The drop in return on equity and return on assets versus year-end results is purely attributable to the exceptionally high CPI linked revenues of last year. Looking briefly also to some key performance indicators showing our strength in liquidity, positioning and capital is that in the first quarter, and for the first time, if not ever, for at minimum last 15, 20 years, our Turkish lira loan to Turkish lira deposit ratio dropped below 100% to 93% and our foreign currency loan deposit ratio at 60%. Our provision coverage of 4.8% is double the ratio. Our total provisions of TRY 1 billion remains on balance sheet. Our capital adequacy ratio 16% suggest a well-capitalized level. Now, let me explain the components leading these solid results.
As of the first quarter end, our assets reached one half trillion TRY. In the quarter, even the regulatory requirements led to an out of an ordinary increase in Turkish lira securities. The highest weight in assets remains to be the customer driven, with loan sharing assets of 55%, pointing our core bank. Securities share reached almost 17% due to TRY 40 billion trade security additions booked to meet regulatory requirement. Accordingly, the share of fixed rate in Turkish lira securities went up to 39% from 28%, with rest being CPI linked and FRNs. Note that all the new additions are booked under our held-to-collect portfolio, so to eliminate the value fluctuations affect capital. Total loan growth in quarter was 9%.
10% growth was in Turkish lira loans and 3% growth in foreign currency loans, all to the current attractive spread on export loans. Continuing with Turkish lira loans, this page, slide 8, our performing loans reached TRY 520 billion by end of the quarter. Both the magnitude and the area of lending was shaped in light of the new regulatory framework and closely monitored. Turkish lira loan growth cut pace to 10% in the fourth quarter, in the quarter, sorry, from the mid-teens in prior quarters. Gently higher growth remained in credit cards and consumer loans with 28% and 16% respectively, while business loan growth turned negative on a consolidated basis. In the pie chart you will notice the growing weight of consumer in part, 45% share in before business.
We have a leading position in Turkish lira loans, consumer loans, credit cards, among private banks with market shares of 19 and a half %, 20% and 23.3% respectively. In line with the regulations limiting lending and negatively affecting business loan growth, in business lending, we lost last year's market share gains in 1 quarter and now have 17 and a half % market share. SME loan market share loss, though, was relatively limited and our market share remained above 20%. Moving to the funding. Deposits dominate the funding sources. Both time and demand deposits as well as deposits like Turkish lira bonds issued and merchant payables fund nearly three-quarters of the assets. Demand deposits alone continue funding more than 30% of the assets, despite the more attractive foreign currency protected time deposits scheme rates.
Even though there has been a regulatory-driven increase in the average interest earning assets due to the securities portfolio additions in the quarter, free funds, meaning demand deposits and pre-equity total, still remain very high. Mathematically speaking, now fund 38% of the interest earning assets versus 50% last year. This inorganically lower rate of 38% is still superior and differentiates us. Borrowing share in funding assets has been further reduced down to 6.9%. Total external debt is now 4.4 billion liras. Dollars, sorry. You can see the foreign debt component in the pie chart on the bottom right-hand side. That is the predominantly securitizations and syndications. Against this total debt of $4.4 billion, of which $1.4 billion is due within a year, our total foreign currency liquidity buffer is $5.3 billion.
Still sustaining almost fourfold the short-term need and buffer. The drop in foreign currency liquidity buffer in the quarter versus year-end directly relates to the regulations supporting liraization, which you will clearly see on this slide. Where there has been accelerated growth in Turkish lira deposits in the quarter, supported by these liraization efforts. The drop you see in foreign currency deposits fueled the Turkish lira time deposit growth, or in other words, foreign currency protected TL time deposit gain. There was an extraordinarily high growth of 40% in Turkish lira time deposits in just 1 quarter. Versus 11% growth in Turkish lira demand deposits. This regulations imposed much higher growth in Turkish lira at time, diluted our Turkish lira demand deposits share in total to 22%.
