banks as well. Then, the other question was on the new banking tax. I know that we still don't have all the details, but it would be very helpful if you could share your view on this change in Spain with us. Thank you.
Thank you. Thank you, Max. On the cost of risk, the reality is what we see today is all very positive, as you said. In fact, it's even more positive than what we were expecting, no? It's great news. The CoR performance has been very good, and on top of that, we've actually been able to reduce NPLs. Again, I think there is more to come. My expectation is that we will be at around 3% by the end of this year in NPLs, meaning further improvement in the next two quarters. It's my expectations, as you know, this was our target for the end of 2024. I think we can get there by the end of this year. So very good, and hence your question is very appropriate.
At the same time, when you look at what we will be providing for in the third and fourth quarter is going to have an immediate relationship with the economic environment and the deterioration of this environment is something that we all expect. We don't know how bad and how much, but there will be a deterioration. I am hopeful that it's something that we will be able to cope with appropriately, thanks to our unassigned reserves. As you said, we have some headroom between the current cost of risk analyzed for the first half and the 25 basis points that we gave as guidance.
I think that indicates that we have some ability to, beyond our unassigned funds, have some further provisions anticipating developments that would be negative into 2023. Time will tell. Yes, we are in a way accumulating buffers to face a deterioration in the economy, which we're not seeing yet, but which we are thinking it's going to come because there are very powerful forces that it will be the case. We continue to be comfortable not just with our guidance for this year, but also with our guidance for the strategic plan, because we're going to have, in fact, I think, a lower use of these unassigned reserves that we could have anticipated because our current ICO loans, et cetera, everything is evolving in the right direction.
In fact, by the end of the year, we're gonna have a higher buffer to offset that macro deterioration. Time will tell how bad that is and hence what is the final picture, no? Second question on the tax. I would say most relevant based on what was published yesterday, as you know, there's this proposition of law presented to parliament, and this is A, does not yet have all the details and B, will be subject to change, obviously, and obviously will also be subject to approval or non-approval. Let's not take everything for granted at this stage, no?
In any case, with information we have, trying to be helpful, we get to a preliminary estimate for next year, which, as you know, the tax is gonna be based on 2022 figures, but it's going to be applied and accounted for as much as we know at this stage, in 2023. The number will be between EUR 400 million and EUR 450 million. Based precisely on the guidance that Javier just gave for what we expect in NII and fees and applying sort of the fiscal rules, we get to this EUR 400-450 million for as a tax in 2023, that, as you know, the current law says it's not tax deductible.
It would be directly a hit to the bottom line if it's approved in this form. With respect to what we think is we are obviously against this measure clearly. We think it's the wrong measure for Spain at this moment. We think it's unfair because it's based on the fact that the Spanish banks are having extraordinary profits and that you know better than anyone else that is not true. We need to just clear the facts, and the facts is, if you look at the return on equity of banks and of their Spanish operation under the Bank of Spain information for the last 12 months, ROE was 5.3%. 5.3% is obviously very far away from extraordinary profits.
The situation this year is not likely to improve much, to be honest, because of the lag period with increases in in NII. When you look at 2023, time will tell. Obviously, the system will benefit from higher rates, but obviously there are other issues, including and particularly loan losses, that they depend on how the situation evolves, no? To establish a tax now on extraordinary profits is just doesn't respond to reality. There's no doubt that you understand this better than I. It's not fair. The tax is not being designed to tax profits. It's being designed to tax revenues. Hence, if you wanna tax extraordinary profits, but you go for revenues, you're really using a tool that is not the right one.
Obviously this is something very unsettling for all of us. I'm being very clear and public that this is based on, again, the wrong facts, no? Second, it's actually a distortion. It creates a distortion from a competitive point of view. There's only a few entities that are affected by this tax. We actually compete in many regions in Spain with entities that are maybe local champions, but are not getting to the standard of EUR 800 million in revenues. We're competing against foreign banks that in Spain are not getting to that level. Why should I be less competitive to fund Telefónica or Iberdrola for a tax recently imposed in Spain versus a large French, Italian, American bank? It makes no sense. It's not a good competition rule.
