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JPMorgan Chase (JPM)  posted stronger-than-expected second-quarter profits Monday as the biggest U.S. bank recorded a big benefit from tax credits and gains in consumer banking, offset by weakness in the trading and investment-banking division.  

Net income rose by 16% to $9.65 billion, New York-based JPMorgan said in a press release, pegging earnings per share at $2.82, or $2.59 excluding the tax benefit. On that basis, the results beat the $2.50 average estimate of Wall Street analysts in a survey by data provider FactSet.

"We had a strong second quarter and first half of 2019, benefiting from our diversified global business model," CEO Jamie Dimon said in a statement published alongside the earnings release. "We continue to see positive momentum with the U.S. consumer, healthy confidence levels, solid job creation and rising wages."

Fast credit-card sales "reflected healthy consumer spending," according to Dimon, while underwriting of mortgages and auto loans "showed solid improvement." 

JPMorgan shares, which has jumped higher following the headline figures, were indicated 1.23% lower in pre-market trading to suggest an opening bell price of $112.56 each. That would still leave the stock with a year-to-date gain of around 15.3%

JPMorgan's results come as U.S. banks face a tougher operating environment than last year, when markets were buoyant following President Donald Trump's $1.5 trillion of tax cuts.   

Wall Street analysts have warned that banks could face a squeeze on their lending profits as the Federal Reserve moves toward a likely interest-rate cut later in July. All the while, competition is heating up for deposits, with more online lenders trying to lure savers away from traditional accounts at bricks-and-mortar branches.

And according to Wall Street analysts, the uncertainty spurred by Trump's trade war with China has led fewer clients to place big transactions with big U.S. banks in stock and bond markets.

"Markets performance was relatively steady on slightly lower client volume, probably due to slightly higher global macroeconomic and geopolitical uncertainties," Dimon said in the press release.

The rival U.S. bank Citigroup (C) said Monday that second-quarter profit rose 6.6% to $4.8 billion, but that figure was boosted by a one-time gain related to an investment in Tradeweb Markets (TW) , an electronic trading platform that went public though an initial stock offering in April.

JPMorgan Chase, Citigroup and Goldman Sachs are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells the stocks? Learn more now.

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