Thank you, Operator. Good morning everyone. I'm going to take you through the presentation, which is available on our website. Please refer to the disclaimer at the back of the presentation. The third quarter was generally constructive across businesses and asset classes. Underlying business drivers grew broadly and we maintained or gained share in a competitive environment. The U.S. and global economy continue to grow. Clients are active with demand for credit remaining solid, all in all resulting in 7% growth in net income driven by positive operating leverage as revenue rises and expense remains controlled. On an adjusted basis, this is a clear record for a third quarter.
Of course, against this financial backdrop I want to acknowledge the recent natural disasters. The impact on affected customers, communities and employees has been devastating, and supporting them is our priority as we rebuild. I will note that any financial impact is not significant to our results.
Starting on Page 1, the firm reported net income of $6.7 billion, EPS of $1.76, and a return on tangible common equity of 13% on revenue of $26.2 billion. Highlights for the quarter include average core loan growth of 7.5% year-on-year, and the FDIC recently released its survey showing that the firm has surpassed the competition and now ranks number 1 in total U.S. deposits and in deposit growth, driven by strong consumer deposit growth up 9%. Client investment assets, credit card sales and merchant volumes were all up 13%, and we continue to rank number one in global IDCs. We had record revenue in the commercial bank and delivered record net income and assets under management in assets and wealth management. The credit environment continues to remain benign across products and portfolios. Card charge-offs were fully in line with our expectations and guidance, and outside of card our charge-off rates remain at historically low levels.
Now turning to Page 2 and some more detail about the third quarter. Revenue of $26.2 billion was up approximately $700 million or 3% year-on-year driven by net interest income up $1.2 billion, reflecting the impact of higher rates and continued loan growth, partially offset by lower markets revenue. Adjusted expense of $14.4 billion was flat to last quarter and to last year if you exclude $175 million of one-time items in CCB in the prior year period. Credit costs of $1.5 billion were up about $200 million year-on-year driven by higher net charge-offs in card, and in the quarter we built card reserves of $300 million primarily due to seasoning of newer vintages. We saw a wholesale release of over $100 million partially driven by select names in the energy sector and reflecting improvements in portfolio quality in commercial real estate.
Shifting to balance sheet and capital on Page 3, what is most notable on this page is that all of the numbers are basically flat quarter-on-quarter with the exception of growth in tangible book value per share, as capital generation was fully offset by distributions, reflecting a payout of above 100% for the first time in a long time, in line with our previous capital plan. From here, we expect the direction of travel for our CET 1 ratio to be lower over time. Moving on to Page 4 and consumer and community banking, CCB generated $2.6 billion of net income and an ROE of 19%.
We continue to grow core loans up 8% year-on-year driven by mortgage up 12% and business banking, card and auto loans and leases were each up 7%. Year-on-year, we saw 13% growth in each of client investment assets, card sales and merchant processing volumes. Nearly half of the growth in investment assets came from net inflows and our deposit margin continued to expand, up 6 basis points this quarter. Revenue of $12 billion was up 6% year-on-year.
Consumer and business banking revenue was up 15% on higher NII, approximately equally due to margin expansion as well as strong average deposit growth. Mortgage revenue was down 17% on loan spread and production margin compression as well as lower net servicing revenue driven by the MSR. Underlying that decline, the mortgage business is performing well relative to the market. Our originations are down only 1% versus the market down an estimated 15% as we gain share and purchase.
Finishing up on revenue, card, commerce solutions and auto revenue was up 7% as higher auto lease income and growth in card loan balances outpaced the continued impact of investments in new account acquisitions. Expect CCSA fourth quarter revenue to be relatively flat sequentially as higher net interest income will be offset by the anniversary net impact of Sapphire reserve last year. Expense of $6.5 billion was flat year-on-year or up 3% excluding the one-time items I mentioned. Higher auto lease depreciation and continued underlying business growth were partially offset by lower marketing expense. The overhead ratio was 54% for the quarter as positive operating leverage despite significant investment in the business moves us closer to our medium term target.
Finally on credit performance, in terms of net charge-offs, as I said, card increased in line with expectations and guidance, and in auto charge-offs included approximately $50 million of a catch-up reflecting regulatory guidance on the treatment of customer bankruptcies. Excluding this, the loss rate in auto was only 41 basis points. In general, it feels like the auto market has plateaued at current levels with inventory, incentives, used car prices and SAW all having stabilized over the last few months. In terms of credit reserves, are previously mentioned, we built $300 million in card reserves in the quarter as we grow, and although there were no mortgage reserve actions, portfolio quality improvements allowed us to absorb the expected impact of the hurricanes into our current reserves.
Now turning to Page 5 and the corporate and investment bank, CIB reported net income of $2.5 billion on revenue of $8.6 billion and an ROE of 13%. The third quarter of 2016 revenue in both IBCs and markets benefited from a number of (indiscernible) events and higher levels of volatility, creating tough comparisons across the board. This quarter in banking, IB revenue of $1.7 billion was strong and relatively flat from last year's record levels.
