Of a big NPL from the loan book. Year to date, loan growth has been 4.5%. To remind, TSKB has one of the highest coverage ratio in the sector since 2019, especially regarding this subject loan. At the same time, the NPL ratio went down below 1% further to this development. It is worth to mention that there has been no new employing departure as it was the case for the past four quarters. As a result, Stage 2 and Stage 3 loans corresponding to the 8% of the total gross loans. Our coverage ratio for the whole book stands strong at 3.6%, whereas we have TRY 1.6 billion and TRY 650 million pre-provision stuck in place. Our proven liquidity was further boosted by new engagements during the second quarter again.
These were three new loan agreements totaling approximately $305 million, which has been signed with AIIB, Development Bank of Austria, and European Bank for Reconstruction and Development. The loan teams, as usual, have a sustainability angle, such as climate mitigation, adaptation, transition finance, and inclusiveness. We will be detailing them soon. Our NII generation capacity stayed solid quarter-on-quarter basis, resulting in 5.7% NIM, which already exceeded our year-end guidance. This is driven by our long-term non-deposit funding base and the least sensitivity to Turkish lira interest rates within the banking sector. Also, of course, through the strategically positioned and front-loaded investments in the securities portfolio, as well as the loans via proactive asset liability management.
As a result of our successful efforts, we have delivered one of the highest ROEs in the sector, which is 31.3%, which is adjusted with non-recurring revenue items such as the one that I just shared, the NPL. Otherwise, our ROE would have been calculated as nearly 36%. To note, pre-provision stock is considered to be reversed gradually in the coming quarters and supports our sustainable earnings performance. Another important achievement of the quarter was the realization of our very first equity investment under the Türkiye Green Fund, basically, to a wind turbine manufacturing company, Ateş Çelik. To remind, we realized the first investment of this fund, the first private equity capital in Turkey and in the world, with a focus on emission reduction and inclusive transformation. We will be detailing it soon again.
Last but not least, our comfortable solvency buffers enable us to stick to our growth strategy and meet our targets as well. CAR, which is supported by our internal capital generation capacity, continues to stay well above the regulatory and sector levels as visible on the slide. On this slide, you could see the first half results, sorry, versus the year-end guidances we have announced at the beginning of the year. We are glad to see that profitability and asset quality metrics have already overbeaten the year-end guidances. In line with our mission and long-term ESG targets, we continue to support Turkish economy, focusing on sustainable development. The fully collected big ticket loan and the redemptions were adjusted. The total first half real growth, FX-adjusted growth, is around 4.5%, indicating that we are on track with our year-end guidance.
We are confident that the bank will meet its loan growth target, taking into consideration the pipeline investment projects that has been already approved at the committee level and also the sufficient liquidity going forward. When excluding the impact of the large ticket NPL collection, our FX-adjusted loan growth would have been around 5.3%. The strategic diverse focus and the limited impact from regulations continue to differentiate the bank in the second quarter too. The NII generation was quite robust and NIM stayed flat quarter-on-quarter at 5.7%, driven by our successful ALM policies and management. On the fee and commission income, lackluster market conditions persisted, resulting in reduced corporate finance fees. On the other hand, advisory and non-cash areas continue to actively contribute to our banking income. 45% of contraction on a year-on-year basis was also driven by the high base impact of the last year's overperformance.
Therefore, we may likely to see a downside risk compared to our annual targets. As far as fee generation is concerned, we would like to remind that and highlight that we do not have any retail banking-related channel. Instead, we are strategically partnering with our stakeholders on a project basis to generate more development focus and also the fee income. Our distinguished and efficient business model, which enabled us to deliver this level of ROE, continue to differentiate us from the sector. This strong earnings performance is mainly driven by consistently solid NII generation. The free provision stuck in place will support this stellar performance going forward. Celebrating our 75th year, there has been one-off items, mainly HR-related ones, as well as some other costs, lifting our OpEx by nearly 60% on a year-on-year basis.
The year-end growth figure can exceed our projections due to a wage adjustment in the second half of the year. Our cost-to-income ratio is at 16.2% currently and being still the lowest one in the sector. Further to our strong internal capital generation again, TSKB continues to sustain its superior position among the sectors. Despite the loan growth and Turkish lira depreciation during the first half, our capital was steadily around levels of 20.3% and level of Tier 1 was hovering around 19.2% with the first half results and excluding the BRSA's temporary measures. On a quarterly basis, the figures were flat. Our buffers are sufficiently comfortable to support our growth projections. And regarding any potential legislation changes, which could be in line with international regulations. Bank's strong collection performance continued during the quarter.
