New York (AFP) - JPMorgan Chase reported a drop in third-quarter profits Friday as it set aside funds for potential loan defaults and highlighted the rising risk of recession.

Profits fell 17 percent to $9.7 billion on a 10 percent increase in revenues to $32.7 billion.

The results were dented by JPMorgan’s move to add $808 million in reserves for potential bad loans. In the year-ago period, profits were boosted by $2.1 billion in reserve releases.

The contrast reflects today’s much more subdued economic outlook compared with a year ago.

Higher interest rates helped boost the bank’s net interest income, but JPMorgan suffered a big drop in investment banking revenues.

Chief Executive Jamie Dimon said consumer spending remained robust during the period, but pointed to myriad risks facing the economy.

“There are significant headwinds immediately in front of us –- stubbornly high inflation leading to higher global interest rates, the uncertain impacts of quantitative tightening, the war in Ukraine, which is increasing all geopolitical risks, and the fragile state of oil supply and prices,” Dimon said.

“While we are hoping for the best, we always remain vigilant and are prepared for bad outcomes so we can continue to serve customers even in the most challenging of times.”

In an interview with CNBC earlier this week, Dimon said a US recession was likely in early-to-mid 2023 and that the stock market could fall another 20 percent.

Both earnings-per-share and revenues topped analyst expectations.

Shares rose 1.8 percent to $111.30 in pre-market trading.