Wells Fargo, opens new tab beat Wall Street estimates for quarterly profit, boosted by strong investment banking ​fees and as it doled out more loans after its regulatory shackles were removed last year.

The boost in its loan book came ‌as consumers borrowed money for cars and credit cards, while commercial and industrial clients also ramped up their borrowing. The shift comes as CEO Charlie Scharf pivoted to grow its loan book by focusing on expanding its credit card and auto businesses after the bank’s historic $1.95 trillion asset cap was lifted last year.

However, Wells Fargo’s shares, which have underperformed peers this year ​with a 6% drop, fell as much as 4.4% as investors noted a forecast that was unchanged and slight net interest margin (NIM) compression.

Scharf ​said narrower margins in the quarter were largely due to additional financial activity, which allows the bank to attract new clients ⁠and expand.

“It’s those additional businesses that have narrower margins… We’ll be very conscious of what the impact is both on NIM, but also on this balance ​between what you see in terms of NIM profit growth but returns,” Scharf told analysts.

Margins and net interest income (NII), the difference between what a bank earns on ​loans and pays out on deposits, have been a key focus as investors watch the pace and sustainability of earnings growth after the asset cap removal. The metric has fallen short of expectations in recent quarters as the bank’s deposit mix normalizes.

“But the ongoing fundamentals are probably not as strong as the headline EPS number would indicate and guidance for the ​full year was unchanged,” analysts at Oppenheimer said.

Wells Fargo, the fourth-largest U.S. lender, said NII rose 5% to $12.32 billion in the three months ended June 30. ​Average loans jumped 12% from a year earlier.

It reported net income growth of 17% to $6.41 billion, or $2.00 per share, beating the average analysts’ estimate of $1.72 per share, according to estimates ‌compiled by ⁠LSEG.

The U.S. economy has stayed resilient as higher tax refunds cushioned the impact of elevated energy prices following the conflict in the Middle East. But worries remain around the impact on inflation.

“Concerns around affordability and inflation exist, but the labor market and wage growth remain strong. Markets and U.S. economy have absorbed macroeconomic and geopolitical uncertainty,” Scharf said.

“Strong environments like this don’t last forever, and we see large amounts of capital being deployed by both banks and non-banks across a ​broad range of risk assets.”

Executives also ​said if inflation ends up being ⁠higher than expected or interest rates rise, it may impact consumers and the overall economy. That hasn’t materialized yet, executives said.

Wells Fargo’s investment banking prowess this quarter included some big deals such as U.S. utility NextEra Energy’s (NEE.N), opens new tab $67 ​billion deal for rival Dominion Energy (D.N), opens new tab, SpaceX’s (SPCX.O), opens new tab blockbuster $86 billion IPO, among others.

The momentum helped boost investment banking fees by ​35% to $939 million.

Equity capital ⁠markets also had a blowout quarter, underpinned by a wave of large initial public offerings and AI-linked follow-on share sales.

The trading business also gained momentum as Wells Fargo deployed more ⁠balance sheet ​to the markets business, which was constrained during the asset-cap era.

The bank’s markets revenue, which includes ​its trading business, jumped 24% to $2.21 billion in the second quarter.

Equities trading revenue surged 64%, while fixed income, currencies, and commodities rose 10%.