A return of the trading bulls has helped lift banking earnings

JP Morgan and Merrill Lynch have reported record quarterly profits, with Bank of America seeing a solid rise.

Banking giant Citigroup also released good earnings news earlier this week.

While a slowdown in trading revenues is predicted in the final months of this year, banks are set to benefit from the improving economy, analysts say.

However, analysts did raise concerns over the strength of US consumer spending, pointing out that credit card transactions were on the increase, which could indicate that household finances were getting stretched.

Interest rates have also been on the rise as the economy has recovered and high oil prices have pushed up inflation, something that may put a dampener on consumer and corporate borrowing.

Going higher

JP Morgan said net income jumped to $2.53bn (�1.44bn) in the three months to the end of September from $1.42bn a year earlier, while trading revenue climbed by 50% to $2.4bn.

The bank, the third-biggest in the US, said its president James Dimon would take over as chief executive six months earlier than planned at the end of this year.

Merrill Lynch, the biggest US brokerage, reported third-quarter net income of $1.4bn, compared with $922m a year earlier.

One of the key drivers of growth was a more than doubling in revenues from equity trading.

Analysts said they were optimistic that retail investors were coming back into the market, helping buoy earnings and underlining the improving confidence in the economy.