JPMC, aka Chase or JP Morgan, reported a better-than-expected profit today. Sounds good, right? While the company (also my employer) didn’t make as much as it did same quarter last year, it did earn a profit. That’s a glimmer of hope. However, upon further inspection, it becomes apparent that most of the profit came from the bank’s investment bank division. Do the math:

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

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.

So, “banking operations” accounted for roughly $500 million. Not good, really, though it’s still on the plus side.

What does this mean? Banking deposits – more specifically, profits from regular bank customers – is not rising. Banking may not be dead, but it sure ain’t growing!

Essentially, JPMC owned bonds at say, 5 percent, and sold them for a profit as rates for newly-issued bonds declined (say, to 3 percent). This profit could turn on a dime when rates head back up, especially when you consider that the Fed has pumped in record money supply growth over the past year or so.

In fact, we may see US Treasury bonds in the 8-10 percent range within the next 3-5 years. I hope banks sell all those bonds they bought in the mid-2000s!