Thank you, operator. 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, the firm reported net income of $8.3 billion and EPS of $2.29 on revenue of $28.4 billion, all were record for the second quarter, even exceeding the benefit of tax reform. Our return on tangible common equity was 17%. And also included in the results were two notable items, which I will call out in a momentum, excluding which EPS would have been about $0.10 higher. The strength this quarter was broad-based across businesses and highlights include average core loan growth excluding CIB of 7% year-on-year, consumer deposit growth of 5% which we believe continues to outpace the industry; card sales up 11%; and client investment assets and merchant processing volumes, each up 12%. We maintained our number one rank in Global IB fees and CIB delivered double-digit revenue growth across the board. Commercial bank revenue was up 11% year-on-year with IB revenues being a bright spot this quarter. And in asset and wealth management, AUM and client assets were both up 8%.
Turning to page two for more details about the second quarter. The firm delivered strong core positive operating leverage this quarter.
Revenue of $28.4 billion was up $1.7 billion or 6 % year-over-year. Net interest income was up $1.1 billion or 9%, reflecting the impact of higher rates and loan growth, partially offset by lower market NII. Net interest revenue was up over $600 million, driven by strong performance in markets and IB fees and also higher auto lease income. NII this quarter was negatively impacted by a rewards liability adjustment in cards. And remember that last year included a significant legal benefit. Excluding these two items, NII would have been up $1.6 billion and total revenue up 10%.
Expense of $16 billion was up 8% year-on-year, with half of the increase directly related to incremental revenues, principally compensation in the CIB, transaction expenses and auto lease growth. About a third related to continued investments in technologies as well as headcount across the businesses and the remainder was largely a loss on the liquidation of a legacy legal entity as part of our simplifications efforts. And if you exclusive this item, expense was up only 7%. The legal entity loss, together with the rewards liability adjustment in cards are the two notable items I mentioned at the beginning for a total reduction of over $500 million pre-tax. Credit costs of $1.2 billion were flat year-on-year and credit trends remained favorable across both consumer and wholesale.
Shifting to balance sheet and capital on page three. We ended the second quarter with CET1 of 11.9%, up about 10 basis points versus the last quarter as most of the capital generated was returned to shareholders. Risk weighted assets were relatively flat, despite solid growth in loans and commitments, being offset across other categories. In the quarter, the firm distributed $6.6 billion of capital to shareholders and last month the fed informed that they did not object to our 2018 capital plan. We were pleased to announce gross repurchase capacity of nearly $21 billion over the next four quarters and the Board announced its intention to increase our common dividend to $0.80 per share affected in the third quarter. Moving on to page four on consumer and community banking. CCB generated $3.4 billion of net income and an ROE of 26%.
Core loans were up 7% year-on-year driven by home lending up 12%, business banking up 6%, card up 4%, and auto loans and leases also up 4%. Deposits grew 5%. And although growth is slower than a year ago, we are seeing record high retention rates and customer satisfaction scores. Client investment assets were up 12% with more than half of the growth from net new money flows and we are capturing an outsized share as our customers shift from deposit to investments. Card sales volume was up 11%. And we announced several new cards as we continue to update our product offering.
Revenue of $12.5 billion was up 10% year-on-year. Consumer and business banking revenue was up 17% on higher NII, driven by continued margin expansion as well as deposit growth. Our lending revenue was down 6% on production margin compression and lower net servicing revenue, despite higher purchase volume in retail. And cards merchant services and auto revenue was up 6% driven by lower card acquisition costs, higher card NII on margin expansion as well as loan growth, as well as higher auto lease volumes. This was largely offset by lower net interchange, driven by a rewards liability adjustment of about $330 million, reflecting strong customer engagement across our Ultimate Rewards offering. As a result, the card revenue rate was 10.4% for the quarter, but our full year guidance of approximately 11.25% holds. Expense of $6.9 billion was up 6% year-on-year, driven by higher auto lease depreciation and investments in technology. Finally, on credit. Charge-offs were down $36 million year-on-year, including a recovery of about $130 million from a loan sale in home lending. This was largely offset by higher net charge-offs in card. The card charge-off rate was 3.27%, reflecting seasonality and is in line with expectations and in line with our guidance. There were no reserve actions taken this quarter. Turning to page five and the corporate and investment bank.
