Thank you operator and good morning everyone. And just to let you know that Jamie is actually on the ride with clients today, so he's not able to join us this morning, but sends his regards. So, now 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, the firm reported net income of $8.7 billion, EPS of $2.37, and a return on tangible common equity of 19% on revenue of $28.5 billion, benefiting from broad based strength in performance, but also lower taxes and seasonality. So, this quarter's performance in context, on a core basis pretax earnings grew 13% year-on-year, benefiting from higher rate, solid growth across other revenue drivers, and continued investments in our businesses. And even excluding the benefit of tax reform, net income was a clear record this quarter. Included in the results, you see on the page, approximately $500 million of mark-to-market gains on certain investments previously held at cost due the adoption of a new accounting standard. These gains are reported in CIB markets revenue. Against that, there were a number of other smaller, but nevertheless notable items, including changes in credit reserve, SBA, investment securities, and private equity losses and legal, which together substantially offset those gains. Underlined results continue to be strong. Average core loan growth excluding the CIB of 8% year-on-year, Card sales and merchant processing volumes up 12% and 15% respective. We maintained our number one rank in global IB fees and have net income of $1 billion in the Commercial Bank. And in Asset & Wealth Management, we saw strong long-term flows [ph] across all regions and 10% AUM growth.
Turning to page two, some more details about the first quarter results. So, before we get into the numbers on the performance drivers for the quarter, I do want to remind you that there have been a couple of adjustments to the numbers on the page which are in line with the guidance that we gave during the fourth quarter. First, seeing the impact of the new revenue recognition standard.
You will recall, this will have the full year impact of grossing up non-interest revenue and expense each by approximately $1.2 billion. The impact for the quarter of about $300 million is included here and prior periods have been similarly restated. Second, as a result of tax reform, certain tax equivalent adjustments that are included in managed revenue are lower on a relative basis and for that prior periods have not being restated. This impact which was also about $300 million for the quarter, reduced revenues, was split about 50/50 in NII versus NIR, an offset in tax expense.
So, with that, revenue of $28.5 billion was up $2.7 billion or 10% year-on-year. Net interest income was up $1.1 billion, mainly reflecting the impact of higher rates. Non-interest revenue was up $1.6 billion year-on-year and while it includes the mark-to-market gains on the first page, it also includes approximately $400 million of losses on investment securities and legacy private equity investments. Adjusted expense of $16 billion was up 6% year-on-year, reflecting higher compensation expense as well as business growth including Auto lease depreciation. Credit cost of $1.2 billion were down $150 million year-on-year.
Consumer charge offs were in line with expectations and guidance and there were no changes to reserves this quarter. In wholesale, we had a net reserve release of about $170 million driven by single Oil & Gas names. You'll see that our effective tax rate for the quarter ended a little above 18% compared to the 17% guidance we gave, driven by a combination of higher pretax earnings as well as geographical mix. We're expecting full year effective tax rate to be closer to 20%.
Shifting to balance sheet and capital on page three. We ended the first quarter with CET1 of 11.8%, down about 30 basis points versus last quarter. Capital generated was offset by net capital distributions and changes in AOCI. So, the reduction was driven by higher risk weighted assets reflecting the increased level of market activity, which similarly impacted all other ratios. In the quarter, the firm distributed $6.7 billion of capital to shareholders and last week, we submitted our 2018 CCAR Capital Plan to the Federal Reserve. But as you know, we can't provide any details of that at this stage. So, before moving on to the lines of business, on page four, I'll briefly address this week's new capital news. Two new capital NPRs were released this week, the Stress Capital Buffer and eSLR.
Starting with the Stress Capital Buffer, the proposal was broadly in line with a narrative and expectations that had been set. There is a comment period, we intend to fully participate in the process and are encouraged that there is an openness from current leadership to really consider feedback from the industry. On the positive side, we support the convergence of Stress and BAU capital and in general, support simplification of the framework. We believe that firm should be required to hold adequate capital to withstand severe stress, calibrated to firm's specific exposures and risks. We also agree that many of the changes to the construct of the test, for example, not having to hold capital for full distributions during a stress environment, better reflect reality, and Board-approved policies. That said, stepping right back, if we are fundamentally reconsidering the contrast of minimum capital levels, then all of the building blocks should be in play including the GSIB surcharge to ensure they all hang together. And to reinforce points that we previously made, first and foremost, the fixed coefficients need to be recalibrated in light of the economic growth we've had. Second, the underlying premise for the surcharge and more particularly, U.S. gold plating is somewhat unnecessary for a firm that is compliant with all of the post-crisis reform that directly addresses systemic risks, which includes the severity of the CCAR stress, incorporating material GSIB specific instructions. Beyond that, obvious challenges with the current proposal includes the significant volatility and opacity in the said results, as well as challenges around implementation.
