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JPMorgan Chase recorded the largest quarterly profit ever by a US bank in the first three months of the year, signalling how the industry has been buoyed by a revival in trading volumes, low loan losses and a big cut in the corporate tax rate.

The largest US bank by assets, which has a balance sheet of $2.61tn, reported first-quarter net income of $8.7bn, meaning it made about $100m in profit for shareholders every single day.

One highlight of its forecast-beating performance was a 26 per cent increase in stock trading revenues, to $2bn. The rise in stock market volatility this year has helped restore the trading fortunes of the big banks, after a period of unusual calm which sapped profits at the likes of Goldman Sachs and Deutsche Bank.

“It’s spring time for banks: it’s finally warm in New York, and this is the warmest time for banks since the financial crisis,” said Mike Mayo, banking analyst at Wells Fargo Securities. “These are the highest post-crisis returns that we’ve seen.”

JPMorgan’s chief financial officer Marianne Lake celebrated the return of volatility as a welcome change from the “one-directional, grinding-higher” market of recent times.

Citigroup, the fourth-biggest US bank, which also reported on Friday, did even better in equities trading in the first quarter, with revenues up 38 per cent to $1.1bn.

Wells Fargo, the number three, posted a slight fall in total trading revenues from its smaller securities operations. Its results were overshadowed by the disclosure of a looming penalty of about $1bn for mis-selling insurance and mortgages.

“2018 is off to a good start with our businesses performing well across the board . . . building on the momentum from last year,” said Jamie Dimon, JPMorgan’s chairman and chief executive.

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The new lower corporate rate meant the bank’s quarterly tax bill was $240m lower than a year ago, despite a $2bn increase in taxable income. And its return on equity, a key concern for investors, came to 15 per cent, a multiyear high.

JPMorgan’s results also indicated how Wall Street banks are becoming more willing to take on extra risk. Its value-at-risk — one measure of how much the investment banking unit could lose in a single day’s trading — leapt 60 per cent from a year earlier.

Ms Lake stressed that the absolute number, $40m, is still low compared to historical standards. Moves in VaR depend to a large extent on client demand and levels of volatility in the market, she said.

Analysts expect the positive mood to carry over into next week, when Bank of America, Goldman Sachs and Morgan Stanley present results.

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Ken Usdin, banking analyst at Jefferies, said investors had already anticipated a revival in the industry’s fortunes. “Expectations had risen, following tax reforms and rate hikes,” he said. “We’re still waiting for confirmation of post-election benefits as far as improving borrowing demand is concerned.”

Share prices in the big US banks have been flat this year but are still up more than a fifth from 12 months ago, anticipating the benefits of lower taxes, lighter regulation and higher interest rates, which have widened the gap between banks’ funding costs and the yield on assets.

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Since the Republican administration took power, promising to lift some of the burdens put on banks after the financial crisis, investors have been awaiting the first fruits of that effort. Now, with almost all of the key regulatory positions filled by Trump appointees, momentum is building.

This week saw two key developments: a planned loosening of the annual bank stress test, and a move to tweak the amount of capital banks must hold compared to their total assets.

During a call with analysts, Ms Lake of JPMorgan noted that the current crop of regulators was much more “open . . . to really consider feedback from the industry,” and made an unusually direct appeal for relief from Washington from the tougher rules governing the very biggest, systemically-important banks.

“Stepping back, if we are fundamentally reconsidering the construct of minimum capital levels, then all of the building blocks should be in play, including the [globally systemically important bank] surcharge,” she said.

In an internal memo to employees on Friday morning, Daniel Pinto, head of JPMorgan’s corporate investment banking unit, celebrated a “strong quarter,” noting that investors are “eagerly looking for opportunities amid the bouts of volatility”.

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