JPMorgan Chase & Co
The second-largest U.S. bank is seen as one of those that has best survived the credit crisis, but as the recession lingers it is facing rising losses across its large consumer loan portfolios.
The bank's home lending portfolio may shrink 10 percent to 15 percent to about $240 billion in 2010, and $200 billion in 2011 at current production and run-off levels, according to Dimon's presentation at an analysts' conference in New York. That decline would reduce 2010 net interest income in the portfolio by about $1 billion from this year's levels.
Losses on its Chase portfolio of credit cards could reach 11 percent by the first quarter of 2010. Losses on the Washington Mutual card portfolio could rise to 24 percent over the next several quarters, according to Dimon.
JPMorgan, however, had expected near-term consumer losses broadly to reach the levels laid out in the presentation and the bank has prepared by adding to credit reserves in previous quarters, Dimon said.
If these numbers are accurate we won't need to do much more reserving, he said.
But there is of course uncertainty surrounding the level of losses in JPMorgan's credit card and home loan portfolios if unemployment remains at around 10 percent longer term, Dimon said.
While there are some initial signs of stability in consumer delinquency trends, the bank is not sure these will continue, according to the presentation.
Dimon reiterated that the bank would like to increase its quarterly dividend -- currently at 5 cents -- but that this will not happen until there is clear improvement in the economy. I would view that as unemployment really comes down, he said.
JPMorgan acquired the assets of failed Seattle thrift Washington Mutual last year. It acquired investment bank Bear Stearns last March and in recent quarters, profits at JPMorgan's investment bank have helped offset losses on its consumer businesses.
We're very proud of the investment bank, said Dimon.
The company's shares closed down 4 cents to $41.21.
(Reporting by Elinor Comlay, editing by Maureen Bavdek and Carol Bishopric)