NEW YORK (Reuters) - Second-quarter earnings reports from three of the biggest U.S. banks on Friday showed the sector is benefiting from policy changes in Washington that have lowered their taxes, boosted interest rates and allowed them to buy back more stock.

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Investors were skeptical, worried that underlying businesses were not as strong as they could be and that tough talk from international leaders about trade tariffs and hardened borders could hurt their bottom lines.

“With the tariffs, there’s this element of uncertainty and people aren’t anxious to take loans at a time when there’s uncertainty,” said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.

Shares of large bank stocks were down 0.7 percent at 1:30 p.m. ET, as measured by the S&P 500 Banks index .SPXBK after JPMorgan Chase & Co JPM.N, Citigroup Inc C.N and Wells Fargo & Co WFC.N reported second-quarter results.

Wells Fargo was the only one of the three lenders whose profit did not meet Wall Street expectations. The scandal-plagued bank was hurt by costs relating to past misconduct and a decline in mortgage lending. Although Citigroup beat profit estimates, its revenues fell short of expectations.

Citigroup’s loan growth said little about the U.S. economy because it came largely from corporations looking for international trade loans and working capital financing as well as from private banking clients in Asia, Chief Financial Officer John Gerspach told reporters.

JPMorgan, the largest U.S. bank by assets, had the strongest results, with profit jumping 18 percent year-over-year on strong trading revenue and loan growth. But Chief Executive Officer Jamie Dimon warned that clients are worried about a global trade war after U.S. President Donald Trump ramped up his protectionist rhetoric in recent weeks.

Trade disputes, particularly with China, are creating uncertainty, Dimon said on a conference call with reporters.

“It’s affecting psyche more than it is economics,” he said. “There are unpredictable outcomes when you start skirmishes like this with multiple countries.”

Even so, consumers and businesses remain confident enough to transact and borrow, Dimon later told analysts.

“If you’re looking for potholes out there, there are not a lot of things,” he said. “Growth is accelerating.”

Citigroup Chief Executive Officer Michael Corbat acknowledged trade concerns but said, so far, they had not resulted in significant changes to the way clients transact.

“It’s the rhetoric we’re tracking,” he told analysts. “I think the markets have fears of what the rhetoric leads to but, at this point, we’re not seeing it come through in the numbers.”

Both JP Morgan and Citigroup benefited from strong equities trading during the quarter - JP Morgan's equity trading revenue increased by 24 percent while Citi's equity trading revenue was up 19 percent. That bodes well for Bank of America BAC.N Goldman Sachs GS.N and Morgan Stanley MS.N, each of which have substantial equities trading operations and are due to report quarterly earnings next week.

Despite a favorable trading environment, shares in U.S. banks have underperformed the broader market this year because investors think the record profits are the result of one-time tax cuts and share buybacks rather than underlying strength in their businesses, according to analysts.

Investors want to see more growth in revenue and in pretax profit, according to Charles Peabody of Portales Partners, who said on Thursday the strong growth in earnings across the industry “is coming from financial engineering: a onetime tax cut and share buybacks.”