With demand deposits exceeding TRY 125 billion, we still hold the highest Turkish lira demand deposit base among private peers. This differentiating strength manifests itself in our superior margin performance. That's on next page. Our superior core margin generation capability, which is our legacy, remains, unfortunately, the drop in margins was well anticipated, especially from its peak level at end of last year. Core margin drop was a significant 640 basis points, largely due to CPI adjustments. We used 35% inflation estimate in our CPI value calculations in the quarter. The quarter drop in the core margin was well anticipated and guided, given the regulatory price caps on lending and the removal of the deposit price cap on the foreign currency protected deposits.
Core margin drop, on the other hand, was relatively limited, 125 basis points Q-on-Q, from 5.7% in the fourth quarter last year to 4.4%, and it was flat year-on-year. In here, we admit, we will be seeing a lagged effect of deposit costs in the second quarter. First quarter core margin reading of 4.4% includes a limited quarterly average time deposits cost increase of 50 basis points. Also, it will be fair to show the effect of increased funding costs that were in the form of option premium costs offered to foreign currency protected deposit holders booked under the trading line. Adjusted with those costs, quarterly core margin drop was actually, I mean, could have been actually, let me say, 217 basis points, bringing the core margin to 3.1%, which is still a level that is superior in the sector.
Now, moving to the subject of asset quality. The main message here is that we continue to prudently increase provisions. The share of Stage 2 hits 14% level, increased from TRY 107 billion at year-end to TRY 120 billion, mainly with files that are impacted by the devastating earthquakes. Earthquake-related files now make up 10% of Stage 2 and has 8% coverage. Even though this has caused a slight drop in the Stage 2 coverage ratio to 18.4%, the coverages remain very strong, where average foreign currency loan coverage is 28% and SICR portion is actually a very low risk. Of the first quarter 2022 SICR portfolio, only 1% ended up in NPL by end of first quarter 2023. As for the NPLs are on an improving trend, helped also by the low interest rates customers have been enjoying.
The increase seen in the net new NPL in the quarter relates to the temporary booking of one big file that was under the Credit Guarantee Fund program, so it is soon to be recovered. Despite an improving NPL ratio, we continue building provisions. With total provisions exceeding TRY 41 billion, we have the highest provision level in the sector. How this translates into risk costs or provisions, you can see on the slide where net cost of risk ended 80 basis points in the quarter, of which 65 basis points was due to the impact of the earthquakes. Just to remind you and explain you the reason for the quarterly seeming drop in provisions, that has to do with the big bulk set aside in the last quarter post our annual IFRS 9 model recalibration.
Moving to the topic of net fees and commissions. We could more than double our net fees and commissions on an annual basis and grow by 8% on top of last year's high base. TRY 6.6 billion of net fees and commission generation capability in just 1 quarter is owed to the strength in relationship banking and digital empowerment. Main contributors remain money transfer fees, where our number one rank here is a clear representation that customers choose Garanti BBVA as their main bank. Besides the money transfer fees, as well as cash and non-cash fees, contribution to net fees and commission growth remains high. Moving on to the operating expenses. Year-on-year OpEx growth was 127%, of which 9% was due to the currency depreciation that is fully hedged.
Still high annual growth can be explained with low base effects as the multiple salary adjustments we had last year occurred post first quarter. Expect the growth in operating expenses to converge the guided level of 100% by year-end. Quarter-on-quarter growth of 31% includes earthquake-related donations and costs related to relief efforts, as well as SDIF premium increase that typically hits first quarter. Given the operating circumstances in the quarter, cost income ratio at quarter end was 38% and fees coverage of OpEx was 55%. Regarding capital remains strong. Income generated in the first quarter alone could compensate the operational and market and credit risk increases starting in New year.
The drop in the capital adequacy ratio to 15.9% at quarter end relates largely to the dividend payments and regulatory changes that led to increase in risk weight on commercial loans and general purpose loans. We sustain our strong capital buffers. We have TRY 44 billion of excess capital on a consolidated basis and without any forbearance impact. As a secondary buffer, we still hold on to our TRY 8 billion of free provisions. If we were to include free provisions as part of capital, that would take our capital adequacy ratio to 16.5%. On top of this, if we were to include also the BRSA forbearance impact, it would add another 31 basis points, technically carrying our consolidated capital adequacy ratio to 16.8%.
