After dividends, the second-largest U.S. bank reported net income of $1.52 billion, or 40 cents a share, on $25 billion in revenue.

Investors have been cautiously cheering the performance of the financial sector, whose enormous losses led the stock market into decline. JPMorgan’s quarterly earnings report – like that of Goldman Sachs Group Inc. (GS) and rosy estimates from Bank of America Corp. (BAC) – serves as another psychological prop to jaded investors.

Perhaps the biggest surprise was JPMorgan CEO Jamie Dimon’s claim that the Wall Street bank has the resources to pay back the $25 billion it borrowed from the U.S. Treasury’s Troubled Asset Relief Program (TARP). Earlier this week, Goldman Sachs sold $5 billion in shares to repay half of what it borrowed from TARP.
“We could pay it back tomorrow,” Dimon said on a conference call, adding that the bank is waiting for guidance from the government.

JPMorgan’s investment banking business was a large driver of profits, bringing in a record $8.3 billion in revenue, including $4.9 billion from fixed-income trading alone. The investment-banking arm brought in $3 billion during the same period last year.

“It is almost certain we will see no improvement in those numbers for the next three quarters, probably through the middle of next year,” Gavin Graham, director of investments at Bank of Montreal Asset Management in Toronto, said in a Bloomberg TV interview.

Source: JPMorgan Beats First Quarter Estimates, Continues Bank Earnings Rally