JPMorgan Chase (NYSE: JPM) kicked off the first quarter earnings round with a strong upside surprise, which may or may not bode well for other banks. The bank posted earnings of $5.6 billion, or $1.28 a share, beating the expected $1.16 a share and also heating last year's 74 cents a share. The big surge in earnings reflected in part the release of funds that had previously been set aside to cover expected credit card losses; that added $2 billion to the bottom line.

There was plenty of bad news, however, as the foreclosure fiasco continues to take a toll on the bank's income statement. Chase Retail Financial Services, the consumer unit, reported a loss of $208 million, compared with a $131 million loss a year earlier. That reflected a $1.1 billion charge to cover expected higher costs of mortgage servicing operations. Revenue in the unit was down nearly 20 percent, reflecting thinner margins and a slowdown in home refinancing. The consumer-oriented revenue drop was only partially offset by gains elsewhere; overall bank revenue fell 8 percent.

Bright spots include investment banking and, in something of a surprise, fixed-income trading. JPMorgan has been on fire in deal advisory, riding its work for the AT&T-T-Mobile deal. Hopefully, trading activity will continue to surprise on the upside. In general, we've been saying that deal advisory work might make up for consumer losses. And for JPMorgang, that proved partially true in the first quarter.

The issue now is whether other banks will report similar results. Bank of America's release is on tap for Friday. While some might expect the consumer unit dynamics to be the same, it's less likely that investment banking and trading results will be the powerful offsets they were at JPMorgan.

For more:
- here's the release

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