JPMorgan Chase said quarterly profit fell by half, although shares rose as the third-largest bank avoided the kind of massive losses that crippled many of its rivals.
The bank absorbed more than $5 billion of losses and write-downs tied to mortgages and broken-down corporate credit markets.
Nevertheless those losses were less dramatic than those of rivals such as Citigroup ,UBS and Merrill Lynch .
"JPMorgan did relatively well in a very difficult operating environment," Sandler O'Neill analyst Jeff Harte said. "Unfortunately, it doesn't appear that environment will get better in the near future."
JPMorgan's first-quarter profit dropped to $2.37 billion, or 68 cents a share, from $4.79 billion, or $1.34, a year earlier.
The profit included a $955 million gain on the bank's stake in credit card giant Visa Inc, which went public last month.
The results exceeded the average analyst estimate of 64 cents according to Thomson First Call, which excluded the Visa gain. Reuters Estimates, which included Visa in its forecasts, said the average estimate was 71 cents.
Net revenue fell 11 percent to $16.9 billion, in line with expectations.
Still, JPMorgan Chief Executive Jamie Dimon cautioned that financial markets face a long period of uncertainty. "We simply don't know. There are some good signs and some bad signs," Dimon told reporters in a briefing.
In credit markets, clogged with risky buyout loans extended in better times, Dimon said "I do think we're well more than half way through -- maybe 75 to 80 percent through.
That side is working itself out." That said, Dimon warned a weakened economy and balky markets will weigh on the bank for some time.
JPMorgan set aside $5.11 billion for credit losses on a managed basis, more than triple the year-earlier $1.6 billion, and up from $3.16 billion in the fourth quarter.
About $1.1 billion was tied to home equity loans.
Its investment bank wrote down about $2.6 billion, including $1.2 billion for mortgages, $1.1 billion for loans to fund corporate buyouts, and $266 million tied to collateralized debt obligations.
Last month, it agreed to buy the troubled investment bank Bear Stearns for $10 per share.
Dimon was also reportedly pursuing an offer for Washington Mutual , and is thought to be interested in SunTrust Banks , a large U.S. Southeast bank.
Morgan financial chief Mike Cavanagh said Bear Stearns' businesses were in line with the bank's expectations.
Investment banking operations suffered an $87 million loss, compared with a year-earlier $1.54 billion profit, hurt by the mortgage and loan write-downs.
Net revenue fell 52 percent to $3.01 billion.
Retail banking suffered a $227 million loss, compared with a year-earlier $859 million profit.
Those operations set aside $2.49 billion for soured loans, including home equity loans.
Credit card services profit fell 20 percent to $609 million, despite a 36 percent jump in the amount set aside for bad loans.
Profit rose 53 percent to $403 million in treasury and securities services, fell 16 percent to $356 million in asset management, dipped 4 percent to $292 million in commercial banking, and rose 63 percent to $1.03 billion in corporate and private equity operations.
The latter stemmed mainly from Visa.
JPMorgan ended the quarter with 3,146 branches and $1.64 trillion of assets.