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JPMorgan Chase & Co. reported a better-than-expected quarterly profit on Tuesday as higher interest income and buoyant consumer lending offset lower activity at its trading desks.

Even as the world’s biggest bank recorded record earnings, there were warning signs that the playing field is beginning to tilt against the financial industry. JPMorgan’s net interest margin declined to 2.49 per cent from 2.57 per cent a year ago as deposit rates rose and the rate the bank paid on other borrowings rose.

Citigroup similarly reported a decline in net interest margin on Monday, which sent bank stocks lower.

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Trading volumes have been lower at large U.S. banks as a tit-for-tat tariff war between Beijing and Washington has kept investors on edge. A flattening of the yield curve and rising bets of an interest rate cut have also challenged banks’ ability to boost revenues.

Average loans at the largest U.S. bank, however, increased 2 per cent on the back of an 8 per cent rise in credit-card loans.

The earnings beat was driven by JPMorgan’s consumer bank, Chase, which reported credit card loans were up 2 per cent, credit costs were flat and overall income was up 22 per cent.

Chief executive officer Jamie Dimon remained bullish about the U.S. economy.

“We continue to see positive momentum with the U.S. consumer – healthy confidence levels, solid job creation and rising wages – which are reflected in our Consumer & Community Banking results,” he said in a statement.

Income from consumer and community banking, JPMorgan’s largest business, rose 22 per cent to $4.17 billion, offsetting declines across its other main businesses.

Total net interest income, the difference between what banks pay on deposits and earn on loans, rose 7 per cent to $14.40 billion.

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Investors, however, worry that if the U.S. Federal Reserve cuts interest rates in July, it could pressure margins at banks, which have benefited recently from higher rates.

Net income climbed 16 per cent to $9.65 billion. Excluding the tax gain, it earned $2.59 per share. Net revenue rose 4 per cent to $29.57 billion.

Analysts were expecting earnings of $2.50 per share and revenue of $28.90 billion, according to IBES estimate from Refinitiv.

The bank’s return on tangible common equity, a key profit measure for how well it uses shareholder money, rose to 20 per cent, up from 19 per cent in the first quarter and higher than the bank’s 17 per cent target.

JPMorgan’s results are closely watched by investors looking to gauge the health of the U.S. economy

Among other banks reporting results on Tuesday are Goldman Sachs Group Inc and Wells Fargo & Co.

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