JPMorgan Chase & Co reported better-than-expected first-quarter profit on Thursday, as improved investment banking performance offset an increase in losses from credit cards and other consumer debt.

The results come as a deepening recession and rising unemployment forced the bank to set aside more money against losses in its consumer banking business.

Its shares fell slightly to $32.30 from $32.56 in pre-market trading on Thursday, after first-quarter profit to common shareholders fell 33 percent to $1.52 billion.

The bank set aside $10 billion against credit losses, almost twice the amount it put aside a year earlier.

While the bank has largely avoided the losses and writedowns on complex debt securities and subprime mortgages that hurt other banks in 2008, it is heavily exposed to consumer credit and Chief Executive Jamie Dimon has warned that rising unemployment will hurt the bank's consumer businesses in 2009.

It is reasonable to expect additional increases to credit reserves if the economic environment worsens, said Chief Executive Jamie Dimon in a statement.

Offsetting rising credit card and mortgage losses, however, JPMorgan's investment bank reported profit of $1.6 billion, up from a loss of $87 million a year earlier, on an increase in debt underwriting and strong credit, emerging markets and rates trading activity.

Net income to common shareholders was $1.52 billion, or 40 cents a share, compared to $2.29 billion, or 67 cents a share a year earlier. Net income before preferred dividends was $2.14 billion, compared to $2.37 billion a year ago. Revenue increased 45 percent to $25 billion from $16.9 billion.

Analysts on average expected the second-largest U.S. bank to earn 30 cents a share, with forecasts ranging from 11 cents to 45 cents a share, according to Reuters Estimates.

In February, the bank slashed its common stock dividend 87 percent to 5 cents a share from 38 cents a share, saving $5 billion of common equity a year.

JPMorgan shares have outperformed the broader sector since the start of the year, up about 3 percent at $32.56 on Wednesday compared to a 20 percent decline in the KBW Bank Index.

(Reporting by Elinor Comlay; Editing by Derek Caney)

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