JPMorgan, which holds the most assets of any bank in the country, said Friday that it issued more mortgage loans in the first three months of the year and turned a bigger profit than Wall Street expected.
The bank said it earned $5.4 billion for the first quarter, or $1.31 per share. Analysts were expecting $1.16 per share. Revenue and profit declined at most of JPMorgan's businesses, including investment banking.
JPMorgan's earnings fell 3 percent from the same quarter one year earlier, while its revenue grew 6 percent from last year to $24.4 billion.
As the largest bank, JPMorgan is a barometer of the economy and the financial industry. It is also the first major bank to report its results for the first quarter.
One bright spot was that customers continued to pay credit card bills and mortgage loans on time, which allowed the bank to pick up $1.8 billion from the reserves it had set aside to cover loan losses.
JPMorgan Chase also gained $1.1 billion from a settlement related to Washington Mutual, the failed bank it bought during the depths of the 2008 financial crisis.
"Looks pretty good. The revenue is what really impressed me. It tells me there's more economic activity, maybe, than what we were previously thinking — more demand for credit, more demand for banking services, more business out there," Joe Terril, Founder of Terril & Co, a Money Manager in St. Louis, Missouri told Reuters.
With interest rates hitting historic lows in the first quarter, JPMorgan Chase said its mortgage business earned $461 million, reversing a loss in the same period last year.
It issued 6 percent more in mortgages. Applications for mortgages grew 33 percent as more customers refinanced their loans.
But mortgage-related litigation, an overhang from the bursting of the real estate bubble last decade, continues to be a huge issue: The bank set aside $2.5 billion to fight its legal battles.
The bank's chief financial officer, Douglas Braunstein, said the bank has enough reserves for mortgage-related litigation.
"We think we are unlikely to add significantly to these reserves from where we are today," Braunstein said in a conference call with the media to discuss earnings.
Though the bank ranked first in investment banking fees globally in the first quarter, both revenue and income fell, reflecting turbulence in the markets because of fears that Greece might default on its debt.
The stock market rallied in the first quarter, its best since 1998, but trading volume was low as many investors, particularly individuals, decided to stay away.
JPMorgan's revenue at its investment bank was $7.3 billion, compared with $8.2 billion last year. Fees fell 23 percent to $1.4 billion.