Thanks operator and good morning everyone. I'm going to take you through the earnings presentation which is available on our website. Please refer to the disclaimer at the back of the presentation. Starting on page one, we are off to a good start this year with net income of $6.4 billion, EPS of $1.65, and the return on tangible common equity of 13% on revenue of $25.6 billion with the continuing momentum from last year driving strong performance across all of our businesses. Highlights for the quarter include average core loan growth of 9% year-on-year, reflecting growth trends across products; continued double-digit consumer deposit growth; strong card sales, up 15%; and Merchant volume up 11%. In addition, we achieved a number of records across our businesses, most notably net income and IB fees for a first quarter in the CIB; net income and revenue for the commercial bank; and asset under management and banking balances in asset and wealth management. Overall, the credit environment remained benign. In consumer, there were no reserve actions taken across our core portfolios while in wholesale we had a net reserve release of about $90 million driven by energy, resulting in net releases in both the CIB and the commercial bank. We see no significant items here on the page, but there are a few notable items in our results that I will highlight here too.
The first is the tax benefit, a bit less than $400 million and the benefit relates to the difference in stock price between vesting date and grant date for our employee equity award. And while such an adjustment is business as usual, the recent appreciation in our stock price has caused the benefit to be outside this quarter with the largest impact occurring to CIB and to a lesser extent asset and wealth management. Second is a write-down of our student loan portfolio of approximately $160 million after tax as we move these loans to held-for-sale and explore alternatives to that portfolio. And last is Firm-wide legal expense of around $140 million after tax relating to a number of matters across businesses, some positive and negative, and with the most significant impact being in the AWM business. Moving on to page 2 and some more detail about the first quarter.
Revenues of $25.6 billion was up $1.5 billion or 6% year-on-year with the increase evenly split between net interest income and non-interest revenue. NII reflected the impact of higher rates and continued growth, and NII reflected higher CIB revenues, partially offset by card acquisition cost and lower MSR risk management. Adjusted expense of $14.8 billion was up 7% year-on-year, mainly driven by higher compensation on increased revenue and higher auto lease depreciation. In addition, the combination of the impact of the FDIC surcharge as well as a foundation contribution this quarter accounted to nearly $200 million of the year-on-year expense change. Adjusted for the student lending write-down I just mentioned, credit cost of $1.1 billion will be down approximately $700 million year-on-year as higher charge-offs in card were offset by a wholesale net reserve release this quarter versus a sizeable build in the prior year.
Moving to balance sheet and capital on page 3. We ended the quarter with both standardized and advanced fully phased-in CET1 of 12.4%, in line with our expectations and overall driven by net capital generation. We continue to manage our balance sheet with discipline. Total assets returned to above $2.5 trillion, reflecting the continuation of strong deposit growth as well as our trading balance is normalizing from very low levels at the end of the year. From a liquidity perspective, HQLA was flat at year-end and the Firm remained compliant with all liquidity requirements.
We continued to grow tangible book value per share while returning $4.6 billion of net capital to shareholders in the first quarter, which included $2.8 billion of net repurchase and common dividend of $0.50. And this $4.6 billion compares to $3.8 billion returned last quarter.
As you know, we recently submitted the 2017 CCAR capital plan to Federal Reserve. And as you'd expect, we have no feedback to give you for now. Moving on to page four, and the consumer and community bank. CCB generated $2 billion of net income and ROE 15%. Core loans were up 11% with strength across products. Mortgage was up 15%, card up 9%, business banking up 9% and auto loans and leases up 12%.
Deposit growth continued to outperform industry, up 11% with about half of deposit growth from existing customers as we continue to deepen relationship. We continued to see very strong growth metrics in card for the quarter with sales up 15% and new account originations up 9%. Merchant processing volumes were up 11% year-on-year and active mobile customers up 14%. Revenue of $11 billion was down modestly; consumer and business banking revenue was up 8% on strong deposit growth and we are starting to see the long-awaited improvement in deposit margins. Mortgage revenue was down 18%, driven by lower net servicing revenue, reflecting lower MSR risk management as well as portfolio run-off. And card, commerce solutions and auto revenue was down 3% driven by continued investment in card new account acquisitions that will provide long-term value. It was predominantly offset by net interest income on higher loan balances as well as higher auto lease income. Expense of $6.4 billion was up 5% year-on-year on auto lease depreciation and continued business growth. Finally, the credit trend in our core portfolio remained favorable. Net charge-off increased year-on-year, primarily driven by a $470 million write-down of our student loan portfolio, against which we released $250 million of reserve and card charge-offs were up in line with expectations and in line with guidance. Moving to mortgage and auto credit, our portfolio is continues to perform very well. Now turning to page five and the corporate and investment bank.
