Results from the first of the major Wall Street banks to post earnings underscore how difficult the first quarter was for the financial sector. JPMorgan's bond trading revenue plunged 21 percent, and mortgage lending revenue fell 84 percent from the same quarter last year.
But most of the bank's big businesses, including credit card and commercial lending, delivered lower profits.
Overall, net income fell 19 percent to $5.27 billion, or $1.28 per share, from $6.53 billion, or $1.59 per share, in the same quarter of 2013, the biggest U.S. bank said on Friday.
Analysts on average had expected earnings of $1.40 per share, according to Thomson Reuters I/B/E/S. The net earnings for both the latest and prior quarters included special items.
Total net revenue fell 8.5 percent to $22.99 billion, falling well short of the average estimate of $24.53 billion.
JPMorgan's shares, which recently topped $61 to trade at their highest level in 13 years, were down 3.3 percent at $55.50 in premarket trading.
Chief Executive Jamie Dimon struck an upbeat note, however.
"We have growing confidence in the economy - consumers, corporations and middle market companies are in increasingly good financial shape and housing has turned the corner in most markets...," he said in a statement.
When asked whether the bank would take more risk to boost revenue, Dimon said the bank does not change its underwriting standards to boost revenue.
"We feel really good about the risks we're taking...for the future of the company," Dimon said on a conference call with journalists.
Dimon has been working to improve the bank's profitability after net income dropped 16 percent last year due to massive legal settlements and rising costs to improve compliance with laws and regulations.
JPMorgan's revenue from fixed-income fell 21 percent to $3.8 billion in the quarter ended March 31, while revenue from equity markets fell 3 percent to $1.3 billion.
Some investors worry about how much of the big banks' revenue streams from fixed-income trading have been lost forever as a result of changes ordered by regulators to make the banking system safer. JPMorgan's annual costs to comply with laws and regulations and control risk have increased by about $2 billion.
JPMorgan, the first big investment bank to report for the quarter, said non-interest expenses fell 5 percent in the latest quarter to $14.6 billion.
MORTGAGE LENDING FALLS
Dimon is aiming to hold down overhead - which he defines as non-interest expenses aside from litigation - to below an average of $14.75 billion per quarter, or $59 billion for the year.
Mortgage banking net income fell to $114 million in the quarter, a drop of $559 million from the year-earlier period.
The bank's mortgage originations fell 68 percent to $17 billion from a year earlier, and were down 27 percent from the fourth quarter.
U.S. mortgage lending has been cooling as homeowners finish refinancing their loans.
JPMorgan, the largest U.S. bank by assets, said total assets at the end of March stood at $2.48 trillion, up from $2.42 trillion at the end of December.
The firm's supplementary leverage ratio, a measure of a bank's capital compared with its assets, stood at 5.1 percent at the end of the quarter.
Leverage ratios took on added importance on Tuesday when the Federal Reserve approved new rules setting minimum levels that could force the eight biggest U.S. banks to boost their capital by a total of $68 billion.
The rule sets a higher minimum of 6 percent for the company's insured bank subsidiary.
Before the rule was approved in its latest form, JPMorgan had said it was on track to raise its ratio from 4.6 percent at the end of December to the 5 percent minimum for its holding company by the end of this year.
LITIGATION EXPENSES "IMMATERIAL"
JPMorgan said its litigation expenses were immaterial in the latest quarter, under its "other corporate" accounting line.
Litigation expenses totaled $347 million in the year-earlier quarter and $847 million in the fourth-quarter.
In the first quarter two years ago, litigation costs totaled$2.5 billion as the bank built up reserves in anticipation of big legal settlements that it ultimately reached in 2013.
JPMorgan paid more than $20 billion last year to resolve legal claims stemming from a wide range of problems, including its London Whale derivatives loss and its marketing of bad mortgage securities before the financial crisis.
The rise in compliance costs is a hurdle to Dimon's goal of bringing down overhead to below $59 billion from $60 billion in 2013.
JPMorgan recently trimmed its key average profitability target - return on tangible common equity - to a range of 15 to 16 percent, from 16 percent.
The target cut mainly reflects pressure on profit margins in the bank's investment and commercial banking operations because of new regulations and heightened competition.
Margins from credit cards have also been shrinking as customers become less inclined to carry balances.
Revenue from retail banking, which includes income from the bank's credit card operations, fell 10 percent to $10.46 billion.
Results from JPMorgan's big retail banking and credit card operations are considered a pointer to reports due in coming weeks from regional banks and card issuers.
JPMorgan's shares - which have nearly doubled in price since the bank was rocked in 2012 by its London Whale derivatives trading scandal and $6.2 billion loss - were trading at a multiple of 9.56 times estimated forward earnings on Thursday.
That compares with 9.93 times for Goldman Sachs Group Inc and 11.38 times for Morgan Stanley, both of which report next week.