So, getting to the numbers, you can see on the page, our estimated historical Stress Capital Buffer derived from the said result. And while for 2017, it would imply no impact on our minimum capital levels, you can see that in years prior, the buffer would have been higher. And you know that in 2018, the scenario was in many ways more severe and the lower tax rate has a net negative bias. Further there will potentially be a need for larger management buffers if it is necessary to accommodate significant volatility. So, acknowledging everything that we don't know, it's fair to say that our minimum level of capital including a management buffer would likely be higher under this proposal, but likely still in the range of 11% to 12%. Briefly on eSLR, as you know, we are not currently bound by leverage. I'm trying to say to you this proposal would reduce the eSLR minimum.
So, my primary comment on this is to reiterate my earlier comments about the need to be willing to reexamine the GSIB surcharge regardless of the fact that it reduces the number. Overall, we've been waiting for these proposals and we look forward to participating in the comment process.
Moving to page five and let's start with Consumer & Community Banking. CCB generated $3.3 billion of net income and an ROE of 25%. Core loans are up 8% year-on-year, driven by Home Lending up 13%, Business Banking up 7%, Card up 5%, and Auto loans and leases up 6%. Deposits grew solidly at 6% year-on-year. We believe we continue to outpace the industry, which as we previously noted, is experiencing a slowdown as consumers are increasing their allocations to investments, but also based upon our data, they appear to be spending more, reflecting a continued high level of confidence. Client investment assets were up 13% year-on-year with half of the growth from net new money flows and with record flows this quarter. And active mobile users were up double-digit. Revenue of $12.6 billion was up 15% year-on-year.
Consumer & Business Banking revenue was up 17% on higher NII, driven by continued margin expansion and deposit growth. Home Lending revenue was roughly flat, as portfolio loan spread and production margin compression were predominantly offset by higher net servicing revenue. And Card, Merchant Services, and Auto revenue was up 18% including higher Auto lease income, but it was driven by Card on lower net acquisition costs, higher loan balances as well as margin expansion. The Card revenue rate was 11.6% in the quarter. Expense of $6.9 billion was up 8% year-on-year, driven by investments in technology and marketing. Higher Auto lease depreciation and continued underlined business growth. The overhead ratio of 55% was roughly flat quarter-on-quarter despite seasonally higher payroll taxes and higher marketing expenses.
Finally, on credit, the trends across our portfolio remain favorable. Charge offs were driven by Card and were in line with guidance and there were no reserve actions taken this quarter. Recall, last year included a net impact of a little over $200 million related to the student loan portfolio sale.
Turning to page six and the Corporate & Investment Bank. CIB reported net income of $4 billion on revenue of $10.5 billion and an ROE of 22%. This quarter in Banking, we maintained our number one ranking a global IBCs as well as a number one rank in North America and EMEA. IBCs were $1.7 billion, down 10% from a record quarter last year and strong performance in M&A was more than offset by lower debt and equity underwriting fees.
Advisory fees were up 15% year-on-year as we saw good momentum and some large deal closed. We ranked number one in global M&A wallet and gained share in every region. And for the quarter, we announce and completed more deals than any other bank.
Equity underwriting fees were down 19% in a market that was also down and versus a strong first quarter last year, which included a number of large deals. This quarter we ranked number three in a very competitive environment. And debt underwriting fees were down 18%, driven by a slow start to the year, primarily due to increased market volatility which reduced issuance. Despite these headwinds, we maintained our number one ranking globally and looking forward to the rest of the year, across products, the overall pipeline remains strong.