It also puts us at a disadvantage vis-à-vis hedge funds, credit funds, others that are going to be funding without that tax. We're making this very clear to everybody. This has a competition impact which we need to be aware of. It also creates a big complexity. As you know, you know how banks we do credit. We actually have to incorporate the price of credit, the cost of capital, the cost of funding, operational cost, the cost of credit. Actually, the EBA guidelines forces us to also include taxes in that pricing. On the other hand, there's now a Spanish law that if it's approved, would say that actually you cannot incorporate all this on the pricing of your credits.
We have a big conflict of jurisdiction, as Spain is in no way in a position to go against EU rules in something like this. Obviously, EBA and ECB will require us to do one thing if EBA guidelines are in place and actually this law requires us to do the opposite, no? Again, this is a distortion vis-à-vis European rules that make no sense. Then it's also finally counterproductive. I think we all know that in difficult times, having a strong financial system is critical to make sure the difficult times are less difficult and do not last for a long period.
We can only look back to 2008 to 2012 in Spain to see what is the impact of a crisis where the banking sector is not strong, and you don't like to have that again. This is weakening the banks at this moment in time. It makes no sense. Finally, if we have a tax on, again, on credits, we either pass on that tax to clients because we do what EBA tells us to do, and then credit is more expensive, or it would not do that. Sometimes we may do cheaper, but many others will just not give that credit because it doesn't work. The numbers do not add up.
Whether it's through expensive credit or reduction in the level of credit, this is precisely what you'd want to avoid from an economic point of view, when times are getting tough, no. This is a bad idea. In our case, obviously, these taxes, our money is not ours. Our money is for shareholders. The tax is on shareholders. Then, beyond the 600,000 retail shareholders, we have very many respectable shareholders that represent many people in due course. Then we have our foundation, which is actually using these funds to return them to society and help the poorest part of the population, which is precisely what we need to foster currently.
This tax is actually going to do the opposite. It's going to mean we have lower funds to direct to our shareholders, no? It's clearly the wrong idea. Again, it's unfair, it's distortionary, and it's counterproductive. This is our view. We just had a press release, and I made a press conference. I made it very clear. We're obviously the main bank impacted by this tax in absolute numbers in Spain because of our size. This is just the wrong measure. Let's not take it for granted that this will go ahead in its current form. There are obviously issues about whether there are double taxation here, which is not something that can take place.
We really are paying for profits, but we're also paying for revenues, and hence, there's a very clear, to me at least, double taxation here. There's the principle of equal treatment, which is not being protected. Some institutions, because of size, are having to pay these quite artificially on this EUR 800 million level, others are not, no? Let's see what time brings. You can count on us doing what we can to explain and convince everyone in Spain that this is a mistake in terms of policy. We'll see.
Okay, thank you, Maksym, for your question. Operator, let's please move on to the next one.
The next question is from Sofie Peterzens of JPMorgan. Please go ahead.
Yeah. Hi, here is Sofie from JP Morgan. In terms of capital, in the past, I believe you said that you expect limited kind of capital headwinds or tailwinds to come. Could you just elaborate if this still is the case? Then my second question would be around your kind of capacity or your plans to distribute around EUR 9 billion back to the shareholders in cash dividends and share buybacks, which was announced at the Capital Markets Day. With increased macro uncertainty, the new banking tax also at 12.2% core equity tier one, which is maybe a little bit on the lower side, how confident are you that you can deliver these EUR 9 billion in capital returns? Thank you.
Thank you. If I may, with the latter part of the question, Javier, and then you take it from there. Obviously, if there is a banking tax and the impact is what I said, 400 to 450 times 2, or well, depending whatever is the figure for revenues in 2023, obviously this is going to have an impact in our plan. This was not included, and if it's included, we need to rebase our commitments. We will try to do our best to compensate in other ways. You can take that for sure.
Let's be clear, we were not planning to have whatever is EUR 900 million if we do 2 times the higher sort of end of the range, that was not included in our numbers, no? It's unfortunately not tax deductible, so that will be a direct hit to the EUR 9 billion. Again, we will do our best to compensate it with better numbers, higher growth, whatever. You know, you can take that for sure. Other than that, I think we have had a pretty good quarter, pretty good loan growth. Hopefully, that bodes well in terms of future profitability. We're very happy with that.
