Ladies and gentlemen, good morning and welcome to the BRD Group Q2 and H1 2022 financial results conference call and webcast. This conference call will be recorded. We have just a few announcements before we begin today's presentation. The event will last for approximately one hour. The slides will advance automatically throughout the presentation. At any time during the webcast, you can press zero one to enter the queue for the question -and- answer session. Your hosts today will be Mr. François Bloch, CEO, Mr. Claudiu Cercel, Deputy CEO, Financial Markets, Mr. Radu Topliceanu, Deputy CEO, Retail, Mr. Philippe Thibaud, Deputy CEO, Risks, and Mr. Etienne Loulergue, CFO. I will now hand you over to your speakers. The floor is yours.
Thank you. Hello, everyone, and thank you for having chosen to spend a sunny day with us this morning. We will talk about the BRD - Groupe Société Générale result as it was presented to the board of directors earlier this week. The figures, again, are at the group level, but not audited. Of course, they were prepared according to IFRS standards. If I go straight to the introduction and the main highlights of the quarter and the semester, it's not a surprise for you to see that the commercial activity was pretty high in all sectors. We give here some of the main figures.
The portfolio growth of 9%, year-on-year. Corporate loan growth by 15%, year-on-year. Housing loan production, + 77%, compared to the first semester last year. An important point that we want to mention as well is our contribution to the various governmental program, especially the one supporting the SME, the small and medium enterprise in Romania, when we approved RON 1.4 billion in the first semester. However, I would like to combine this figure with the one I gave earlier on the portfolio growth for corporate loans.
Despite the performance on the IMM Invest, it's worth noting that at the end, the IMM Invest component in our corporate loan portfolio explains only quote-unquote 20% of the increase. Which means that the activity on corporate is not solely focused on the IMM Invest program, but it's across the board, and the IMM Invest program is only one of the products that we are selling to our customers. Again, the level of activity was extremely high. We see that as well on the digital channel. This is something that we follow regularly. As you know, we have now more and more clients in our new platform YOU BRD.
Now, we are almost at 900,000 clients. Of course we have more clients also if we combine both YOU BRD and MyBRD, which is the platform that is still active but will be decommissioned soon. If we combine both, we are well above one million clients, of course, using digital channels. High level of activity, increasing interest rates, so it's not a surprise that the gross operating income is showing a strong growth this quarter, this semester, +11% if we look on the semester basis. Part of the explanation is, of course, the growth of the NBI.
The other explanation is very strict management on cost and especially in the context of high inflation. The third component is the cost of risk. We have a portfolio of extremely good quality. You see that our NPL ratio is now at 2.6%, which I believe is the lowest point since a decade for BRD. While the coverage ratio is at 77%, so you see that the net NPL, so 2.6% times. If you take into account the 77% coverage rate, the uncovered NPL ratio is indeed a very small part of our portfolio.
However, of course, we all see the environment becoming more and more difficult, and Claudiu Cercel will later give some more details on this. Therefore, using forward-looking components, we come with a cost of risk of RON 46 million at the end of June. Despite again not seeing immediate deterioration of the portfolio. Again, it's more a forward-looking component, and I will let Philippe Thibaud provide more details later.
Bottom line, a net profit over RON 600 million, so roughly stable compared to last year. Despite a significant change in the cost of risk, because I remind you that last year, we were talking about a reversal of RON 39 million, compared to today an allowance of RON 46 million. The underlying results is of course much more stronger. That all of this equates to return equity of 15.6%. Three percentage points higher than last year. I will now hand the floor to Claudiu Cercel to speak about the economic environment.
Thank you very much, François, and good morning to you all. As was the case in the first quarter, in this second one, the bank continued to act in an environment characterized by relatively high growth, but also high inflation economy. In the second release on the GDP of the first quarter, the statistical body confirmed the high growth rates superior to 6% in the first quarter. We started seeing by reading the high frequency indicators, economic indicators for the second quarter, that there is a deceleration in the economy, which will probably become manifest in the subsequent quarter.
