By Tanya Agrawal and David Henry
(Reuters) - JPMorgan Chase & Co (NYSE:JPM), the biggest U.S. bank by assets, reported a better-than-expected quarterly profit after a decision by the Swiss central bank to remove a cap on the franc shocked markets and spurred trading in currencies and bonds.
The bank's strong results bolstered Chief Executive Jamie Dimon's argument that size and diversification are advantages, not a reason to break up the bank.
Some analysts have suggested JPMorgan should be broken up to reduce capital requirements and complexity.
JPMorgan's revenue from trading fixed income, currencies and commodities (FICC) by 5 percent to $4.07 billion in the first quarter.
The strong investment banking results helped boost JPMorgan's shares as much as 2.5 percent to $63.61 on Tuesday.
Chief Financial Officer Marianne Lake told reporters it was too soon to say whether trading activity would hold up in the current quarter, although volumes seemed to be a bit lower.
JPMorgan's investment bank is the world's biggest by revenue, according to research firm Coalition. Its revenue rose 8.4 percent to $9.58 billion in the quarter.
But the unit has been under pressure to cut costs as clients have reduced trading since the financial crisis and regulators have demanded that big banks take fewer risks, hold more capital and improve controls.
JPMorgan was the first big U.S. bank to report for the quarter. Overall results are expected to show that trading, debt underwriting and mortgage refinancing were strong even as low interest rates cut into profitability on loans.
Profit at Wells Fargo (NYSE:WFC) & Co, the No. 1 U.S. mortgage lender, which also reported on Tuesday, was also better-than-expected as mortgage banking recovered.
JPMorgan's home loans, including refinancing, jumped 45 percent $24.7 billion as mortgage rates hovered near two-year lows.
Net income rose to $5.91 billion, or $1.45 per share, from $5.27 billion, or $1.28 per share, a year earlier. Analysts on average had expected earnings of $1.40 per share, according to Thomson Reuters I/B/E/S.
The results included an after-tax charge of $487 million for legal expenses. The bank has said its legal troubles should normalize by 2016.
JPMorgan's revenue increased 3.7 percent to $24.07 billion while expenses, adjusted for legal costs, fell by $402 million to $14.2 billion. Money set aside to cover bad loans rose 12.8 percent to $959 million.
The bank's interest margin, a key measure of profitability, fell to 2.07 percent from 2.20, reflecting low interest rates.