Year-to-date, we've gained some share and maintained our number one ranking in global IBCs. We also rank number one in North America and EMEA. We printed record advisory fees for third quarter, up 14% on broad strength across sectors and deal sizes particularly in Europe, making up for a smaller wallet in North America. Equity underwriting fees were down 21%; however, we rank number one in wallet, number of deals and volumes globally for the quarter and for the year to date. The market remains active and the pipeline healthy. In debt underwriting, there was a reasonably high run rate coming into the quarter and we broadly maintained it, landing fees slightly down year-on-year and quarter-on-quarter driven by strong re-pricing and refinancing activity and high yield bond issuance. We rank number one in fees year-to-date and gained share overall and across products.
Treasury services revenue of $1.1 billion was up 15%, and while higher rates are a driver, we are also seeing positive momentum in organic growth in the business globally as our clients are responding favorably to the investments we've made in our platform and products. Moving on to markets, total revenue was $4.5 billion, down 21% year-on-year against an impressive third quarter of 2017 in a quieter and very competitive environment. Fixed income revenue was down 27%, a solid performance given a backdrop of low volatility and tight spreads. At the risk of laboring the point, you may recall that we gained 240 basis points of share in FIC in the third quarter of '16, which will mean our year-on-year decline will look larger than most. Equities revenue was down 4% but underneath that is a diversification story.
Consistent with last quarter, lower flow and exotic derivatives activity was substantially offset by strength in cash and prime, which continues to be a bright spot throughout this year. Before I move on, the fourth quarter environment so far feels consistent with the second and third with no obvious catalysts on the horizon for that to change, but of course change it could, so it's worth pointing out that the fourth quarter last year was also a record for a fourth quarter since the crisis and as such, we expect next quarter's markets revenues to be lower year-on-year. Securities services revenue of $1 billion was up 10% driven by rates and balances, with average deposits up 15% year-on-year as well as by higher asset-based fees on market levels globally. Finally, expense of $4.8 billion was down 3% year-on-year driven by lower compensation expense on lower revenues, and the comp to revenue ratio for the quarter was 27%.
Moving to commercial banking on Page 6, another excellent quarter in this business with net income of $881 million with record revenue and an ROE of 17%, and although we recognize that our results are flattered by a benign credit environment, the performance is very strong and broad-based and is driven by the investments we've been making in the business, the differentiated path on capabilities we can offer our clients, and our commitment to business discipline. Revenue grew 15% year-on-year driven by deposit NII and on higher loan balances with overall spreads remaining steady, and while IB revenue was down some year-on-year, we grew 9% sequentially with particular strength in middle market, which is starting to feel like a trend. Expense of $800 million was up 7% on continued investment in the business focused on technology as well as banker coverage, having added over 200 bankers since the beginning of 2016; and since our investment agenda is ongoing, expect fourth quarter expenses to remain at about this level. Loan balances were up 10% year-on-year and 1% quarter-on-quarter. C&I loans were up 8% year-on-year driven by strength in expansion markets and specialized industries, but were flat sequentially in line with the industry on flat utilization despite decent deal flow and stable pipelines. Commercial real estate saw growth of 13% year-on-year and 2% quarter-on-quarter, and although growth rates are decelerating, we continued to outpace the industry; however, we remain very disciplined in client selection, products and pricing, and are sticking to what we know well. Finally, credit costs were a benefit of $47 million, predominantly driven by commercial real estate. Credit performance remains strong with the net charge-off rate of 4 basis points. Leaving the commercial bank and moving onto asset and wealth management on Page 7, asset and wealth management reported record net income of $674 million with pre-tax margin of 33% and an ROE of 29%.
Revenue of $3.2 billion was up 6% year-on-year driven by higher market levels and by strong banking results on higher deposit NII. Expense of $2.2 billion was up 2% year-on-year driven by a combination of higher compensation and higher external fees for which there is an offset in revenue. This quarter, we saw net long term inflows of $21 billion with positive flows across fixed income, multi-asset and alternatives being partially offset by outflows in equity products. We also saw net liquidity inflows of $5 billion and continued to increase our global market share. Record AUM of $1.9 trillion and overall client assets of $2.7 trillion were up 10% and 9% respectively year-on-year on higher market levels globally, as well as net inflows. Deposits were down 6% year-on-year and 4% sequentially, reflecting continued migration from deposit accounts into investment-related assets as we are retaining the vast majority of these balances. Finally, we had record loan balances up 10% year-on-year driven by mortgage up 19%. Moving to Page 8 and corporate, corporate posted net income of $78 million, treasury and CIO's results improved year-on-year primarily due to the benefit of higher rates, and you'll remember that last quarter other corporate included a legal benefit which is driving the quarter-on-quarter decline you see on the page. Finally, turning to Page 9 and the outlook, all of NII, expense, charge-off and loan growth remain broadly in line with previous guidance, so to wrap up, this quarter and this year we continued to consistently deliver for our clients, our businesses are performing strongly across the board, maintaining or gaining share.
Our financial performance clearly demonstrates the power of the platform, the benefits of diversification and of scale, as well as an investment strategy focused on long-term growth and profitability. We remain very well positioned to continue to benefit in a growing global economy. Operator, we can open up the lines to questions.