JPMorgan's consumer banking strength offsets bond trading weakness

JPMorgan Chase & Co reported a better-than-expected quarterly profit on Friday as gains from higher interest rates and growth in loans helped the bank offset weakness in bond trading revenue, reports Reuters.

The largest US bank by assets, whose results are often seen as a barometer of the economy, has benefited from a tax windfall and a strong economy that has led to higher interest rates and kept loan defaults in check.

All four of JPMorgan's main businesses recorded a rise in revenue, with the consumer banking unit notching the biggest jump in revenue due to a healthy appetite for borrowing. Trading was the only weak spot in the results.

Chief Executive Jamie Dimon praised President Donald Trump's tax cuts and deregulatory efforts, but cautioned on inflation and "geopolitical issues bursting all over the place."

"The US and the global economy continue to show strength, despite increasing economic and geopolitical uncertainties, which at some point in the future may have negative effects on the economy," Dimon said.

JPMorgan shares fell 2 per cent late Friday afternoon. Worries about lackluster trading and weak loan growth have weighed on bank stocks this year, with the S&P Financial index .SPSY falling about 5 per cent and underperforming the broader S&P 500 index .SPX.

JPMorgan is the best performing stock among the big six US banks. Including losses from the market carnage over the past two days that saw the Dow Jones Industrial Average .DJI drop more than 1,300 points, the stock is the only one among the big banks to be in positive territory for the year.

The bank's average core loan book rose 6 per cent in the third quarter and outperformed Citigroup's (C.N) 4 per cent growth even as higher rates crimped borrowing in areas such as mortgage loans.