JPMorgan Chase & Co. (JPM) - Get Report , the largest U.S. lender, posted higher profit than Wall Street expected as growth in credit-card balances and other loans overpowered a slide in trading revenue.
Earnings of $1.76 a share in the three months through September compared with the $1.65 average of analysts' estimates from FactSet, and net income climbed 7% to $6.73 billion.
Core lending grew 8%, while credit card loans climbed 6%, the New York-based bank said. Rising interest rates after two hikes this year by the Federal Reserve pushed net interest income -- the difference between what banks charge to borrowers and what they pay to depositors -- up 10% to $13.1 billion, JPMorgan said in a statement.
"Underlying business drivers grew broadly, and we maintained or gained share in a competitive environment," CFO Marianne Lake said on a conference call with reporters. "The U.S. and the global economies continued to grow, and clients were active, with demand for credit remaining solid."
Consumer prosperity manifested in gains in the community banking division, where profit rose 16% to $2.55 billion and JPMorgan led U.S. rivals in total deposits for the first time in 23 years. That compensated for a 16% drop in trading revenue, which was juiced a year ago by volatility related to Britain's decision to leave the European Union and the turmoil of the U.S. presidential election eventually won by Donald Trump.
JPMorgan dropped 1% $95.83 in New York trading on Thursday. The shares previously climbed 38% to $96.63 since Trump's election, outstripping a 19% increase on the S&P 500 and a 34% gain on the KBW Bank Index.
Still, the $1 billion decline in trading revenue, compared with both a year ago and the first three months of 2017, illustrated the demise of the "Trump bump" -- speculation that a Republican-led government would quickly deliver tax cuts and looser regulations.
Stock trading slipped 4% to $1.36 billion, while fixed income shrank 27% to $3.16 billion.
Trading momentum has fizzled as Trump's plan to overhaul health care collapsed and support in the Senate for his tax plan wavers. Backing for the president has been further complicated by vacancies in key positions, upheaval on his staff and a steady drip of revelations about his campaign's interactions with Russia.
While Trump has moved quickly to loosen rules that the administration could change on its own -- a position showcased when his appointees backed removing bailed-out insurer AIG's (AIG) - Get Report 'too big to fail' designation last month -- he has yet to score a major legislative victory.
"There is still the chance that we will get greater certainty on tax reform or other key policy items such as regulatory reform, and that could boost lending and earnings in the future," Brian Kleinhanzl, an analyst with brokerage Keefe, Bruyette & Woods, said in a podcast this week.
"If we do start to get traction coming from D.C.," finance stocks may rally even more than in September, when the KBW Bank Index posted a gain three times as large as that of the S&P 500, he said.
The goal isn't to discard laws imposed after the 2008 financial crisis, when the government attempted to set up safeguards that would prevent a recurrence involving billions of dollars in taxpayer bailouts.
"No one's talking about throwing out Dodd-Frank and changing everything," CEO Jamie Dimon said on the call. "That's never been part of the conversation. This is about recalibrating some of the very detailed rules in there so that markets are more liquid, mortgages are more available, stuff like that."
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