Obviously, we will have quarters with lower growth in terms of RWA. Time will tell. We need to see a bit more how the current economic environment, which is evolving, affects the overall market. Our commitment towards this figure with the sort of in brackets, the comment I made on the banking tax, which if it finally happens, is obviously an issue. The rest is something we feel we're gonna be able to deliver.
Hi, Sofie. From my side, on further system-wide impacts further down the road. We are pretty much in line, although I will elaborate, but probably the impacts are gonna be generally postponed into 2023. I further explain, remember that what we mentioned is that we had in the first quarter this positive plus 20 basis points impact from applying the Danish compromise to the Bankia Vida consolidation. Once we consolidate the Bankia Vida late into the year.
The message was, we don't expect to have additional, let's say, regulatory impacts, basically the major part of those related actually to the M&A, because it's about the homogenization of different IRB models, and that would not be higher than those 20 basis points or not much higher. This continues to be the view. I don't know if it's gonna be 20, minus 25, but not much more than this. Probably this postponed, on a net basis because there are positives and negatives, more skewed into 2023 still with an uncertain calendar. You may ask why, and this has to do with the regulatory or supervisory approval process. Those are many internal models that needs a supervisory approval.
Depending on the backlog that actually a supervisor has, those are being approved sooner or later. Our expectation now is that it's gonna be later, and as I say, into 2023. Remember that on top of that, on our Investor Day, we made clear that once IFRS 17 applies into next year, we have this impact of up to 20 basis points, and I explained it the way, well the reasons for that, no? Those are The impacts, as I say, basically now skewed into 2023. Thank you.
Okay, thanks, Sofie. Operator, let's move on to the next one, please.
The next question is from Pamela Zuluaga of Credit Suisse. Please go ahead.
Good morning. Thank you for taking my questions. Most of them have already been answered, but I have one more. How are you thinking about your excess liquidity position? Will the repayment of TLTRO funds and the stronger loan growth that we've seen limit your ability to further expand your ALCO portfolio versus your original plan of growing it to EUR 90 billion? Thank you.
Thank you very much, Pamela. Good morning. Well, the short answer is no. We were planning this portfolio, considering our forecast of the evolution of what we call the commercial gap with quite an ample buffer, so we can fund this portfolio without relying on, let's say, money market funding on the repo market. Well, the strong growth we have had on lending, as I mentioned to another question or actually in the presentation, probably it's not a pace sustainable for every single quarter. There are some seasonal effects also. As I mentioned also, tight debt capital markets to some extent making corporates a little bit more reliant on bank funding.
Well, I think that we are doing well, but probably very probably not at the same pace. I don't think that this is actually gonna be limiting our cash pool to an extent to result into a constraint on our ability to fund our fixed income portfolio. Thank you, Pamela.
Thanks, Pamela. Operator, let's move on to the next one, please.
Thanks. The next question is from Ignacio Ulargui of BNP Paribas Exane. Please go ahead.
Thanks very much. Thanks for taking my questions and for the presentation. I just have two questions. One on fees. I mean, coming back a bit to the guidance that you have provided. What should we expect? What is embedded in the guidance for payment fees in the second half of the year? And secondly, I mean, on the NPL disposals and the statement that, Gonzalo, you made on reducing the NPL ratio to 3% by 2022 instead of 2024 as it was in the plan. I mean, do you see still a strong appetite for portfolio disposals? Does this new tax impact the credibility or the ability to dispose NPLs faster? Thank you.
Thank you, Ignacio. I will start with the second one. Yes, we still see a good market. Obviously, I think the factor that is most relevant is for acquirers of assets that require some leverage. Leverage has become more expensive. Obviously spreads have gone up, so that might have a little impact on pricing, but so be it. Now, other than that, I see good interest, and I think it's a good opportunity to continue reducing the non-performing loans. We have reasonable visibility, but obviously when you're talking about portfolio transactions, until they are signed, things can change, you know. Whatever we do, it will only be done if we think we get good value.
At this stage, we think there's still value out there, and it will allow us to sell. If anything, this tax is an example of the distortion that it creates. Actually, well, from NPLs, you still get some interest to be recovered, which would be taxable for us, but not for the acquirer. That will be below the threshold, you know. Anyhow, that's a side comment, but whether we have a tax or not, we'll continue to try and use portfolio divestitures as a way to manage NPLs, because otherwise, you know, the collection time in Spain is so long that it really hits the regulations that we have and the expectations that we all have on NPL management, you know. Hopefully, yes, we'll be able to continue on that front, no.
