Tags: US | JPMorgan | Chase | Dividend

JPMorgan Chase CEO Says Bank Could Raise Dividend

Thursday, 01 Apr 2010 09:29 AM

JPMorgan Chase & Co.'s CEO Jamie Dimon said the bank could hike its dividend if economic conditions improve and potential regulatory reform is settled.

In an annual letter to shareholders, Dimon said JPMorgan could increase its annual dividend to a range of 75 cents to $1 per share. The New York bank cut its dividend to 20 cents per share from $1.52 per share last year as loan losses piled up and banks moved to shore up their reserves during the recession.

The talk of a potential dividend hike at JPMorgan Chase is not new. Executives at the bank have discussed — in vague terms — expectations that would need to be met to hike the dividend in recent months. Dimon's comments in the letter provide a bit more detail about what kinds of improvements JPMorgan would need to see to raise its dividend.

Dimon said in the letter that JPMorgan would need to see several months of jobs growth, a significant drop in loan losses and more certainty about potential banking regulatory reform before it can raise the dividend.

Economists expect Friday's jobs report to show employers added jobs for only the second time since 2007. High unemployment and a crumbling housing market led to a sharp increase in loan defaults across all types of consumer loans. That has cost banks billions of dollars in recent years.

Even though JPMorgan has been one of the strong banks in the past couple of years during the downturn, it still set aside $7.28 billion for bad loans in the fourth quarter.

When JPMorgan announced its fourth-quarter results in January, Mike Cavanagh, the bank's chief financial officer, said losses on credit card lending could reach 10.5 percent by the middle of the year. The rate was 8.64 percent in the fourth quarter.

Credit-card losses typically mirror the unemployment rate, which was 9.7 percent in February. Economists polled by Thomson Reuters forecast the rate remained unchanged in March.

JPMorgan will also be keeping a close eye on potential regulatory reform being discussed by Congress. In the letter, Dimon said possible financial services reform could affect reserve requirements or taxes, which could affect how much of its quarterly profit can be given to shareholders as dividends.

JPMorgan shares rose 51 cents to $45.22 in late morning trading Thursday.

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JPMorgan Chase Co.'s CEO Jamie Dimon said the bank could hike its dividend if economic conditions improve and potential regulatory reform is settled. In an annual letter to shareholders, Dimon said JPMorgan could increase its annual dividend to a range of 75 cents to $1...
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2010-29-01
Thursday, 01 Apr 2010 09:29 AM
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