NEW YORK (AP) — JPMorgan Chase's first-quarter profit was not as good as last year's, but it told investors what they wanted to hear: Banking is not dead.

JPMorgan said yesterday it earned $2.14 billion for the January-March period, thanks to both strong trading activity and banking to average consumers.

Like other banks, JPMorgan is still seeing its loan defaults increase. The company's credit costs amounted to $10 billion — that's $6 billion from loan losses, and $4 billion to build up reserves.

And it anticipates that losses will keep rising in credit cards, home equity loans, mortgages and commercial real estate loans.

But the company is benefiting from growth in deposits, a rise in mortgage refinancing, and low borrowing rates. When a bank can borrow cheaply, it can profit more from lending.

It can also earn more from trading and investing — like Goldman Sachs Group Inc., JPMorgan pulled in record revenue in the first quarter from buying and selling bonds. Not only did JPMorgan profit from the wider rate spreads, but it also gained market share from its purchase of Bear Stearns and took advantage of historically high issuance in the bond market.

"January, February and March were some of the biggest bond months ever," said CEO Jamie Dimon in a conference call.

JPMorgan's revenue from the fixed-income markets was a record $4.9 billion, and helped push the entire investment bank division to record revenue of $8.3 billion and a record profit of $1.6 billion.

However, Dimon added that fixed-income activity is likely to taper off — which means that the investment bank might not be able to pull off another record performance for some time.

"It's not reasonable to expect it to continue at that level," Dimon said.

JPMorgan Chase & Co. earned $2.14 billion, or 40 cents per share, on record revenue of $26.9 billion in the first quarter. It earned $2.37 billion, or 67 cents per share, a year earlier.

Analysts predicted a profit of 32 cents per share, according to Thomson Reuters. The company's shares rose 40 cents, or 1.2 percent, to $32.96 in midmorning trading.

"The results are quite strong in a very challenging environment," said Tom Kersting, a banking analyst at Edward Jones. He said overall, though, investors are cautious ahead of the government's stress test results in May, and first-quarter results from Citigroup Inc. and Bank of America Corp.

Those two banks are likely to post better results than last quarter, Kersting said, "but not as strong as what we've seen out of Wells or JPMorgan".

Last week, Wells Fargo & Co. surprised investors by announcing a record $3 billion quarterly profit.

Unlike Citigroup, Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley, JPMorgan has managed to avoid posting a quarterly loss since the financial crisis began.

JPMorgan said it extended $150 billion in new credit during the first quarter.

Its retail banking unit earned $474 million, compared with last year's loss of $311 million. That business was helped by last year's acquisition of the thrift Washington Mutual Inc. Average total deposits rose 62 percent to $345.8 billion from a year ago.