The nation's biggest bank by assets kicked off third-quarter bank earnings season by outperforming analysts' estimates. For the three months ended Sept. 30, JPMorgan Chase (NYSE:JPM) reported net income of $6.7 billion, a 7% increase over the year-ago period.

On a per-share basis, JPMorgan Chase earned $1.76. Analysts had expected it to earn only $1.65 per share.

"JPMorgan Chase delivered solid results in a competitive environment this quarter with steady core growth across the platform," said Chairman and CEO Jamie Dimon in prepared remarks. "And for the first time, the firm led the nation in total U.S. deposits, as consumers and businesses continue to view us as their partner of choice."

JPMorgan Chase chairman and CEO Jamie Dimon, standing with his arms crossed.

JPMorgan Chase Chairman and CEO Jamie Dimon. Image source: JPMorgan Chase.

Revenue at the New York-based bank climbed 3% to $26.2 billion. That also came in above the consensus estimate, which had called for third-quarter revenue at the bank of $25.23 billion.

JPMorgan Chase's performance was fueled by a 7% increase in average core loans, the principal product sold by commercial banks. The bank also reported that its lending margin had widened. Its net interest margin rose from 2.24% in the year-ago period to 2.37% in the latest quarter.

Further boosting profits at JPMorgan Chase was a 1% decline in operating expenses. It was this, in conjunction with the 3% revenue increase, that contributed to the 7% growth in the bank's bottom line.

Shares of JPMorgan Chase nevertheless proceeded to fall, ostensibly for two reasons. In the first case, as a universal bank, with both investment and commercial banking operations, JPMorgan Chase saw its Wall Street operations take a hit.

The Chase Tower in Phoenix, Arizona.

The Chase Tower in Phoenix. Image source: Getty Images.

In particular, the bank's trading revenue fell on a year-over-year basis by 21%. That was roughly in line with the 20% drop that JPMorgan Chase had forecast earlier in the quarter.

The trading slump was led by a drop in fixed-income trading, its bread and butter, which fell 27%. Revenue from its equities trading unit was similarly down, though by a comparatively modest 3.6%.

The second culprit for the decline in JPMorgan Chase's shares despite its better-than-expected earnings can be traced to fears over rising credit losses. The bank set aside $1.5 billion in the quarter in anticipation of future loan losses. That was up 14% from the year-ago period.

The concern is that this is a signal that tougher times are ahead. But to be fair, an increase in loan loss provisions is to be expected given the growth in loans at JPMorgan Chase and the mature state of the credit cycle, as banks are just now exiting a period of ultra-low loan losses.

All things considered, despite the drop in its share price, it was a solid quarter for the bank. If interest rates climb once more this year, as analysts and investors largely believe will happen, then things should continue to get better from here.

John Maxfield has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.