REUTERS: JPMorgan Chase & Co's quarterly profit topped Wall Street's expectations on Friday, as trading revenue came in much higher than expected and demand for loans increased on the back of a strengthening U.S. economy.
U.S. banks are benefiting from a cut in corporate tax rates, hikes in interest rates and a growing economy that is driving demand from borrowers while holding down loan loss rates.
"We see good global economic growth, particularly in the U.S., where consumer and business sentiment is high," Chief Executive Officer Jamie Dimon said.
Overall, the bank's revenue rose 6.5 percent to US$28.39 billion and topped the average analyst estimate of US$27.36 billion, driven by growth in all four of the bank's businesses.
Shares of the largest U.S. bank by assets were up 1 percent in premarket trading.
JPMorgan's quarterly reports are closely watched for signs about the health of consumers and businesses as the lender plays a major role in several businesses, such as home mortgages, commercial lending and asset management.
Average core loans, which include consumer credit and loans to the biggest corporations, were up 7 percent compared with the year-earlier quarter.
Analysts and economists are watching loan demand at banks for signs of any impact from international trade tariffs on their business and expansion plans.
Investors have also been looking for signs that the corporate tax cuts have given companies new confidence to borrow, a phenomenon that bankers have said might not show up before the second half of the year.
Earlier this week, Dimon was quoted in an Italian newspaper saying that U.S. business executives have warned U.S. President Donald Trump that the impact of trade tariffs on economic growth could offset the benefits of tax cuts.
Trading revenue, which makes up about a fifth of JPMorgan's total revenue, was up 13 percent, compared with a 1 percent gain expected by Credit Suisse analyst Susan Roth Katzke.
In May, the bank's corporate and investment bank chief, Daniel Pinto, said second-quarter markets revenue was likely to be flat compared with a year earlier.
Net interest income rose 10 percent as the U.S. Federal Reserve raised benchmark interest rates four times since the second quarter of 2017.
Net income rose 18.3 percent to US$8.32 billion, or US$2.29 per share, in the second quarter ended June 30, from US$7.03 billion, or US$1.82 per share, a year earlier.
Analysts expected the bank to earn US$2.22 per share, according to Thomson Reuters I/B/E/S.
Citigroup Inc and Wells Fargo & Co , the third- and fourth-largest banks by assets, are also set to report results on Friday.
(Reporting by Sweta Singh in Bengaluru and David Henry in New York; Editing by Saumyadeb Chakrabarty)