Good morning, Ignacio. From my side on fee guidance on payments, well, this is approximately a EUR 500 million per year business, year to date, and adjusting for the disposal of the merchant acquiring Bankia business to Comercia. We are growing like 10%, so at 10% pace. It's a positive evolution. You saw on the presentation a chart with precisely the volumes, you know, the traffic on credit and debit card, and this is well doing very well. Obviously the summer season is gonna be a good one with foreign visitors obviously making use of our payment facilities. The third quarter, I think it's gonna be a good one.
The fourth quarter is a little bit more uncertain, and with all the uncertainties we have around. Generally speaking, we have a positive view, but sorry not to be more, let's say, specific on that point, but just giving you the trend we are having year to date, probably you can figure out. Thank you.
Thank you, Ignacio. Let's have the next one please, operator.
The next question is from Benjie Creelan-Sandford of Jefferies. Please go ahead.
Yes. Good morning. Good afternoon. Thank you for taking the questions. Two from me, please. The first one was just on M&A appetite. I realize there's still work to do on Bankia, but looking further forward, you know, is there any change in your appetite for additional M&A? I guess I'd frame that question around two developments. One, obviously, if we look at the broader performance of the sector year to date, valuations have gone down, your valuation has gone up, so your relative purchasing power has improved. So does that change how you think about M&A? Secondly, going back to the point about the bank tax in Spain, you know, does that perhaps drive a greater appetite to diversify the business earnings and footprint, you know, potentially overseas going forward?
That was one question. Second question was just a quick follow-up on excess liquidity. The ECB obviously mentioned last week that they may look to change the compensation of excess liquidity holdings going forward. I'm just wondering whether you had any thoughts about how that might impact on your net interest income sensitivity, how it may change how you manage your liquidity, and I guess to be specific, would it potentially lead you to look to repay yourselves from borrowings more quickly? Thank you.
Thank you, Benji. I would just say we have no M&A appetite. We have a lot to do with our current perimeter, and we're likely to be focused on improving that for a good while. No M&A appetite. Javier, you wanna?
Yes, on ECB and TLTROs. Good morning. Well, it looks increasingly likely that the, let's say, the term sheet of the TLTRO is not gonna be changed, but it's true what you say that Christine Lagarde mentioned some potential restrictions on the excess liquidity balances. I really don't know. Obviously, it's very sensitive information for money markets.
Just to keep in mind that this for 2022 is not having a major impact. Precisely, if I gave this guidance with EUR 100 million spread, it already takes. I don't say that it's EUR 100 million the impact for 2022, but it already takes into account some uncertainty regarding precisely this factor. Also, the potential positive impact is more into 2023. In terms of NII sensitivity, we took already a cautious view on that front when doing the numbers that we presented on the month of May.
It's not changing actually our views, because remember that we were actually giving more sensitivities thinking on 2024. The impact for 2024 of this issue, the TLTRO funding is virtually zero, so it's more something for 2023. Time will tell. I hope that ECB in the September 9th meeting will be more specific because it's something important. Basically, for money market positioning, repo market, everything, I think that ECB should be clear on that. We'll see, no? It's a little bit complex. I suppose that they can try to engineer some kind of tiering, some balances being paid at the deposit facility, some excesses potentially not, potentially linked to TLTRO you have disposed or not.
There are plenty of combinations we have been working on, but it's difficult to assess which may be the potential impacts in a situation where actually the ECB is hiking rates and what may their actions, the impact may have on money markets actually going the other way around, no? I think it's not easy, but obviously they have all the information to decide. Time will tell. Thank you.
Thanks, Benji. Let's move on to the next one, please.
The next question is from Andrea Filtri of Mediobanca. Please go ahead.
