Michael Falco for The New York Times

JPMorgan Chase kicked off the banking industry’s earnings season on Friday with news that its profits surged 48 percent last year amid signs that consumers and businesses had slowly regained their balance in the aftermath of the financial crisis.

The bank posted a $17.37 billion profit in 2010, up from $11.73 billion a year earlier, as losses on troubled loans eased.

That strength held up in the fourth quarter, when JPMorgan handily beat Wall Street estimates with earnings up 47 percent, to $4.83 billion, or $1.12 a share, from $3.28 billion, or 74 cents a share, in the quarter a year earlier.

The rosy report could pave the way for JPMorgan to increase its dividend by as much as a dollar.

Wall Street has been anxiously awaiting JPMorgan’s earnings report, hoping for a signal that plump shareholder payouts will return in 2011.

“We do think dividend increases are in the cards for some,” said Jason Goldberg, a senior analyst at Barclays Capital, who added that “JPMorgan will be in that grouping.”

The bank’s earnings set off a modest rally for bank stocks on Friday as investors look ahead for other financial institutions to report more good news next week. Shares of JPMorgan rose 1.03 percent, or 46 cents, on Friday, closing at $44.91.

Related Links JPMorgan Chase Press Release

The solid results show how JPMorgan has emerged from the bailout era as one of the nation’s most powerful banks and seems poised to take further advantage of its position as the economy rebounds. Indeed, 2010 was the most profitable year in the history of JPMorgan, surpassing its earnings even at the height of the boom.

Jamie Dimon, JPMorgan’s chairman and chief executive, offered what was perhaps his most upbeat assessment in three years, heralding signs of stability returning to the markets. “You are hopefully starting to see the foundation of a good recovery,” he said in a conference call with reporters.

Yet the fine print of JPMorgan’s report indicates some lingering concerns for the bank.

Despite the resurgent profits, the bank’s revenue for the year rose slightly, to $102.68 billion, from $100.43 billion in 2009. And the profits, though strong, were padded by the bank’s release of its reserves and an unusually large investment gain.

“JPMorgan is just now returning to an acceptable level of performance,” said Jim Sinegal, an analyst with Morningstar. “It’s more an indication the economy has stabilized rather than rebounded.”

JPMorgan, meanwhile, faces billions of dollars in potential legal claims stemming from the mortgage crisis. It is among several banks ensnared in state investigations and private lawsuits over questionable foreclosure procedures. Some investors are also seeking to recoup their losses on troubled loans and securities that banks sold.

JPMorgan put aside another $1.5 billion last quarter to cover potential legal claims from private investors who bought faulty mortgage-related securities. That increased its overall litigation reserves by more than $6.7 billion in 2010. The bank previously set aside a separate reserve of more than $5.6 billion to cover expected losses stemming from the repurchase of faulty loans that it sold to Fannie Mae and Freddie Mac, the government-controlled housing finance companies.

Banking analysts say the mortgage problem could cost the bank up to $10 billion. But armed with those reserves, bank executives say they have ample resources to cope with the coming wave of claims.

“It’s going to be a long, ugly mess, but it won’t be life-threatening to JPMorgan,” Mr. Dimon said in a conference call with analysts. “We will be talking about this for every quarter over the next three years.”

JPMorgan produced solid results in the fourth quarter across most of its core businesses, illustrating just how powerful the bank has become in the postbailout era.

Chase’s corporate bank reported profits of $530 million, up $306 million from the fourth quarter of the previous year. Bank officials said that they saw a lift in the number of midsize businesses seeking credit.

Chase Retail Financial Services, its consumer banking arm offering everything from mortgages to checking accounts, reported profits of $708 million in 2010, in contrast to a loss of $399 million the previous year.

Profits also rebounded at Chase’s credit card unit, though those gains were somewhat skewed by the bank’s decision to release about $2 billion it had previously set aside to cover losses on credit cards. Bank executives said this business was benefiting from the slowdown in job cuts and bankruptcy filings.

Earnings at JPMorgan’s investment bank, meanwhile, fell 21 percent in the fourth quarter. Stock underwriting fees and deal advisory fees dipped during the quarter, despite an otherwise solid year.

“All these numbers are still bad, but they’re a lot better than they were a year ago,” said Paul Miller, an analyst with FBR Capital Markets.

Across the company, bankers expect to reap the benefits, even if their 2010 paychecks are slightly smaller than they were in 2009. The bank earmarked $28.1 billion to compensate its workers, much of which will be paid out as bonuses. That means they can expect to earn, on average, about $117,000, down from $129,000 in 2009.

Workers in JPMorgan’s investment bank, on average, earned $369,000, compared with roughly $380,000 in 2009. Top producers, however, can still expect to collect multimillion-dollar bonus checks.

JPMorgan’s report on Friday was the beginning of a crucial earning season. Citigroup will report its earnings on Tuesday. Bank of America, Goldman Sachs, Morgan Stanley and Wells Fargo will follow later in the week.

Good news for the banks could translate into higher hopes for the broader economy.

“It’s not like issues from the financial crisis are going away, but we think we’ll see positive overtones as to how the economic recovery is taking hold,” said Moshe Orenbuch, an analyst at Credit Suisse.