As a result, the NPL ratio was down to 0.9% and Stage 2+ NPL ratio went down to 8%. Given our strong profitability, we also choose to some of our coverage ratios for problematic loans increase the coverage ratios for problematic loans irrespective of any deterioration. Consequently, our net core, excluding the currency impact in the same period, was calculated as -81 basis points, indicating already a downside potential in a positive way, in our net cost of risk targets. On the next page, we will be discussing our decoupling stellar earning performance, which is visible already. Posting TRY 3.4 billion of quarterly net income with 9% increase. The yearly earnings growth on a cumulative basis has reached to a level of 47%. To remind, TRY 400 million of pre-provisions were reversed during the first quarter. There was no change throughout the second quarter.
As a result, the total outstanding pre-provision stock is remaining at the level of TRY 1,650 million to support our earnings performance. With this earnings quality, the bank delivered 31.3% of ROE, which is again, to reiterate, adjusted for all non-recurring income items, including the one coming from our large ticket NPL collections in both this and the previous quarter. To note, including the impact of the pre-provision stock, our return on equity will reach approximately 35%. On the next page, I would like to go into more detail, item by item, the P&L table. Bank's NII continued to expand marking a surge of 32% on a year-on-year and 22% on a quarter-on-quarter basis.
When adjusted with the CPI link increase income, the yearly increase was 6% owing to the declining trend in the CPI-linked income and the reasons of the continuity in the top line generations are as follows. We have maintained our solid loan spreads steady during the quarter and generate FX accruals front-loaded basis. Leverage our security investments in a timely and front-loaded manner as well, which has been already feeding the NIIs. Compared to previous quarters, swap costs were down by 33%, also with the downsized swap portfolio. Trading line showed a 10% uplift during the quarter. To remind, we are not long in FX and carry a position to hedge 100% of the FX loan provisions. Quarterly fees and commissions growth was 28% with the contribution of advisory and non-cash business, again in line with the targets.
In addition to the muted market conditions though, high base impact of the previous year is also in place as discussed. Eye-catching quarterly other income mainly attributable to a large ticket loan collection. That was also, as you know, almost 100% covered. This loan was classified as NPL in year 2018 due to the problems between its shareholders. Following the sale of the project, which was already in operation, the full amount was collected. This line also includes relatively lower collections from other NPLs. To remind, we had another significant amount of NPL collection in the previous quarter with the exit of, again, one large ticket NPL. To continue with the OpEx, it went up by 59% by a year-on-year basis and 33% on a quarterly basis. The one-off within the quarter was related to our 75th year celebrations and largely accounting for HR costs.
For the rest of the year, taking the July wage adjustment into consideration, the OpEx growth is not likely to be easing down materially. Following the last three consecutive years increase, net banking income continues to expand by 53% on a year-on-year and 34% on a quarter-on-quarter basis. When we eliminate the one-off items and compare the last two quarters only, the quality of the net banking income evaluation is already different. Given our strong profitability, we have increased the coverage ratios of some Stage 2 and 3 loans in the book irrespective of any deterioration or increase in the risk at all. As a result, provision costs went up by 92%, on a year-on-year basis and 556% on a quarter-on-quarter basis. With 3.6%, our coverage ratio is among the highest ones in line with the bank's prudent stance.
Our income from participation also continued to be a strong contributor to the revenues. The yearly growth was 28%, whereas it was 52% on a quarterly basis. The main components of this item came from TSKB Real Estate Valuation gains and İş Girişim Sermayesi, which was due to the valuation of a new investment of the company. As a result, TSKB posted a net income of TRY 3.4 billion, which is up by 47% on a yearly basis and 9% on a quarterly basis. Once again, we maintained strong profit generation with a strong expansion in the top line as well as one of aforementioned contributions. This slide actually shows our long-term and well-diversified funding structure and robust fixed liquidity.
In line with our business model and policy role, DFI funding remained to be the main source within the bank's funding base, accounting for nearly 60% of our liabilities as of the second quarter. Of which 80% is guaranteed by the Ministry of Treasury and Finance. As of the second quarter, approximately $822 million worth of non-withdrawn DFI funding is available in climate and environment and earthquake-related green and inclusive recovery teams. Please note that almost 100% of non-withdrawn DFI funding is under the guarantee of Turkish Treasury. With the disbursement of these funds, guaranteed DFI funding share again increased about 15% during the year. TSKB's value-building engagements within the DFI space have continued to expand with the inclusion of new DFI counterparty and creation of new funding teams, financing teams with both in existing and new DFIs.