CIB delivered a strong result with reported ROE of 18% and net income of $3.2 billion. But remember, a significant portion of the tax benefit on the stock update is reflected in these results. Revenue of $9.5 billion was up 17% year-on-year and IB fees of $1.8 billion were up 37%, partly due to a weak first quarter last year, but also given strong absolute performance this year. In banking, IB revenue was up 34%, driven by higher overall issuance, especially in ECM including a strong IPO market. Remember, the first quarter of 2016 was particularly strong in M&A and weak in DCM for us. And this quarter, they are normalized. Overall, we gained share and ranked number one in global IB fees and number one in North America and EMEA. Looking forward sentiment is positive, market remains broadly constructive; and across products, we expect decent deal flow and the pipeline healthy.
Treasury services revenue of $981 million was up 11% year-on-year, driven by higher rates and operating deposit growth. Lending revenue of $389 million was up 29% year-on-year on higher gains on securities received from restructurings. Moving onto markets and investor services. Markets revenue of $5.8 billion, was up 13%. At the Investor Day, the market was characterized by low volatility and subdued client activity, leading us to be somewhat cautious. March ended up being stronger than expected, reflecting some recovery in volatility, but also clients responding more to market themes including European elections and to a lesser degree stronger U.S. rates outlook. Fixed income revenue was up 17% with credit and securitized products as key drivers on stronger client activity and significant spread tightening broadly. Rates was also solidly up as the market reacted to central bank actions and we saw a pick-up of flows in EMEA.
We had a decent quarter in equity with revenue up 2% year-on-year in somewhat quiet market broadly with corporate derivatives and prime being brighter spots. Securities services revenue was $916 million, in line with guidance. And finally, expense of $5.1 billion was up 7%, driven by higher performance based compensation, and the comps to revenue ratio for the quarter was 29%. Moving on to page six, and commercial banking. Another excellent quarter in commercial banking, with the 15% ROE, revenue grew 12% year-on-year due to higher deposit, NII and continued loan growth, as well as a strong IB revenue up 34%, making this the third consecutive quarter of IB revenues of over $600 million. Expense of $825 million was impacted by a $29 million impairment on leased assets. Excluding this, we saw expense increase slightly of our guidance as we made great progress on the pace of investment which will continue to drive strong top-line growth. Looking forward, we expect our underlying expense trends be relatively flat. Loan balances of $191 billion were up 12% over the prior year. Consistent with the industry broadly, we have seen a slowdown in C&I growth with our loan balances remaining relatively flat sequentially, although up 8% year-on-year. There are a number of factors likely contributing including potential noise in the data from large acquisitions in prior periods and a resurgence in capital markets activity, particularly in DCM including high yield. So, not to dismiss the importance of the trends, we do need to weigh all the facts and against that other macro indicators remain supportive of the economy broadly including CapEx, data and surveys, as well as very high levels of business optimism, all of which should be supportive of solid demand for credit over time. In commercial real estate, we saw sequential growth of 3%, slightly ahead of the industry but below the pace of prior quarters, impacted both by higher rate, as well as a prudent approach to new originations given where we are in the cycle and maintaining discipline on risk adjusted returns.
Credit performance remains strong with a net recovery of 2 basis points reflecting continued stability in both our C&I and CRE portfolios, and overall, a net release loan of loss reserves driven by energy. Leaving the commercial bank and moving on to asset and wealth management on page seven. Asset and wealth management reported net income of $385 million with pretax margin and ROE each of 16%. Revenue of $3.1 billion was up $3.1 billion was up 4% year-on-year driven primarily by higher market levels and strong banking results on higher deposit NII. Recall that last year's first quarter included a one-time $150 million gain on the sale of an asset. Expense of $2.6 billion was up 24% year-on-year, predominantly driven by higher legal expense. I want to emphasize that the underlying core business results remain very strong, in fact in line with the strongest performance of the business ever. This quarter we saw net long-term inflows of $8 billion with strength in fixed income and multi-assets being partially offset by outflows in equity. Assets under management of $1.8 trillion and overall client assets of $2.5 trillion were both up 10% year-on-year, reflecting higher market levels and net inflows into both liquidity and long-term products. Finally, banking balances continue to be strong with loan and deposit up 7% and 5% respectively. Moving onto page eight and corporate. Corporate generated $35 million of net income for the quarter. Treasury and CIO's results improved in part reflecting the benefit of high rates. And other corporate benefitted from the release of certain legal reserves. Finally, turn to page nine and the outlook.
With the addition of the March rate hike, we've updated our NII scenarios as follows: Rate flat from here for the full year NII will be up around $4 billion. Based on the implied, NII will be up by around $4.5 billion. And of course the Fed dots would imply the possibility of three rate hikes this year, which is not fully phased in. So, expect second quarter NII to be up sequentially, approximately $400 million, consistent with what we saw this quarter. To wrap up, these results reflect strength broadly across our businesses. We remain well positioned to benefit from client flows and a healthy economy as we serve our clients and communities, and we look forward to continuing to grow our business. With that, operator, you can open up the lines for Q&A. Operator?