It’s all about the Fed.

That was the takeaway after the five biggest U.S. lenders reported second-quarter results, as lower interest rates weighed on banks’ outlooks for lending income while also helping to keep credit quality relatively pristine.

Executives did little to counter investor concern that earnings may have peaked, warning of tougher times ahead, especially if geopolitical uncertainties and a changing rate environment push traders to the sidelines and discourage companies from doing mergers. For now, the banks keep setting profit records -- the five firms cracked $30 billion in quarterly earnings for the first time.

“We still feel pretty good about the future,” Bank of America Corp. Chief Financial Officer Paul Donofrio said. “When I look at the economy, sure, it’s slowed a little bit, but it’s still doing quite well.”

Here are the main themes of bank earnings so far:

Rate Pain

The Federal Reserve hasn’t even announced a cut yet, but that didn’t stop lower rates from starting to weigh on the biggest lenders. Every one of the four commercial banking giants missed analysts’ estimates for net interest income in the second quarter, and most set a lower bar for the latter half of 2019.

Bank of America and Wells Fargo & Co. indicated their biggest revenue source will decline in the second half, while JPMorgan Chase & Co. predicted a decrease from its record first half. How many times the central bank cuts rates this year will likely determine how steep the drops are.

Banks’ traditional lending businesses have profited from the Fed’s march upward that began in late 2015, as they passed on the higher rates to borrowers while keeping deposit rates low. Investors have fretted about how banks will handle the turnabout, causing their stocks to trail the broader market despite record earnings and buybacks.

Strong Consumers

Cheap borrowing options and a low unemployment rate are bolstering the U.S. consumer, and banks are benefiting. Bank of America’s retail division helped drive overall profit to a record as loans and deposits grew and mortgage activity surged. Citigroup Inc.’s consumer unit posted its strongest second quarter since 2013.

Despite months of questions about when the credit cycle will turn, banks’ metrics on consumer delinquencies keep improving. Bank of America’s profit was helped by a surprise drop in loan-loss provisions from the first quarter and Wells Fargo said its level of delinquent consumer loans fell 7 per cent from a year earlier.

Trading Woes

The banks’ trading revenue fell 6% in the quarter, according to Bloomberg Intelligence. That marked the fourth consecutive decline as sell-side traders struggle to capitalize on market swings.

Markets keep getting jolted by President Donald Trump’s unpredictable threats to ratchet up tariffs on countries such as China and Mexico, as well as the Fed’s shifting stance on interest rates. That’s made investing clients more cautious, driving down market activity.

Goldman Sachs Group Inc.’s equity traders posted the only increase among the major banks, citing market share gains from weaker rivals. Morgan Stanley will try to match that when it reports earnings Thursday.

What Bloomberg Intelligence Says

“Morgan Stanley earns relatively more from equities, and the competitive opportunity, in light of Deutsche Bank’s pullback, is also a focus for global leaders.”--Alison Williams, banks analystClick here to read the research

The one consistent bright spot: Most banks reported big gains tied to investments they made more than a decade ago in Tradeweb Markets Inc. The trading-platform company went public in the quarter and has surged more than 75 per cent since then.

Deal Drop

Traders didn’t get much help from their dealmaking counterparts. Despite some high-profile initial public offerings in the quarter, the firms’ investment banking units had the steepest second-quarter drop in revenue in seven years.

Executives warned that geopolitical uncertainty and trade skirmishes could weigh on corporate sentiment -- which could hurt dealmaking going into the third quarter, typically a seasonally weaker period.

Volatility around trade and interest rates “plays out through the trading that you see on both fixed income and equities, it plays out through investment banking, it impacts corporate sentiment and those things as you would imagine are difficult to predict," Citigroup Chief Executive Officer Michael Corbat said Monday. "We obviously feel good about the client dialog that we’ve had, but those are the factors that are a bit harder to manage."