In this quarter, we signed three new DFI loan agreements amounting to circa EUR 320 million, consisting of a EUR 200 million loan agreements with AIIB under lots of guarantee, which will support private sector investments in renewable energy efficiency, climate adaptation industries, climate industries, as well as digital infrastructure. The latter one is to be one of the new teams that we are engaged with, and those will also combat with the climate change. Another loan agreement was signed with EBRD amounting to EUR 75 million to support inclusive business to provide not only to women but also young people. This youth unemployment has also been the new team as we engage this year as a financing team. This project expands the partnership between EBRD and TSKB beyond the green financing as well.
Last but not least, the signings with the Development Bank of Austria, which will be used to finance renewable energy and energy efficiency investments. This has been the fourth credit line we have signed with Development Bank of Austria since 2014. Our strong liquidity position is also very reflected by the fixed coverage ratio. It is hovering around nearly 400% as of the second quarter end. In addition to our DFI borrowings, as we are blending these funds with the markets funds as well, we actively use our strong capacity to access international funding from both local FIs and international capital markets. To remind, during the last week of June, having seen the opportunity window, we successfully executed an intraday $350 million worth of senior Eurobond issuance. The maturity has written as five years, and the issuance actually attracted strong demand from a well-diversified group of qualified investors.
We have achieved a 50 basis points of a pricing improve, and that has been also indicating a long new issue premium. To continue, we would like to also state that we have renewed our syndication facility during this week with a 120% of renewable rate with the support of several correspondent banks and the involvement of 16 banks from 11 different countries, and we had also three newcomer names. Moreover, for the very first time, the bank launched the two-year tranche and successfully banked in the center of its syndication loan as well. To continue with the asset composition, the total assets as of the second quarter have reached over TRY 287.5 billion, showing a growth of nearly 11% since the first quarter and nearly 40% on a year-on-year basis.
The assets mainly consist of loans in line with our business model and with a share of 72%, while strategically managed securities portfolio constitutes the next significant portion at 17%. Consistent with our growth targets for this year, total loans have expanded to TRY 206.4 billion, reflecting a fixed adjusted growth rate of 4.5%. The currency breakdown of our loan portfolio, as you know, is primarily in FX with 94%, and the Turkish lira comprising just 6% of the portfolio. This brings up the equation where TSKB is less sensitive to higher Turkish lira funding rates. In terms of the currency composition of the loans, the preference of euro-denominated loans has continued this quarter, with their share lifting to approximately nearly 51% from 46.5%. Investment loans constitute the largest portion as being the development bank and representing nearly 77% of the total loan.
Accordingly, the bank's loan growth targets were not affected from the FX loan cap and some other relevant temporary regulations. This was also in relation to funding these investments with DFIs and also funding these transactions under the state guarantees securing from the DFIs. To remind, we do not carry maturity mismatch, and the average maturity of these loans stands at circa five years, as you know, whereas that of the liabilities is around 11 years. Now we will continue with the details of our loan book. During the second part of the year, we have maintained our strategic focus and continued the development focus and impact creation focus in our lending activities, too. As such, the cash loans allocation surpassed $1.1 billion in the first six months, which already proves our $2 billion target is even more achievable.
With non-cash loans taken into consideration, the bank's support to Turkey's economy was realized to be more than $2 billion during the first half. In line with our targets, the SDG-linked loans continued to account for 93% of the total loan portfolio, with schemes such as reconstruction of earthquake-affected regions, renewables, enabling technology projects, efficiency projects, manufacturing capacity-increasing investments, and also port investments. TSKB, being the bank of many firsts, has built an expertise basically in assessing and appraising projects in various sectors. Thanks to the collaborations with its stakeholders, this capacity has been reflected on creating new funding schemes and financing innovative projects. One of them was the first transition loan on lend to a cement company during the first quarter. Another first was the loan we disbursed to the agriculture company with an amount of EUR 80 million for modern geothermal greenhouse investments.
This project also enables capacity to access sustainable and safe food systems while also supporting women empowerment. All in all, in the outstanding loan portfolio, electricity generation loans continue to have the highest share by almost 29%, of which 94% is renewable energy loans. Projects under the theme of green recovery of earthquake-affected regions, hybrids renewables and also prosumer investments, as well as the distributed solar power plant projects are followed under their own sectors such as metal and machinery, chemical and plastics, and also to produce the electricity for their internal energy needs and efficiency purposes. On the next slide, we would like to elaborate the further strengthened position and already resilient and well-performing loan book. During the quarter, there have been a couple of loans belonging to a group but transferred to Stage 2 loans.