For the GDP in 2022 being now expected by various bodies, among which European Commission and the World Bank, in a bracket between 3% and 4%. Inflationary environment continues to be strong. The inflation is increasing. It was printed as at slightly above 15% in June 2022, which is a very high level, at least for the last almost 20 years, and substantially above the boundaries established by the central bank within their inflation targeting mechanism. This is not only happening in Romania, it's region-wide.
If we look at the printings in other countries like Poland, Czech Republic, Hungary, where these inflation figures are above 12%, going even up to 17% in Czech Republic. It's also true for Eurozone, albeit at a lesser level, slightly below 9%. In this environment, obviously, the central bank had to continue acting and tightening their monetary policy. They did 3 hikes in this period between April and June by 225 basis points. The official policy rate is now at 4.75%, still significantly lower than the three peers with which we usually do compare in the region, Poland, Czech Republic and Hungary, where rates are between 6.5% and 10.25%, this last one in case of Hungary.
They increased rates, but they continued to provide the support, liquidity support to the market via the Lombard Facility, which is relatively extensively used by banks now, to a lesser extent by buying bonds in the market, where they only prefer to intervene just to smooth some volatility episodes that may occur from time to time. In the interbank market, these actions of the central bank are very manifest with rates going up, very manifest in case of ROBOR that reached 6.4% in June 2022, significantly above the same level at the year-end 2021, with the average for the first half showing the same strong increase. The support for the economy comes also from the government.
It's not only the case of the National Recovery and Resilience Plan, which is well-known. I will not comment much on it. New support schemes are available. Like for example, a new credit moratoria approved at the June end, which allows for up to 9 months deferral of bank loan repayments in case of individuals and companies facing financial difficulties. A new program Support for Romania proposed in April 2022 for an envelope of about RON 17 billion.
The new scheme, IMM Invest Plus, which unites under the same umbrella some formerly existing state aid programs, which still wait for the approval of the European Commission and which will be valid till the end of this year. In this environment, the Romanian banking sector continues to show good position in both liquidity and capital. Loan to deposit ratio continues to stay at comfortable levels, 70% in March 2022, just slightly above the same level at year-end 2021. Liquidity, even though it's on a tightening trajectory, it's still in terms of for regulatory metrics above the requirements and even above European average.
Whereas capital adequacy ratios still stays at a relatively comfortable level above 20%, even though there are some pressures induced by both the lending growth affecting RWA, but mostly by the OCI component derived from the increasing of yields in government securities, mostly composing the banking books in government securities of banks. The risk profile continues to be sound with the NPL ratio going a bit lower at 3.3% in March 2022, slight decrease compared to the year-end 2021, whereas the coverage ratio improved at close to 70%, still well above the peer average, which is 45%.
At the same time, the share of FX loans at 29%, it's now well below the previous year's levels, although it seems to somehow stabilize, because lately we do notice some higher appetite of some banks to lend in euros, especially to companies. I will be wrapping up on this and passing the floor to my colleague Radu to have a more in-depth analysis of our commercial performance in the first half. Thank you very much.
Thank you. Thank you very much, Claudiu. Hello, everybody. I'm happy to be here with you today. We are moving now to slide 11. We'll discuss a little bit about the advancement that we are having in reaching our offers and channels. First of all, discussing about the increased usage of the electronic channels. As François mentioned already, we are having a significant decrease in number of MyBRD active clients, and we are continuing to promote this platform to our clients, and they are moving from the old one to the new one. The old one is still active, but the total number of digital active clients is significantly higher. Also, we saw a significant increase in number of transactions, plus 20% year-on-year done via digital channels.
On corporate and SME clients, we continue to have a very high percentage of transactions being done via digital channels, 99% for corporate and 97% for SME. Not only transactions are performed digitally, but also letter of credit and letters of warranty. Also for the FX, a very important percentage done via digital channels. Last but not least, a nice increase in acquiring transactions +14% year-on-year. The growth in YOU BRD is also driven not only by migrating the clients there and by acquiring new clients, new digital clients, but also by the new functionalities that we are adding. Probably the most relevant one for the period from our previous call is the introduction of fully remote registration.
