JPMorgan Chase & Co., the biggest U.S. bank, said profit climbed 12 percent, beating analysts' estimates, as first-quarter revenue from trading stocks and bonds increased for the first time since 2010.
Net income rose to $5.91 billion, or $1.45 a share, from $5.27 billion, or $1.28, a year earlier, according to a statement Tuesday from New York-based JPMorgan. Thirty-one analysts surveyed by Bloomberg estimated per-share earnings of $1.41. Excluding 13 cents in legal expenses and about 3 cents in accounting adjustments, earnings were $1.61 a share.
Trading revenue had a "very strong" start to the year as higher volatility boosted volume, Daniel Pinto, chief executive officer of JPMorgan's investment bank, said in February. Wall Street firms contended with falling trading revenue last year amid unusually calm markets.
"We expected an improvement in fixed-income trading revenues," Pri de Silva, senior banking analyst at CreditSights Inc. in New York, said before results were released. "That should bode well" for competitors including Goldman Sachs Group Inc., Morgan Stanley and Citigroup Inc., de Silva said.
JPMorgan climbed 1.5 percent to $63 at 7:43 a.m. in New York. Revenue in the quarter increased 4.1 percent to $24.8 billion, mostly driven by gains at the corporate and investment bank, the company said.
Profit in Pinto's division climbed 19 percent to $2.54 billion, the biggest increase in the firm's four main businesses. The company said "macro events" drove robust client activity in currencies, emerging markets, rates and equities.
Fixed-income trading revenue rose 4.5 percent to $4.07 billion, exceeding the $3.94 billion average estimate of analysts surveyed by Bloomberg. Equity-trading revenue advanced 22 percent to $1.61 billion, beating the $1.41 billion estimate. Trading during the first three months advanced on a year-over- year basis for the first time since 2010.
Investment-banking fees also rose, fueling a 12 percent increase in the division's revenue to $3.1 billion.
Higher capital requirements prompted JPMorgan, the world's biggest investment bank, to lower its target for returns at that business to 13 percent from 15 percent, according to a February presentation. The firm is also considering whether to shrink in areas including interest-rates trading and prime brokerage because of the new capital rules, Pinto has said.
Net income from consumer and community banking, run by Gordon Smith, increased 12 percent to $2.22 billion as revenue advanced 2 percent and expenses declined 4 percent.
JPMorgan said profit in asset management, run by Mary Erdoes, rose 11 percent to $502 million. Assets under management climbed $111 billion to $1.8 trillion amid greater inflows and rising equity markets.
Commercial banking, the unit run by Doug Petno, posted a 1 percent profit increase to $598 million. The division's provision for credit losses was $61 million, up $56 million from a year earlier as the bank set aside more reserves related to loans to energy companies.
JPMorgan shares trade at a discount to the estimated valuations of its four main businesses, leading analysts including Richard Ramsden of Goldman Sachs to examine whether the firm would be worth more split into pieces.
The bank's valuation is hurt by uncertainty around future legal costs, CEO Jamie Dimon said last week in his annual letter to investors. The firm, which has posted more than $36 billion in legal costs since the financial crisis, may see those expenses "normalize" by 2016, he said.
"Though we still face legal uncertainty, particularly around foreign-exchange trading, we are determined to reduce it," Dimon said in the letter.
Last year, the company settled regulatory claims that traders sought to rig foreign-exchange benchmarks. The Justice Department's related case is still open.