On the other hand, there has been no new NPL inflow as it has been the case since the very first quarter of last year. Moreover, one large ticket NPL, which was operational and classified as a problematic loan due to shareholder disputes seven years ago, was sold and fully repaid and consequently withdrawn from the portfolio. From this collection, TRY 1.3 billion was written under other income. Given strong collections, the NPL declined in the last quarter as there is 70 basis points impact from collections and 10 basis points impact from loan growth positively. We would like to note that there has been no write-downs or NPL sales to date. In addition to this important positive development, there has been an outflow from Stage 2 to healthy loans. Besides, there was only one single file transferred to Stage 2.
All Stage 2 and 3 loans are operational projects belonging to large corporates, and each have their own peculiarities, as you know. To remind, 89% of Stage 2 loans are restructured. The weight of restructured loans between Stage 2 and 3 is nearly 90%. In addition, our size also enables us to monitor these loans very closely and to conduct periodic and ad hoc also analysis. Without compromising our prudent approach, given the bank's strong profitability and irrespective of any deterioration, we elevated the coverage ratio of some of the problematic loans. Accordingly, total loan coverage ratio was realized at 3.6% as of the second quarter, which is still above peers. Owing to differentiating loan portfolio composition and positive normalization, TSKB's currency-adjusted net cost of risk was recorded as - 81 basis points by the quarter end.
For the rest of the year, we do not expect a material inflow to problematic loans. Therefore, our year-end guidance for NPR ratio and net cost of risk indicates a downward potential for the sake of positive development. Briefly highlighting the quarters, again, continuation of declining trend in NPR ratio with the sizable collections and zero new inflows nearly. Stage 2 and Stage 3 loans having a share below 8% and maintaining sector high coverage ratio, thanks to the sustained profitability too. Now you can see our security portfolio in more detail. In the first half of the year, the share of securities book was nearly 17% of the total assets. As we shared in the previous quarter, we have strategically changed the composition with the bank's approach to invest in high-yielding fixed and Turkish lira-reference index-floating securities and also floating rate notes.
In the second quarter, we have continued to invest in fixed-rate high-yielding securities too. Accordingly, the share of CPI linkers are on a very declining trend, also with the maturing ones. The front-loaded portfolio reallocation, together with the Central Bank of the Republic of Türkiye's rate cut cycle, is expected to support our net interest margin and partially offset the declining contribution from CPI linkers in the upcoming periods too. As of the end of the second quarter, share of Turkish lira securities in the total portfolio has remained to be above 50%. The sale of total securities has reached to, including the Eurobonds, a level of TRY 48.5 billion, from TRY 47.4 billion figure by the end of the first quarter. To remind, in the previous quarter, with a front-loaded manner, we made significant amount of investment targeted for this year.
On top of that, in the second quarter, we continued our investments to high-yield securities, as discussed, the amount to be more than TRY 1 billion with the fixed-rate sovereigns. This strategy will pay off going forward to support our NIM. For the rest of the year, we will continue to closely monitor again the markets and strategically position ourselves regarding our securities book and also the money market transactions. On the next slide, during the second quarter, we continued to maintain the highest net interest margin performance in the sector. Bank's core NIM continued to widen as an outcome of our front-loaded loan growth with robust spreads, FX loan accruals, and also high collection performance. Last but not the least, leveraged securities portfolio investments with a strategic shift in the composition, as discussed.
The NII, excluding CPI, was up by 16%, which has been on an increasing trend on a quarter-on-quarter basis since last year. On top of that, TRY 2.8 billion of CPI linkers was matured in the second quarter. As a result of which, part of the CPI linker income picked up and reached a level of TRY 813 million. Bank's core NIM increased to 4.6%, and the CPI linker's impact came to a level of 1.1%, almost to steadiness. Keeping the annualized NIM figure at 5.7%, which is well above our guided figure as within this assessment. Given our investment bond focus and multiple guaranteed borrowing, we are nearly immune to regulatory changes and have not been affected materially from the regulatory changes, which resulted in the strong NII, also thanks to our core business activity.
As a result, our NIM indicates an upside potential versus our year-end guidance of 5%. Next slide is on the bank's capital indicators, which are quite superior relative to the sector balances and well above the regulatory requirements. During the first half of the year, the bank's capital ratios remained well above sector average. This also reflected the continued resilience despite quarterly volatilities. While risk-weighted assets expanded, the simultaneous increase on the core equity supported the preservation of capital adequacy ratio. The driver behind the solid performance in CAR is strong net profit generation. Needless to mention. Even excluding the temporary regulatory forbearance measures introduced by the BRSA, the bank maintains a robust capital structure and a well-capitalized balance sheet.