The foreign currency sensitivity on our capital adequacy ratio is that for every 10% depreciation it is 35 basis points negative. This wraps up our financials presentation. Allow me also to inform you on our value creation on the non-financial side as well. One of the highlights marked this quarter is in our announcement of interim decarbonization targets for 2030 to achieve 2050 net zero. We're the first bank from Turkey to do so. Open banking was one of the most important agenda items and like always, we were one of the pioneers. Now we're happy to say we're a hub for other banks accounts. We are, our customers first choice and the numbers clearly support that. With 13.4 million mobile customers, we have the highest digital and mobile customer base.
Diving deeper on our value creation and starting with employee satisfaction, which is crucial in our value creation. Our hybrid working model allows for a healthy work-life balance. We're proud to be included in Bloomberg Gender-Equality Index for seven consecutive years. These contribute to employee satisfaction, resulting in a poll result that was 4.3 out of 5, and that is far above the sector average reflecting on our employee loyalty. Creating sustainable value beyond serving the largest customer base is our goal. Recently launched Ecological Steps helping our customers track their carbon footprint with easy and fun tasks. Gamification is an important tool in taking care of our earth and taking care of our future. In line with responsible banking model, for us, sustainability has moved beyond financing. We have so far mobilized TRY 57 billion in sustainable business.
We also focus on managing the direct impact we have through our community investment programs. As of 2022, our contribution reached TRY 72 million. Along with these, we care about what we shouldn't finance. We have been carbon neutral since 2020, and as you will notice on the next slide, we have been the first Turkish bank to set and announce interim decarbonization targets for 2030 in 4 carbon-intensive sectors: power, automotive, iron and steel, and cement in line with the PACTA methodology. With the targets we set, part of the PACTA, as part of the PACTA methodology, we track our customers' progress in their decarbonization processes and offer them financial support for their investments in new technologies and production methods along the way.
We are proud to say that our efforts on these issues are recognized by various credible international agencies. We're included in 11 sustainability indices. To name a few, for instance, Dow Jones Sustainability Index, we raised our score from 75 to 83, which is the fifth highest in global banking sector. We are qualified for the Global A List in 2022 in the Climate Change program of CDP as the only Turkish bank. CDP, as you may know, is a well-recognized environmental reporting initiative. With all these great results in our financial and non-financial strategic performance indicators, it is no surprise that we rank first in brand power among private peers and rank number one in Net Promoter Score for SME, commercial and mobile banking.
Now, this concludes our presentation, and we leave the floor to you for questions. Thank you for listening.
Hello again for the Q&A session. Just a quick reminder, you can either ask your questions by using Raise Your Hand button or by typing your question into the Q&A area. Once you hear your name, and you are welcome to ask your question. Our first question comes from Waleed. Hello, Waleed.
Hi. Can you hear me?
Yes, please go ahead.
Perfect. Thank you so much for the presentation, thank you for the detailed remarks in terms of highlighting Garanti's strong balance sheet profile. I mean, continuing with that, I wanted to ask two questions which are interlinked. Number one, you know, given that there is expectation around policy normalization during the second half of the year, if you could share to the extent you can, some results from stress tests in terms of how you've, you know, kind of stress tested the balance sheet to different scenarios, whether it's, you know, FX devaluation or, you know, a sharp increase in rates. That will be quite helpful if you can share that.
Secondly, I mean, knowing the profile of Garanti's and how you've actually navigated, you know, previous episodes of economic uncertainty, just wanted to kind of get a sense of the agile management techniques that you would have or deploy as we move into a more normalized or more kind of orthodox policy environment in terms of how you intend to deal with your bond portfolio and risk management. Perhaps linked to that, if you can talk about any potential for risk weight optimization that you can undertake as well. Those would be my questions. Thank you very much.
Okay, Waleed. Thank you. Thank you for joining and asking the question. Firstly, related with the stress tests, and I think this cover the remaining part of your question. The first, interest rates. Our balance sheet is very well prepared for any outcome because our duration gap in TL balance sheet is less than three months. The most important thing is that the correlation between inflation, policy rate, loan rate, and deposit rate has been broken. These rates must have a certain relation among each other. Until that correlation is established again, bank will operate with negative spreads and normalization will take some time. Secondly, exchange rate in Turkey, banks does not carry material currency risk on balance sheets. While banks assets are growing, their foreign currency assets are shrinking. Only high quality foreign currency assets are left.