Yes. Thank you. A follow-up from Paco's initial question on NII sensitivity. I don't think it was answered. Wanted to ask, what would be the NII sensitivity plugging in forward rates curves and zero deposit beta, so that we have a better tracking of how this is evolving and we can replicate it better. I just didn't catch before what is expected negative impact from the removal of negative interest rate fees that you mentioned beforehand. Just a quick follow-up here on the banking tax comments just made. It is not essentially an incentive to increase the deposit beta transfer more upside to your depositors, rather than paying a banking tax and use your flex your muscles on the local market. Thank you.
Thank you, Andrea. On the latter one, again, we have a very solid liquidity position. Obviously, even if there is a 5% savings associated to interest expenses because we would save these extra costs, there is 95% costs on paying. I do not think at this stage that this is going to alter our strategy on customer deposits. In any case, with these measures that are unprecedented, when they are applied, there's always sort of secondary effects that no one has thought of, and we'll have to see how things develop generally in the market. At this stage, I would say it's unlikely to change our to. Our policy with respect to customer funds, no. Javier?
Hi, Andrea. Good morning. If the question is which is our NII sensitivity, assuming 0% beta, I don't have the numbers right now, no. But they are not difficult ones to construct, at least approximately. We gave you our assumptions of deposits at costs with a cost being between 30%-35% during the period of the strategic plan, assuming the yield curve that, as I mentioned before, is pretty much in line with what we have as of today. With a pass-through approximately of 70% of twelve-month EURIBOR. I can come back to you and give you the numbers, but I think that you can figure out with those figures on our deposit base. Obviously, it's a theoretical exercise.
It's not something we think is gonna happen. I would like to be clear on that. We will have to pay for some of the deposits, some corporate deposits, obviously, and some other in a situation where rates are, let's say, in the 1% handle. In our view, and according to what we are seeing in other jurisdictions as of today, with our loan-to-deposit ratio well below 100% and excess liquidity situation in the system is still this beta has the chance to be lower than in other processes or hiking rate processes that in the past. We have to rely probably to have a better understanding of those dynamics on past experiences in other jurisdictions.
Well, this is my message, but we will follow this very closely in coming quarters, no? Because you will be able to track our deposit cost base on our statements, no? On custody fees, I mentioned that we were charging to a balance of approximately EUR 35 billion. We were making, like, EUR 10 million per month. This is gonna go gradually, but over the summer, probably over September, October. Obviously, depending on the relationship with the client, the different agreements we have in place. This is not a standard procedure with everyone the same.
It's gonna be a process, but what we assume is that by the end of this year, with rates in positive territory, this will have gone. Thank you, Andrea.
Thanks, Andrea. Let's move on to the next one, please.
The next question is from Alvaro Serrano of Morgan Stanley. Please go ahead.
Good afternoon. Just a couple of follow-ups, really. On the distribution question that came earlier, I took note that Andrea made some comments, I think it was late last month or earlier this month around banks when they come to setting distribution will have to take into account a recession. Does that have any practical consequences, the way you think about sort of your distribution? I mean, I don't know if that's a generic comment or that does change because you have to lower the payout or something like that. Just some thoughts around the risk there.
Second, I know you've touched on the fees as well, but I just on the recurring banking fees, that 12% quarter-on-quarter growth, can you explain what is it general activity? Is there any seasonality there? Can we annualize that or should it be continued to grow? Because obviously, if payments is a big chunk, then inflation at least is helpful for that. So a bit more color on that item, recurring banking fees. Thank you.
Thank you, Alvaro. I'll take the first one on distribution. My reading is that there is not gonna be a blanket ban on dividends or capital distributions, which is obviously very important. Hence, I take it positively. On the other hand, what the supervisor is saying is obviously entities that are approaching distribution time need to be well prepared to face a potential recessionary environment. Or the consequences of sort of interruption of gas supplies from Russia, which I think is fair enough, is what I think any of us should do because it's an uncertain environment. I think hence it's a very reasonable position from Mr. Andrea Enria. From our own point of view, to be honest, that's what we would do in any case.
Again, even if we have good reasons to think that the environment is going to deteriorate, I am in a situation where, as a bank, we've never been so strong in the last 12 years, no. We have the capital, the liquidity, we have the NPLs, we have the unassigned provisions, we have the PPA from Bankia. We have been quite prudent in the past. We have good level of profitability. We feel it's never a good time to face a difficult environment. We feel it's a time where we are completely prepared and very confident that we can go through and weather the storm very successfully, no. Maybe hopefully the storm would not be that big. Maybe it would be very big.
