Image caption JP Morgan said it set aside a lot less for possible bad debts

JP Morgan has reported record first quarter profits of $6.5bn (£4.2bn) and says there are signs the US economy is "healthy and getting stronger".

The bank said it had reported a strong performance across all businesses.

Retail banking deposits rose 10%, new mortgage orders rose 37% and the company said it had kept the top spot for earnings from investment banking.

Mortgage lender Wells Fargo also released results, and it also reported record first quarter profits.

Wells, the fourth biggest bank in the US, saw net income rise by 22% to $5.2bn helped by cost cutting.

Wells Fargo chairman and chief executive, John Stumpf, said: "Loans and deposits demonstrated continued growth in a challenging economic environment."

'Positive signs'

JP Morgan said it had cut mortgage loan loss reserves by $650m and property asset reserves by $500m.

The bank was also boosted by a big drop in spending on litigation, which was $0.3bn in the first quarter of 2013 compared with $2.7bn a year earlier.

JP Morgan was struck by massive losses last year as a result of the "London Whale" trades, which cost the bank $6bn.

These came in the corporate and private equity division, which recorded a profit of $250m in the quarter compared with a loss of $1bn in the same period a year earlier.

Jamie Dimon, chairman and chief executive of the bank said the results were helped by an improving US economy.

"All our businesses had strong performance, and our client franchises did exceptionally well," he said.

"We are seeing positive signs that the economy is healthy and getting stronger. Housing prices continued to improve and new home purchases are also starting to come back.

"We also saw strong performance in our credit card portfolio, with net charge-offs remaining near historic lows, another sign that consumers are healthier and more confident."

However, he added that the growth in demand for loans had slowed during the first three months of the year and that small businesses remained "cautious" about the recovery and were nervous about possible changes to tax rates.

He said this was making some of them reluctant to invest.