Moving onto market, total markets revenue was $6.6 billion, up 13% year-on-year reported. However, as mentioned, this includes the mark-to-market gains we called out on the front page and also includes a reduction of about $150 million reflecting lower tax equivalent adjustments year-on-year. Accounting for both of these items market revenues would have been up about 7%. Fixed income market's adjusted revenue was flat versus a strong first quarter last year with rates and spread markets reversing to more normal levels following significant outperformance last year, being offset by strong emerging markets and commodities performance. It was a record quarter for equities and revenue was up 25%. A well-diversified story driven by broad strength and continued momentum throughout the quarter with increased volatility benefiting all of equity derivatives. In addition, we saw share gains in cash and continue client activity driving growth in prime as the investments that we've made the business are paying off. Treasury Services and Security Services revenue were both $1.1 billion for the quarter and up 14% and 16% respectively, driven by higher rates and balances. Security Services also benefited from asset based fee growth on both market levels and new client activity. Finally, expense of $5.7 billion was up 9% year-on-year, half being higher compensation expense with a comp-to-revenue ratio of 29% and the remainder primarily driven by higher transaction costs in markets.
Moving to Commercial Banking on page seven. Another very good quarter in this business with net income of $1 billion and an ROE of 20%. Revenue was up 7% year-on-year, driven by higher deposit NII as we continue to benefit from higher rates, partially offset by lower IB revenues. Sequentially, revenue was down 8%, largely driven by the impact of tax reform. Gross IB revenues of $569 million result 15% year-on-year on a lower overall industry wallet and fewer large transactions versus last year. That said, the underlying flow of business remains robust. In fact, it was a record quarter for middle market clients and the pipeline looked strong. Expense of $844 million was up year-on-year as we continue to invest in the business, both in bankers and technology. Loan balances were up 6% year-on-year and flat sequentially. C&I loans were up 5% on strength in our expansion markets as well as specialized industries, but down 1% sequentially roughly in line with the industry. CRE loans were up 7% year-on-year and up 1% quarter-on-quarter as the competition is significantly elevated.
So both, while client sentiment is high in the wake of corporate tax reform and we remain hopeful that this will support higher demand later in the year, we're not seeing that yet and we are maintaining pricing and credit discipline. Finally, credit performance continues to be very good with zero net charge offs this quarter. Moving onto Asset & Wealth Management on page eight, Asset & Wealth Management reported net income of $770 million with a pretax margin of 26% and an ROE of 34%. Revenue of $3.5 billion was up 7% year-on-year, driven primarily by higher management fees on growth in AUM as well as higher NII on deposit margin expansion and loan growth. Expense of $2.6 billion was down year-on-year as the first quarter of last year included nearly $400 million of legal expenses. Adjusted expense would have been up 8%, driven by higher external fees and revenues as well as higher compensation. For the quarter, we saw net long-term inflows of $16 billion including $5 billion in active equities with strength across all regions benefiting from strong long-term performance. We saw net liquidity outflows of $21 billion, largely driven by a combination of recent M&A activity and the impacts of cash repatriation due to tax reform. AUM of $2 trillion and overall client assets of $2.8 trillion were up 10% and 9% respectively on high market levels globally as well as net inflows.
Deposits were down 9% year-on-year, reflecting the migration into investments which we previously discussed, but were about flat sequentially on seasonally higher balances. Finally, we had record loan balances up 12% with strength in both mortgage as well as other loans globally. Moving to page nine and Corporate.
Corporate reported a net loss of $383 million. The net loss of $1.87 million in treasury and CIO was primarily due to losses related to security sales. The net loss of $196 million in other Corporate reflects approximately $100 million after-tax loss on legacy private equity investments, as well as a net tax expense on adjustments and true-up of certain reserves.
And you'll recall that last year included a legal benefit and our quarter, of course, included the impact of tax reform. Finally, turning the page 10. Given Investor Day is only six weeks behind us, we've not changed our guidance for the full year 2018. So, to wrap-up, we are pleased with the firm's performance this quarter with all of our businesses showing continued and broad strength in an overall environment that remains supportive. And while acknowledging the tailwinds of tax reform and higher rates, the consistent performance of business drivers is translating into topline growth and positive operating leverage with revenues and pretax income both up double-digits year-on-year. So, with that operator, we can take some questions.