I think we are well prepared and hence will be able to argue our case, and do our sensitivities. In fact, we're obviously already doing sensitivities to pretty tougher scenarios and still see how resilient our profitability, hence our capital distribution is, no? That would be my reading.
Good morning, Alvaro. Well, on fees, here there are a few effects, no. Well, first thing is a calendar effect, a longer quarter, so more days, more revenues. We have had a strong recovery in credit card fees, as I mentioned. Also strong volatility on foreign exchange markets, precisely on foreign exchange for customers. We made plenty of transactions, everything related to transfers. Well, I would say that is overall a strong activity in the bank, in terms of operational point of view has led to this result. Counterintuitively, we have also had some increase in custody fees, right, with rates still negative. Just to be clear that beta has nothing to do with twelve-month average.
We were still charging even a little bit more during the second quarter for, let's say, large corporate deposits. Also keep in mind that during the first quarter, we had some, let's say, one-offs related to the homogenization of the loyalty programs between, let's say, former CaixaBank, so former Bankia clients and CaixaBank clients. What probably affected the first quarter a little bit also from a point of view for this factor. Going forward, I already mentioned that custody fees will gradually go. Everything related to credit cards, et cetera, the third quarter is gonna be, in my view, a good one. The fourth quarter is a little bit more uncertain with the uncertainties we face.
In terms of the loyalty programs, this is being worked out. Keep in mind that, for those, let's say, current account maintenance fees, that is like a secular trend downwards. As we make more and more relational clients, we are close to 70% of our clients being relational. Then they enter those loyalty programs and obviously those charges, explicit charges just to hold a current account are gradually diminishing, no? This is a long-term trend, thinking on a quarter-on-quarter basis. I think that is gonna have to do more with overall activity in the economy. We as the major, let's say, counterpart in terms of payments in the system, obviously taking advantage of this. Thank you, Alvaro.
Okay. Thanks, Alvaro. Let's move on to the next one, please, operator.
The next question is from Borja Ramirez of Citi. Please go ahead.
Hello. Good afternoon. Thank you for taking my questions. I have two quick questions, if I may. The first one is regarding a mortgage demand in Spain. In the first half of the year, it has been quite strong. I would like to ask what are your views for mortgage demand in the second half of the year? My second question is regarding AUMs. You have been gaining market share in terms of AUMs, have been very resilient. I would like to ask what outlook do you expect for the rest of the year? Thank you.
Hey, Borja. Good morning. I think in terms of mortgage growth, if we look into the second half of this year, we're still going to have significant growth. Figures that are out there indicate mortgage growth for the first half. There are different sources, but 8%-10%. This is likely to slow down, but I think during the second half, it's probably going to be still at 5%-6%. Obviously, as we see the impact of higher rates and potentially on confidence, when you look into 2023, our expectation is that that will further moderate, and hence we'll have probably a lower increase in prices, still positive, and a more significant reduction of transactions, you know.
It's difficult to see because in reality, it has actually surprised us on the upside as not just in Spain, but in many markets, as you know. There should be a slowdown, but not a radical slowdown.
Hi Borja. You had a second question on inflows on AUMs. Well, I think that having been able to keep having inflows during the first two quarters of the year is a remarkable success. It tells us about the strength of the franchise we have, the business model we have here. You know, it's something that we have been explaining in detail in the past, based on advisory. Not only private banking, it's, I would say more affluent banking, et cetera. To some extent explaining to clients that the way to save, looking forward and obviously in this high inflation environment, is not on deposits, it's on with long-term horizon, et cetera. Also I think that we are successful on this.
In my view, if markets stop to some extent the downward trend and just, let's say, settle in a range, it's gonna be a positive development. Hopefully in the second half, at least, we can keep with the pace of inflows we have been having in the first half. It's true that it's natural that people, savers, think twice before entering long-term investments in this kind of super high volatility we are having, not only in equity markets, but also in the fixed income market. Thank you, Borja.
Borja, thanks a lot. Let's move on to the next one, please.
The next question is from Carlos Cobo of Société Générale. Please go ahead.