As a reminder, the bank holds TRY 1.65 billion in pre-provisions and when adjusted for this amount, both Tier 1 and total CAR would have been increasing by an additional 60 basis points. In summary, we have been continuing to execute our real growth strategy in line with our guidance for this year, having a clear focus on capital efficiency, risk-adjusted returns, and with a strategically positioned balance sheet management. Looking ahead, the expansion in our fixed loan and the front-loaded investments in the securities portfolio are expected to further support profitability, allowing us to close the year in line with our projections. Last but not least, we would like to conclude our presentation for today with an update on sustainability agenda of the bank.
In the second quarter, we have organized the second development day, a significant event for us, which is bringing together over 600 stakeholders, including academia and business. The conference themes, enhancing potential growth through triple transformation, focused on the critical intersection of green, digital, and social transformations. This event reinforces TSKB's strong commitment to Turkey's inclusive and sustainable development. To remind again, the Türkiye Green Fund, the first green private capital fund of its kind globally established through credit financing, has been made its inaugural investment. The financing is guaranteed from IBRD by the Ministry of Treasury and Finance.
The fund's first partner is Ateş Çelik, a leading domestic company specializing in renewable energy equipment manufacturing, reinforcing our focus on green and greening investment as well as inclusive transformation. As of the second quarter, our climate and environment-focused SDG-linked loan disbursements have reached $1.2 billion, positioning us to achieve $4 billion target for 2030.
Climate and environment-focused SDGs linked loan stands as 58.4% against the target of 60% by the end of 2030. Furthermore, our SDG-linked loan disbursements totaled $6.1 million with a, again, 2030 target of $10 million. Our earthquake recovery loan disbursements also reached $525 million, which represents nearly 90% of our $600 million target of 2026. As you know, we are consistently monitoring our KPIs and targets here, and we are renewing those targets when the time comes for that one. That being said, we will continue to support the sustainable and inclusive development of Turkey going forward and in alignment with the national policies and newly implemented laws and regulations. That being said, we would like to thank you for listening to us.
Thank you, Murathan. This concludes our presentation. We will now start our Q&A session. If you wish to ask a question, please click on the Raise Hand icon, or you may submit your questions by using the chat box.
Hello again. We received three questions from two counterparties. One from Özgür Gökçek. First question is about our loan growth, especially taking into consideration Central Bank easing cycles. Well, first of all, as more than 90% of our loan portfolio is attributable to FX loans and mainly investment loans, the Central Bank easing cycle does not actually affect our either loan growth strategy or the pipeline and the existing financials. The other question is about the availability and terms of funding from DFIs. Does it change over time? Well, as we mentioned, all our borrowing activities have been continuing on track. We mentioned three new DFI engagements within this quarter. We had one new OPEC Fund engagement in the previous quarter and ongoing negotiations both with existing and new potential DFIs for this year and the next.
Also, we have access to international capital markets like issues in Eurobond or PIPEs, which we did very recently, and very successful overall syndications loan. So funding operations are going on track. The other question was about the credit provision. I noticed that no credit provisions were reversed in the second quarter. That is true. We did not reverse any credit provisions within this quarter, and the existing stock is TRY 1,650 million . As we indicated in the presentation, we are planning to reverse the existing stock going forward. Another question we received was from Mustafa Kemal Ezgi. One was about the provision stock, we already answered. The other question was about net fees and commissions. Is there a chance it will get worse?
Well, as we indicated, there might be a downside potential there, but we have an existing mandate, so we are expecting a recovery. Hopefully, it also depends on the market conditions. In terms of the other question, the cost of risk, is there an upside? Yes, our asset quality metric has been improving. We had one NPL collection in the first quarter, a difficult one, and another NPL collection in the second quarter, and the ratio dropped below 1% level. So yes, there is a potential that cost of risk will be below 50 basis points by year-end. We have one more question from Emre Koçak. Considering TSKB's strong M&A sustainability, do you plan to expand your advisory services to include dedicated sustainability consultancy? Do you see this as a potential lever to enhance long-term profitability and value creation?
Well, we have a 100% owned subsidiary called Escarus focused on sustainability consultancy activities for more than a decade. We have seen that the contribution from the company is increasing and the presence within Türkiye and also outside of Türkiye has been increasing. So yes, in our long-term and even midterm strategy, we are planning to increase the contribution from our sustainability consultancy activities, which is our focus, too.
If you wish to ask a question, please click on the Raise Hand icon, or you may submit your questions by using the chat box. We have no further questions. This concludes our webcast. If you have any further questions or require additional information, please do not hesitate to contact our investor relations team. Thank you once again for your time and participation. We wish you all a pleasant evening.