JPMorgan Chase reported net income of $5.4bn as the US banking group kicked off the first-quarter earnings season with results that were down from last year's $5.6bn but still much better than analysts had forecast. Jamie Dimon, chief executive, on Friday described the results as "solid." In upbeat comments on the US economy, he said the housing market was "very close to the bottom," while American consumers had reduced their debt burden so that the "debt service ratio is back to where it was 20 years ago." Businesses are in very good shape. They're earning money, they're very well capitalised, they've got a lot of cash," he said. The first quarter was marked by the eurozone crisis receding and investment banks benefiting from a better trading environment, and a thawing of frozen capital markets activity. Retail banking improved markedly, with a 40 per cent increase in net revenues to $7.6bn and the mortgage arm turned to a profit of $461m after a net loss of $1.1bn in the same quarter last year. JPMorgan acknowledged the impact of a government programme for distressed borrowers, which has driven higher rates of refinancing, boosting revenues. Revenues from Investment banking fell 11 per cent year on year to $7.3bn. But that was up 68 per cent from the dire final quarter of last year, when the eurozone crisis was acute and worries rose over the health of the US and Chinese economies. But overall expenses climbed sharply from $16bn a year earlier to $18.3bn, dulling the impact of the surging top line. Among the expense items was an additional $2.5bn related to mortgage litigation. Like other US banks, JPMorgan is struggling to put behind it the bad loans that underpinned the financial crisis. Mr Dimon said there would be "elevated levels of costs and losses associated with mortgage-related issues for a while longer." The bank resisted the suggestion that its London-based chief investment office, recently revealed to be taking large positions in credit derivatives, was taking on huge amounts of risk. Doug Braunstein, chief financial officer, said the office was mainly used to invest the bank's $360bn of excess deposits in "a variety of very high-grade securities" and "as part of that they hedge against downside risk." Mr Braunstein rejected the idea that the office was proprietary trading in contravention of the new Volcker rule, which prohibits the activity at banks. "All those activities I've described are very long-term in nature and they are consistent, I think, with both the spirit and the written rules," he said. However, JPMorgan has previously warned that it may fall foul of the Volcker rule.