CIB reported net income of $3.2 billion on revenue of $9.9 billion, up 11% and an ROE of 17%. In banking, we maintained our number one ranking for the quarter and year-to-date in Global IB fees and with a record first half performance, and we grew share across the regions. IB revenue of $1.9 billion was up 13% year-on-year, outperforming the market but was down slightly as we saw robust activity, particularly in M&A and ECM. It was a record second quarter for advisory fees, which were up 24%, benefiting from a number of large deals closings this quarter.
We gained share and ranked number two globally. Equity underwriting fees were up 49%. We ranked number one globally as well as in North America and EMEA and gained share in a competitive environment, driven by IPOs and convertibles in the two most active sectors, healthcare and technology, which are areas of strength for us. Additionally, we saw good momentum in private capital market as clients are exploring alternative sources of capital. And debt underwriting fees were relatively flat versus a very strong prior quarter, supported by healthy acquisition related activity. And we ranked number one in DCMs globally and across all the products. Looking forward, the overall pipeline remains strong. Moving on to market.
Total revenue was $5.4 billion, up 13% year-on-year or up 16% adjusting for the impact of tax reform and was driven by strong results in equities, solid performance across categories and with performance picking up in the second half of the quarter. Fixed income markets revenue was up 12% adjusted on the back of good client flow and decent volatility and with commodities making a notable recovery from a challenging prior year. It was a record second quarter for equities with revenue up 24%, driven by strong client activity and favorable trading results, and with particular strength in cash, prime and flow derivatives. Treasury services and securities services revenues were each up 12%, driven by higher rates and deposit balances, and security services also benefited from higher asset-based fees on new client activity and higher market levels. Finally, expense of $5.4 billion was up 11%, driven by higher performance-related compensation, volume-related transaction costs and investments in technology. The comp-to-revenue ratios for the quarter were 27%, consistent with prior quarter.
Moving to commercial banking on page six. Another strong quarter for this business with net income of $1.1 billion and an ROE of 21%. Revenue was a record for second quarter, up 11% year-on-year driven by higher deposit NII and strong investment banking activity. Gross IB revenue of $739 million was up 39%, driven by several large transactions and strong underlying flow of business and the overall pipeline is robust and active. Expense of $844 million was up 7% as we continue to invest in the business, both in bankers and in technology.
Loan balances were up4% year-on-year and 2% sequentially. C&I loans were up 3% year-on-year and sequentially due to increased M&A related financing with strengths in our expansion markets as well as in specialized industries, and despite lower tax exempt activity. CRE loans were up 4% year-on-year and flat versus last year as there continues to be a lot of completion for high quality assets and we are selective given where we are in the cycle.
Finally, credit performance remains strong with a net charge-off rate of 7 basis points. Moving on to asset and wealth management on page seven. Asset and wealth management reported net income of $755 million with a pretax margin of 28% and an ROE of 33%. Revenue of $3.6 billion was up 4% year-over-year driven by higher management fees on growth in long-term products as well as strong banking results. Expense of $2.6 billion was up 6%, driven by continued investment in advisors and technology as well as higher external fees on revenue growth. For the quarter, we saw net long-term inflows of $4 billion with positive flows across multi assets, equities and alternatives, partly offset by outflows in fixed income. Additionally, we saw net liquidity inflows of $17 billion. AUM of $2 trillion and overall client assets of $2.8 trillion were both up 8% with the increase being split about equally between flows and higher market levels globally.
Deposits were down 7% year-on-year, reflecting continued migration into investment where we are also capturing the vast majority and down 3% sequentially on seasonal tax payments. Finally, we had record loan balances, up 12% with strength in global wholesale and mortgage lending.
Moving to page eight and corporate. Corporate reported a net loss of $136 million. The result included a pretax $174 million loss on a liquidation of a legacy legal entity, previously mentioned. But it's of note that while this loss through expense affects retained earnings this quarter, it is offset from a capital perspective. So, it's capital neutral. Before I wrap up, you may note, we have no outlook page here. Although both revenue and expense are trending higher market-related, given we're only halfway through the year, we're not updating our outlook at this point. So, to close, the macroeconomic backdrop continues to be supportive. Consumer and business confidence and sentiment remain high, client activity levels are robust, and the markets are open and active. We are pleased with the firm's results this quarter. Our broad-based financial performance clearly demonstrates the power of the platform. Revenue grew strongly, double digits year-over-year in many cases. We realized positive core operating leverage, despite significant investments and credit trends remain favorable across both consumer and wholesale. This was a clear record for second quarter, whichever way you slice it. We remain focused on consistently delivering for our customers and our communities and investing for the long term. With that, operator, can you open up the line for Q&A?