WASHINGTON (Reuters) – While big U.S. bank bosses were optimistic on the economic outlook on Friday, pointing to an uptick in some lending businesses and a jump in consumer spending, investors were skeptical on the growth outlook for the sector.

JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co, bellwethers of the U.S. economy, reported combined profits of $19 billion for the fourth quarter, each comfortably beating analyst estimates.

However, analysts noted that the beats were helped by reserve releases and other one-off items and that underlying performances were less compelling.

Bank shares across the board were down 2.1%, with only Wells Fargo bucking the trend amongst the top six, amid worries over a decline in trading revenues and loan growth.

“Investors are concerned about where growth is going to come from,” said Viola Risk Advisors bank analyst David Hendler. “There doesn’t seem to be much sizzle in the forward quarters.”

Bank executives said the U.S. economy is still on a healthy trajectory, despite headwinds including the wave of Omicron infections, 7% inflation, and supply chain bottlenecks.

While loan growth, a key metric watched by analysts, was mixed, consumer lending and spending were up, they pointed out.

“The consumer is very strong,” JPMorgan CEO Jamie Dimon told analysts. “Despite … Omicron, in spite of supply chains, 2021 was one of the best growth years ever,” he said.

Average loans at JPMorgan, the country’s largest lender, rose 6% year-on-year, while combined debit and credit card spend was up 26%. At Wells Fargo, loans were down 3% year-on-year but grew 5% during the second half of 2021, boosted by its consumer and commercial portfolios.

Overall lending was flat at Citigroup partly because corporations are still flush with cash and have other financing options, said Chief Financial Officer Mark Mason, but loan balances on Citigroup-branded cards in North America were up 3% from a year earlier and spending was 24% higher.

Bank of America Corp, the country’s other major consumer lender, reports earnings on Wednesday.

“What we are seeing across the three major banks that reported today is not only a decent environment for loan growth in the 4th quarter but management teams’ optimistic this will continue into 2022,” said Jason Ware, chief investment officer for Albion Financial Group, which holds JPMorgan shares.

Still, investors worry that rising inflation could hurt consumer spending, while loan growth may not be strong enough to outpace deposit growth, meaning banks may not fully benefit from a steepening yield curve as benchmark rates rise.

“It gives the notion the economy isn’t as strong as we thought it was,” said Keith Buchanan, portfolio manager at Globalt in Atlanta.

EXPENSES, TRADING

Inflationary pressures also weighed on expenses as banks face cutthroat hiring competition and are being forced to pay more to recruit and keep talent, executives said.

“Hiring has been very competitive across the business,” said Citigroup’s Mason. “We have seen some pressure in what one has to pay to attract talent.”

The Wall Street businesses of JPMorgan and Citigroup fared mostly as expected, with both reporting big declines in trading. That was cushioned by another stellar quarter for deals.

Goldman Sachs Group Inc and Morgan Stanley, Wall Street’s other trading giants, will report next week, offering further clues on how the trading environment may look through the remainder of the year.

Analysts expect a further normalization as the Fed slows and eventually stops its asset purchases entirely.

“You’re not going to have the fixed income trading boom that you had in the lower rates environment, with corporations rushing to refinance at lower rates,” said Hendler.

(Additional reporting by Matt Scuffham, Megan Davies, Elizabeth Dilts, David Henry, Noor Zainab Hussain, Niket Nishant and Sinead Carew; Editing by Nick Zieminski)