The biggest U.S. bank leaned on old-fashioned lending in the third quarter to weather a slump in fixed-income trading.

JPMorgan Chase & Co. said net interest income -- revenue from customers’ loan payments minus what it pays depositors -- jumped to a record US$13.9 billion in the period, helped by rising interest rates and steady growth in what the bank considers core loans. Bond-trading revenue fell 10 per cent.

JPMorgan’s core-loan book expanded 6 per cent, excluding the investment bank, even as it faced stiffer competition from non-traditional lenders and as rising interest rates sapped demand for some types of borrowing, including mortgages. Some companies borrowed to fund growth plans in the wake of President Donald Trump’s tax cuts. Before the report, analysts had predicted loans would only increase 2 per cent for the four biggest U.S. money-center banks.

The increase in NII put the lender on pace to meet more optimistic guidance set by Chief Financial Officer Marianne Lake at an investor conference in September, when she said the bank could generate US$55.5 billion of net interest income in 2018. That was a boost from the US$55 billion she forecast in February.

Analysts have warned that bank profits could be nearing their peaks as the benefits of lower taxes, declining legal bills and rising interest rates start to fade. Charles Peabody at Portales Partners cut his recommendation on JPMorgan to sell from neutral Wednesday, citing the possibility of falling revenue, higher credit costs and weaker shareholder returns in 2019.

“The U.S. 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,” Chief Executive Officer Jamie Dimon said in a statement announcing the results on Friday.

Trading Results

The bank’s net interest income beat a previous record of US$13.8 billion set in the fourth quarter of 2008. On an adjusted basis, it was US$14.1 billion, surpassing the US$14.03 billion average estimate of six analysts surveyed by Bloomberg. The amount the bank set aside for bad loans was US$948 million, less than the US$1.46 billion analysts expected.

Trading revenue of US$4.4 billion was helped by a 17 per cent jump in equity trading. Fixed-income trading revenue of US$2.84 billion fell short of analysts’ estimates.

Lake said in September that third-quarter trading revenue would decline from the same period a year earlier. JPMorgan said Friday the drop in fixed-income trading revenue reflected weakness in its rates and credit-trading businesses.

Shares of the bank were trading at US$109.15 before the start of regular U.S. trading, after closing at US$108.13 on Thursday.