A client can become a new client without visiting a branch, which we think is very, very important facility. Contact center continues to be an important channel to our clients. The volume of calls remains at a significant level, and we managed to improve the service offered to our clients, having a better service level, moving from 71% to 76%, which I think it's a very good one, but also by integrating all the remote interactions with clients in the contact center. Network continues to remain a very important component of our interaction with our clients. We continue to downsize the network and to strengthen it. The reduction in the number of branches is happening both through closure, but also through merging the smaller branches into a bigger and more efficient ones.
We are improving the quality of the service. We are increasing the number of the 24/7 banking points 13% year-on-year. With all these activities, the network reached 481 branches at end of June 2022, which if you are comparing with the numbers that we had at end of 2016, it's a reduction by 41%. A very significant restructuring of the network. Moving to the next page, François already mentioned the very dynamic lending activity that we are having. It's happening across all segments.
If you are looking at the total of the corporate lending portfolio, it's an increase of 18% year-on-year, driven both by big corporate, but especially by SME, which are registering a very significant growth, 31% year-on-year. Part of it coming also from the active participation in governmental programs. We continue to have also a very solid performance in lending activity. We've overall increased year-on-year by 16%, while in individual loans, we have a very strong first half of the year. You can see the growth of 77% compared with previous year in housing loans and more than double compared with 2019. The overall production in H1 was more than RON 2 billion in consumer loans production.
Again, a very solid number. We are growing not only in lending but also in deposit. If you are moving to the next page, on page 13, you can see the growth of our deposit base, which is happening in both segments, retail and corporate. This growth is ensuring us a very solid liquidity profile. Our net loan to deposit ratio is at 68%. We continue to be very strong in the asset management. We are still number one by number of investors, and our market share is approximately 18%. Last but not least, we also been an important contributor in Fidelis program, supporting Romanian state. We had an average 41% market share on the two issuances from the beginning of the year.
Very solid performance across the board. With this, I will pass the word to Etienne to discuss about profitability.
Thank you, Radu. Good morning, everybody. I will talk about the profit and loss, and I will start with the revenue. I'm glad to announce that BRD posted its best ever first half in terms of net banking income, with more than RON 1.6 billion NBI for H1 2022, growing by 7.6% year-on-year. This growth is especially driven by the excellent performance on the net interest income component, with +11% on first half, and even +12% if we focus specifically on Q2. This growth in the net interest income is driven by two components. There is a positive volume effect, very visible, definitely. We mentioned the growth of the portfolio of +9% year-on-year.
There is also the interest rate effect, with the positive growth of about three months, which is very visible in first half and in Q2. We can also mention that IRCC, another important rate for us, is also growing, but lagging behind as it is composed by the two-quarter previous average amounts. We have to mention also that on the net interest income, we also start to feel the increasing cost of funding. It's especially visible in the negotiated deposit and in the term deposit grid, which is repricing quite fast. We have to do it to stay consistent. On the fees, the fees are growing by almost 2% year-on-year on first half, with a combination of two opposite effects.
We see very positive impact of the volumes, especially on cards and on capital market activities. We mentioned, for instance, our participation to the Fidelis program. At the opposite, we see the development of packages, for which the prices are quite lower than the price item per item. All in all, the net growth of fees is 2%. On the trading revenues and other revenues, we are more or less stable globally. It's true, both at H1 level and at Q2 level. Here also is driven by two opposite components. The very positive one is the dynamism on the sales activity, especially on FX.
On the other hand, we benefited during H1 2021 of some positive revenues that were not possible to repeat in H1 2022, especially in terms of revaluation of some assets and capital gain on some sales of financial instruments. This is for the revenue part. Now if we move to the next slide 15. Speaking about the OpEx, we can confirm our very rigorous discipline on the front of costs, even though we start to feel the inflation effect in the OpEx.
