JPMorgan's credit-card division, which lost money for all of 2009, generated $1.34 billion in profit, or 24% of net income for the quarter. The investment bank's $2.37 billion of earnings accounted for 43% of the total.

Fewer consumers fell behind on their credit-card payments in the first quarter. Thirty-day delinquency rates dropped to 3.57% from 5.6% in the same quarter in 2010 and 4.1% in the fourth quarter. The rate of credit cards charged off as bad debt also fell, to 7% from 11.8% the prior year and 7.9% in the previous quarter.

The loss in retail banking, which includes home loans and checking accounts, compared with $708 million of profit during the fourth quarter and a $131 million loss a year earlier. The division benefited from a $2.4 billion reduction in provisions to $1.3 billion, JPMorgan said.

'Right Direction'

Home prices, which stabilized early last year, have fallen every month since the middle of 2010 and may slow reserve releases, which are determined in part by economic forecasts, said Jason Goldberg, a senior analyst with Barclays Capital in New York.

"The most important things should be moving in the right direction, but you're not yet firing on all cylinders," Goldberg said.

Loan growth remains slow and net interest margins, which measure the profitability of lending, continue to narrow at U.S. banks. Bank loans and leases fell $87.4 billion to $6.97 trillion from the end of 2010 through March 30, or 1.3%, according to Federal Reserve data.

Net income in investment banking declined 4%, to $2.37 billion in the first quarter from $2.47 billion the year before.

JPMorgan and other large banks, which have benefited from record low costs of funding mortgages and other assets, face a squeeze on net interest margins -- the difference between what they pay to borrow money and what they get for loans and on securities.

'Kind of Lackluster'

The net yield on interest-earning assets -- what the bank collects on interest on loans and securities minus what it pays out on deposits and other borrowings -- rose to 2.89% in the first quarter, from 2.88% in the fourth quarter and 3.32% a year earlier.