REUTERS: JPMorgan Chase & Co reported a quarterly profit that beat estimates on Tuesday as higher interest income and consumer lending offset lower activity at its trading desks.
But even as the biggest U.S. bank reported record earnings, there were warning signs across Wall Street that the playing field is beginning to tilt against the financial industry.
Like Citigroup on Monday and Wells Fargo & Co on Tuesday, JPMorgan reported its net interest margin declined to 2.49per cent from 2.57per cent a year ago, as deposit rates and the rate the bank pays for other borrowings both rose.
JPMorgan also lowered its outlook for net interest income to "about US$57.5 billion" in 2019 from the US$58 billion to US$60 billion projection executives gave in February.
While Chief Executive Officer Jamie Dimon maintained a bullish outlook about the U.S. economy as a whole, he conceded that uncertainties relating to global trade, which tend to impact trading volumes, were a drag.
"The consumer in the United States is doing fine," Dimon said on a conference call. "Business sentiment is a little bit worse, mostly driven by the trade war. But...I wouldn't get too pessimistic."
Average loans rose 2per cent, driven largely by JPMorgan's consumer bank, Chase, which reported credit card loans were up 2per cent and credit card sales surged 11per cent. The cost of handling that credit was flat.
Overall income from the consumer and community banking, JPMorgan's largest business, rose 22per cent to US$4.17 billion, which offset declines across other businesses.
Total net interest income, the difference between what banks pay on deposits and earn on loans, rose 7per cent to US$14.40 billion.
Net income climbed 16per cent to US$9.65 billion as a tax gain and higher net interest income overshadowed lower activity on its trading desks. Excluding the tax gain, it earned US$2.59 per share. Net revenue rose 4per cent to US$29.57 billion.
Return on tangible common equity, a key profit measure for how well it uses shareholder money, rose to 20per cent, up from 19per cent in the first quarter and higher than the bank’s 17per cent target.
Analysts were expecting earnings of US$2.50 per share on revenue of US$28.90 billion, according to IBES data from Refinitiv.
(Editing by Bernadette Baum)