Therefore, we don't see any NPL risk for the sector due to exchange rates. Thirdly, asset quality. We expect NPL inflow to remain under control as strong economic activity helps real sector's profitability. Retail and wholesale have benefited from the low interest rate environment in the last two years, therefore, cost of risk fairing at low levels. In case of interest rate hike, there will be an adjustment not in 2023, but in 2024. 2024, we may consider normalized net cost of risk level as 125-150 levels. To sum up, what can I say? As proven by our track record, our balance sheet is very well-positioned for any outcome. Second question is related with capital adequacy ratio and interest rate impact on that. interest.
Increasing interest rates affect negatively the valuation of hold to collect and sell portfolio on capital adequacy ratio. Loan rates will also increase if there is an increase in interest rates. As I said, our duration gap is very suitable for adaptation to the new environment. We will start seeing expanding in margins. Of course, lending demand will also cut pace in an increasing interest rate environment. Since there are many moving parts in the balance sheet, it wouldn't be fair to give you a figure as there is no linear correlation. My comment is that our balance sheet is very well-positioned for any outcomes, so we are able to manage our capital adequacy ratio easily in this volatile environment.
Let us take a more moment for any questions on the line. Thank you for waiting. Seems like we have a written question from Mehmet Sebil. He asks, w hat is the current share of CBRT-placed fixed-rate long-term bonds in your total assets? Can you provide capital sensitivities to higher interest rates arising from the security portfolio?
The regulatory-wise, our security portfolio increased about, around TL 50 billion amount. We are able to manage this environment, with these levels. What's in the balance sheets will be the final amount of fixed security. I think this answer is enough. Okay.
Thank you. Our second written question. Sorry. Can you please elaborate on sustainability of much muted deposit cost increase in first quarter?
The deposit cost increase was limited due to two reasons. We met 60% thresholds towards March, and therefore, cost of deposits will come with a lag. Secondly, what you don't see directly under NII is the premium cost paid to customer under FX-protected deposit scheme to support conversion. We transparently presented it in our net interest margin chart. However, I should also underline that this cost did not get fully reflected to the bottom line as we had hedging instrument that could largely offset this premium cost. Thirdly, always, I'm proud of saying that we are able to generate low cost of deposits, compared to the market conditions. Okay.
Thank you. We have a third question. A written question again. What is the biggest risk in the sector?
The risk in the sector, we may talk about three main topics. The first is margin management. The correlation between inflation, policy rate, loan rate, and deposit rate, as I said, has broken. These rates must have a certain relation among each other. Until the correlation is established again, we are gonna be under negative margin pressures. Although the sector's capitalization is strong, this current situation inevitably pressures bank's profit. Again, the profitability. Last year's earnings were supported with extraordinary high CPI increase revenues. This year, due to lower CPI reading and expected core margin suppressions, earnings will be lower. However, in the long run, it will adjust when the correlation among the interest rates are reestablished. We are currently at transition period.
Thirdly, the biggest risk, I think, in the sector for the next three years is cost of acquiring customer. Half of bankable population is already Garanti's customer. The important thing is how to deepen the relations with this customer. Current competition is based on acquiring customers at all cost. The rate of promotions paid to these salary customers in OpEx will increase significantly. Unfortunately, these expenses will not translate into profit for the banks.
Thank you. Seems like we don't have any more questions. This concludes the Q&A session. I now leave the floor to our presenters for closing remarks.
Thank you all for your participation. I would like to once again remember our citizens we have lost in the devastating earthquake. There is still damage that need to be repaired, and we'll heal our wounds together. Start to 2023 was strong, and we achieved strong set of results, demonstrating our resiliency under any circumstances. As Garanti BBVA, we are ready with our strong and healthy balance sheet composition. We will continue to generate high quality and best-in-class earnings in 2023 under any circumstances. Thank you for all, for your supports and trust in us. I wish you all the best.