Mega bank JPMorgan Chase posted relatively strong first-quarter earnings even as income from mortgage banking fell 31% from year ago levels to $673 million.

The mortgage banking unit's net revenue also declined by $671 million from last year, reaching $2.7 billion in 1Q.

Provisions for credit losses in the segment also rose to $198 million from $192 million last year, while the company noted a $650 million reduction in loan loss allowances for Q1.

Revenue from mortgage production – minus losses on loan repurchases - fell 25% from last year to $1.2 billion, while production expenses rose by $137 million to $710 million as higher loan volumes moved through the system.

The good news is losses on loan repurchases declined to $81 million in the first quarter, down from $302 million a year earlier and $53 million from the previous quarter.

The company’s mortgage servicing revenue also dropped 3% from last year with the company servicing fewer average third-party mortgages.

Last year, the company’s mortgage servicing rights risk-management segment posted income of $191 million, but is now reporting a loss of $142 million for 1Q 2013.

"Servicing expense was $737 million, a decrease of $414 million from the prior year, which reflected the impact of approximately $200 million for foreclosure-related matters in the prior year and lower servicing headcount," JPMorgan added in its earnings.

On the lending side, mortgage originations rose 37% from last year, reaching $52.7 billion in 1Q.

Mortgage application volumes also grew 1% from last year hitting $60.5 billion.

Total third-party mortgages serviced by JPMorgan (JPM) hit $849.2 billion in 1Q, down 4% from the previous year and 1% from the last quarter.