(Bloomberg News) JPMorgan Chase & Co., the most profitable U.S. bank, is taking trading revenue from competitors as investments including its $1.7 billion purchase of RBS Sempra's commodities business begin paying off, Deutsche Bank AG analysts said.

JPMorgan's share of total trading revenue among the top five broker-dealers has risen to as much as 26 percent over the past two quarters from as much as 22 percent over the previous nine months, Deutsche Bank analysts Matt O'Connor and David Ho told clients in a research note after meeting with Chief Financial Officer Doug Braunstein yesterday.

"We came away more confident than ever that share gains in FICC trading are sustainable as management noted that strong relative trading results recently reflect the benefits of investment spend over the past couple of years," the analysts said, referring to JPMorgan's fixed-income, interest-rate, currency and commodities trading unit.

JPMorgan is already seeing higher trading revenue per client as a result of its capital markets investments, O'Connor and Ho wrote.

First-quarter net income for the New York-based bank climbed to a record $5.56 billion. Almost 43 percent of that profit came from the investment bank, where earnings fell 4 percent to $2.37 billion from a year earlier. Fixed-income and equity markets revenue, where trading results are reported, was $6.6 billion, or 81 percent of the investment bank's revenue in the first quarter.

Proprietary Trading Restrictions

Regulatory restrictions in proprietary trading and international capital rules won't result in a "meaningful" loss in revenue for the second-largest U.S. bank by assets, O'Connor and Ho said. They reiterated their "buy" recommendation on JPMorgan stock and raised their 12-month price target to $54 from $52 a share.

JPMorgan fell 39 cents to $43.60 at 12:17 p.m. in New York Stock Exchange composite trading. Since reporting earnings on April 13, the stock has declined 6.7 percent compared with a 4.2 percent decrease in the 24-company KBW Bank Index.

Expenses will remain high and JPMorgan's mortgage book has cost the company $22 billion since 2009, averaging $3 billion to $4 billion a quarter, according to the note. Braunstein said "additional mortgage hits were likely and could linger for another 12 to 24 months," O'Connor and Ho wrote. They estimated the company will take another $3 billion in mortgage-related litigation charges this year and again in 2012, "although our bias is they could be higher."