Hi. Thank you for taking my questions. Guess I'm one of the last ones as well. Two quick ones on product consumption. Some banks, I believe, in the U.K. have been sharing some insight on how they're seeing their customer behaving. I would like to see if you have any similar insight in terms of how do you see the balance between people using their savings and high savings ratios to keep on consuming despite the increase in their energy bills and energy costs? Or you're seeing some, as other banks have said, that people is cutting on you know, streaming subscriptions, gym memberships, and stuff like that. It'll be interesting to see if you can share some of that. The other question is about NII. I recall if
Correct me if I'm wrong, but you said that the NII could even slip a little bit in this quarter as you reprice all the funding higher. What we're seeing is an important expansion. While we haven't really seen any material change in the average EURIBOR rates during the quarter because of the two or three months lag in repricing. What changed that performance? Is it that you've been comfortable enough to buy more bonds or more ALCO earlier than you expected? Or what did change that you know surpassed expectations? Thank you.
Thank you, Carlos. I'll say obviously it's something we follow very closely. We publish regularly on a weekly basis, consumption we see through our cards, no? There, just to summarize what you see in the. Average in July, which is very much also in line with the previous quarter, is increased and it's 12% of spending of cards. This is comparing 2022 with 2019, i.e., pre-pandemic, you know, where these are obviously nominal levels. If you take into account inflation, you see already that on a real basis, the evolution is not that great.
On nominal euros, which is what we present in our income statement, overall spending in cards in Spain is 12% up in July versus 13% that used to be in the second quarter, so very much in line. From April, May, June, July, similar levels. Spending first necessity goods, if that's the right translation, is up 50%. Tourism, it's up 11% now. E-commerce up 52%. Foreign expenditure is up 26%, so there's a clear indication of tourism having an active impact, no?
Generally, with respect to accumulated savings, we have the feeling that this has been helping the economy clearly in the first and second half, and also, as per the previous question on mortgages, it has also been helping the mortgage market. This is still out of our estimate of EUR 75 billion of accumulated savings, there's probably EUR 60 billion that has already flowed back to the economy, and a little more that is likely to flow during this quarter, maybe next quarter, but that will be exhausted. We are likely to have a clear reduction in consumer. You see the figure in consumer consumption volumes, no?
You see what's happening in the U.S., the figures from the other day, figures from Unilever worldwide or from Walmart in the U.S. or Coca-Cola, et cetera. Nominal consumption is up. Real consumption is down. Now the consumer is suffering the consequence of inflation, and that is likely to come. Now, again, I insist we measure ourselves in nominal euros, as long as we keep not being in a hyperinflation country, which hopefully is going to be the case in the Eurozone. So look at nominal numbers, we're gonna see good nominal numbers, I think. Even though, given the level of inflation, which is more persistent, you saw the figures today in Spain again, going up from closer to 11%.
I think that's a big risk. At what point is really inflation going to come down next? So far, it's very difficult to predict, you know, and that would also have implications for monetary policy. Now the latest is that recession or the risk of recession is going to be enough to confront inflation and hence rates are going to stay at, I don't know, 1% is the latest, sort of futures market for the ECB. I have my doubts that 1% is gonna be enough to confront inflation. Anyhow, we'll see.
Carlos, good morning. On the last question about NII and our initial expectations, it has been basically about volumes and to some extent the frontloading of a rate hike expectations. Now that has resulted into faster, let's say, twelve-month IRR repricing. We saw this tenor going up, I would say faster than initially expected, pricing a frontloading of rate hikes. What this widened our overall balance sheet margins. On top of this, we were able to increase the size of the portfolio, not increase, but to roll over maturities at better levels than initially expected. It's a combination of things, and it has actually been better than expected.
I would take the opportunity to remind that the third quarter, I already said this, but just to be clear, the third quarter is still having a negative impact from the, let's say the minus 1% funding from TLTRO that goes, and obviously will have some kind of impact on third quarter NII. Just to be clear on that front. Thank you.
Okay. Thank you, Javier, Gonzalo. Thank you everyone. That's all we have time for today. The IR team will follow up with anyone who's been left in the queue. With that, it's been a pleasure to host you one more quarter. Thank you for watching, and have a great summer break. All the best. Bye-bye.
Thank you very much.
Thank you.