(Reuters) – JPMorgan Chase’s profit fell in the third quarter as a larger provision for potential loan defaults offset investment banking profits, the bank said on Friday.

Banks are building inventories — which serve as protection when borrowers default on their loans — to usual levels as consumers deplete the savings they built up during the pandemic.

Consumers’ financial health remains solid despite high interest rates and fears of unemployment.

Still, CEO Jamie Dimon maintained a cautious tone on the economy even as stock markets hit record highs and the Federal Reserve began a long-awaited cycle of rate cuts.

“We have been closely monitoring the geopolitical situation for some time, and recent events show that conditions are treacherous and increasingly worse,” Dimon said.

“There is significant human suffering and the outcome of these situations could have far-reaching consequences for both short-term economic outcomes and, more importantly, for the course of history.”

Net interest income (NII) – the difference between what a lender earns on loans and pays on deposits – grew 3% to $23.5 billion.

The bank’s activities on Wall Street were a bright spot as the prospect of monetary easing from the Fed fueled a rally in stocks in the third quarter.

Investment banking revenues rose 29% to $2.4 billion. This is higher than management’s expectation of 15% last month.

The lender set aside $3.11 billion as a provision for credit losses, compared with $1.38 billion a year earlier.

Profit was $12.90 billion for the three months ended September 30, compared with $13.15 billion a year ago.

Shares rose about 1% to $214.79 in premarket trading.

(Reporting by Niket Nishant in Bengaluru and Nupur Anand in New York, Editing by Lananh Nguyen and Arun Koyyur)