Wall Street banks have benefitted from a resurgence in capital-raising activity in debt and equity markets. They are also seeing an uptick in fee income from advising on M&A deals as companies become more confident in the US economy’s ability to avoid a major downturn.

“While market valuations and credit spreads seem to reflect a rather benign economic outlook, we continue to be vigilant about potential tail risks,” CEO Jamie Dimon said, adding that the risks included a changing geopolitical situation, which remains the most dangerous since World War II.

Inflation and interest rates may stay higher than market expectations due to threats like large fiscal deficits and restructuring of trade, Dimon said.

The largest US bank’s profit was US$18.15 billion, or US$6.12 per share, for the three months ended June 30, compared with US$14.47 billion, or US$4.75 per share, a year earlier, it said on Friday.

The bank’s shares dipped 0.6% in trading before the bell. They have gained 22% so far this year, but have underperformed rivals Bank of America, Citigroup, and Wells Fargo.

JPMorgan benefitted from a plan to exchange some of its shares in Visa, the world’s largest payment network.

Investment banking fees grew 50%, compared with a low base, but was higher than an earlier company prediction of 25% to 30%.

JPMorgan’s lending business also benefitted from high rates, with net interest income (NII) – the difference between what it earns on loans and pays out on deposits – rising 4% to US$22.9 billion.

Lending has remained healthy even as banks compete for deposits and face pressure to shell out more to depositors to store their money.