Globally, our OpExs are growing by approximately RON 40 million year-on-year for first half, which represent +4.8%, but half of this growth is driven by the contribution to Deposit Guarantee Fund, which is driven by two components. Of course, the volume effect, which was anticipated, but also a decision from the fund management to increase their coverage rate. They called for higher contribution this year. If we put this aside, the growth of our operational expenses is only 2.5% on first half, composed by, first, growth on staff expenses, but only +2%. This is the combination of course, the pressure coming from the inflationary pressure on the wages.
It is mitigated by our structural action of reduction of the head count, and we were able to deliver a reduction of -500 or 562 FTEs, June to June. The other expenses are also growing by approximately +3% on the first half, and it's mostly driven by our external component, the cost of utilities, of course, energy, but also external services, due to the inflationary pressure on salaries. All in all, the gross operating income is substantially growing with a double-digit growth of +11% on first half, and even more on +12% if we focus on Q2. The cost to income ratio is improving. If we focus on Q2, which is a quarter where we do not have the contribution to the Deposit Guarantee Fund and Resolution Fund.
If we focus on Q2, we can see that our cost to income ratio reached a level of 47.2%, improving by more than 2 points compared to the same quarter last year. This is for OpEx, and now I pass the floor to Philippe Thibaud to comment on the cost of risk. Philippe, the floor is yours.
Thank you, Etienne. Good morning, everyone. Despite difficult times ahead of us, you will see that, in terms of cost of risk, we have very low level at RON 21 million.
Now that being said, I will let François with the next page.
Thank you. Thank you, Philippe. Capital position. You should see now on the slide the waterfall between the June 2021 capital position and the June 2022 capital position, and with the various elements explaining the changes. If I go on the components increasing our solvency ratio from the lowest to the highest one. Of course, the first one is the retained 2021 profit, which meaning the profit minus the dividend that we distributed. Then we have, of course, the profit of this semester.
You remember, and this is the largest component that we draw sub loans that contributed to over 400 basis points into our solvency ratio. However, as we grew our portfolio, we had an increase in the RWA, and that is a negative impact on the solvency ratio, 250 basis points. Second big effect is the OCI, the other comprehensive income. And you know that our government bonds portfolio is booked into the hold to collect and sell portfolio, which is therefore the change in the value of the bonds is reflected into the OCI, which is a capital item and not a P&L item.
I remind you that the 10-year yield at the end of June 2022 in Romania were above 9%, whereas they were below 4% a year before. You can imagine the impact on the valuation of this bond portfolio of this increase of yield again more than 700 basis points increase of yield. That created this 650 basis points impact OCI and therefore on our capital position. Of course, we have the dividend that we distributed for the previous year 2019 and 2020 that were distributed in early 2022. Those are the big difference.
Again, coming back to what I said before, this is why the board has proposed to incorporate the profits of the first semester. That will. This again is the explanation of this 216 basis points that you see on the right part of this, on the left part, sorry, of this chart. This is I would say a significant event. But it goes in line with our prudent management of our capital position. What we see is still a lot of volatility on the ten-year yield.
Even though we witnessed in July a bit of a softening, the yield coming back to 8%, we cannot rule out a further increase in yield. I think that it is important that the bank has enough capital for first of all, of course, to comply with the regulatory requirements, but here it's less of the issue, but more to fuel the growth in our portfolio. This is what I wanted to say on this slide. I propose that we move to the conclusion. We had a favorable environment both on the macroeconomics and on the volumes on the market volumes.
However, we see more and more signals of deterioration as Philippe was pointing out earlier. A deterioration which could come, of course, from the prolonged war in Ukraine, from the elevated energy price and high inflation, but also from some sort of imported deterioration, whether it comes from the U.S. or from Western Europe. You know that Romania could be quite affected by lower economics in Western Europe. I think that we need to take into account this possible significant deterioration of the situation in Romania.
The reason why we make sure that we have a sound portfolio, that's the first thing, and I think that Philippe explained that very well. We have a high quality portfolio. We have good provisioning levels. We have also a solid capital position, again, in order to be able to navigate into waters that will probably become more turbulent in the months and quarters to come. Of course, that should not overshadow the good results of this quarter and of this semester on the commercial side, on the financial side.
Of course, the high profitability of the bank when we express it in terms of return on equity at 15.6%.