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JPMorgan Chase & Co, the biggest US bank by assets, reported a better-than-expected quarterly profit on Friday as gains from higher interest rates and loan growth more than offset a drop in bond trading.
Trading revenue fell for the first time in five quarters as volatility hit multi-year lows, but the drop was not as bad as expected by a company executive in the run-up to the results.
Executives at big banks warned in recent weeks that trading revenue for the quarter would be down from a year earlier, when client trading surged around UK's Brexit vote.
The quarter benefited from the Federal Reserve raising interest rates for the second time this year in June. The target range for overnight interest rate now stands at 1 percent to 1.25 percent, compared with 0.25 percent to 0.50 percent a year earlier.
"We continued to post very solid results against a stable-to improving global economic backdrop. The U.S. consumer remains healthy," Chief Executive Jamie Dimon, 61, said in a statement.
The bank's net income rose 13.4 percent to $7.03 billion in the second quarter ended June 30.
Excluding a gain from a legal settlement, the company earned $1.71 per share, compared with analysts' average estimate of $1.58 per share, according to Thomson Reuters I/B/E/S.
Markets revenue fell 14 percent, led by a 19 percent decrease in fixed income markets revenue to $3.22 billion.
Mortgage lending continued to be a dark spot in the bank's results as higher interest rates kept borrowers from refinancing. Mortgage fees and loan servicing revenue fell about 41 percent to $404 million.
Net interest income rose 7.6 percent to $12.21 billion, primarily driven by loan growth and the higher rates.
Rising interest rates are usually good for banks, allowing them to increase how much they charge for loans faster than they increase how much they pay for deposits.
JPMorgan's non-interest expenses rose to $14.51 billion, up from $13.64 billion a year earlier.
At the end of May, Chief Financial Officer Marianne Lake had estimated expenses of less than $14.5 billion in the quarter.
JPMorgan's shares were little changed in premarket trading. They have risen 7.9 percent in value this year, mirroring gains in the broader S&P 500 Financial Index.
About half of those gains have come after June 28 when the Federal Reserve approved JPMorgan's plan to spend as much as $19.4 billion to buy back stock over the next year. The bank also won permission to increase its quarterly dividend.
Wells Fargo & Co and Citigroup Inc are also scheduled to report results on Friday.