JPMorgan Shows Strength in Quarter

JPMorgan Chase, the nation’s largest bank, on Friday reported a 33 percent rise in first-quarter earnings, bolstered by gains in the investment banking business and a surge in mortgage lending.

“All our businesses had strong performance, and our client franchises did exceptionally well,” Jamie Dimon, the bank’s chief executive, said in a statement.

Even as loan growth slows and the economy recovers slowly, the gains from investment banking allowed JPMorgan to record 12 consecutive quarters of profit.

Within the investment banking unit, assets grew by 8 percent to $19.3 trillion for the first quarter.

The net earnings of $6.5 billion, or $1.59 a share, exceeded Wall Street analysts’ expectations of $5.41 billion, or $1.40 a share. Revenue was $25.8 billion, compared with $26.8 billion in the same period a year earlier.

The report kicked off the bank earnings season. As the nation’s largest bank by assets, JPMorgan is often looked at as a bellwether.

Mortgage originations rose 37 percent, to $52.7 billion, underscoring the housing market’s improvement.

“We are seeing positive signs that the economy is healthy and getting stronger. Housing prices continued to improve and new home purchases are also starting to come back,” Mr. Dimon said.

Still, like rivals that are also slashing expenses, JPMorgan in February said the bank would cut up to 19,000 jobs within its mortgage and community banking units.

JPMorgan has pinned some of its hopes for future profitability on its asset management business, as profits from riskier businesses like trading get undercut by a spate of new regulation. The asset management business reported net income of $487 million for the quarter, up 26 percent from a year earlier.

JPMorgan continued to gain business in private banking, accumulating $2.2 trillion in assets under management, up 8 percent from a year earlier.

Another quarter of strong earnings offers JPMorgan another chance to move beyond the multibillion trading loss that has dogged the bank.

Since announcing the trading loss last May, JPMorgan and Mr. Dimon, have struggled to reassure skittish investors and defray a series of federal investigations related to the bungled wagers on complex-credit derivatives. Mr. Dimon has testified before Congress, vastly reshuffled its executive ranks and fortified risk controls. In January, JPMorgan’s board slashed Mr. Dimon’s compensation by 50 percent to $11.5 million.

The losses, which stemmed from trades made by the bank’s chief investment office in London, have swelled to more than $6 billion. For Mr. Dimon, the losses have helped to undercut his reputation as a deft risk manager â€" an accolade he won after successfully steering the bank through the 2008 financial crisis in better shape than its rivals.

More recently, Senator Carl Levin, Democrat of Michigan, grilled current and former senior executives at the bank about lax oversight policies and gulfs in risk management. The Congressional hearing, which lasted for nearly four hours, renewed pressure on Mr. Dimon and the bank. At times, senior executives floundered as they tried to combat lawmakers’ accusations that the officials misled investors and regulators about the soured bet. The hearing came just a day after a scathing 300-page report into the losses.

Mr. Dimon has struck a more contrite tone, seemingly chastened by the continued fallout from the trading losses. In his annual letter to shareholders, released on Wednesday, Mr. Dimon repeatedly apologized for the losses. He described the losses as the “the stupidest and most embarrassing situation I have ever been a part of”, vowing to continue to bolster risk controls and rout out problems.

Rather than taking a combative tone toward regulations that rein in Wall Street, Mr. Dimon expressed regret for how the trading losses “let our regulators down.”

In his letter, Mr. Dimon also warned shareholders that the bank will continue to face regulatory challenges in the “coming months.” JPMorgan, Mr. Dimon said, will deploy resources to improve firm-wide controls on risk and compliance. “We are re-prioritizing our major projects and initiatives,” he said.

The earnings on Friday come just a month before JPMorgan’s annual shareholder meeting where the results of a crucial vote will be announced. Shareholders will decide whether to strip Mr. Dimon of his chairman title, a role he has held since 2006. Ahead of the nonbinding vote, JPMorgan has been working behind the scenes to make their case to shareholders that Mr. Dimon should keep the dual roles.