Jamie Dimon Speaks Out: Dividends and All! (JPM)

Jamie Dimon, CEO and Chairman of JPMorgan Chase & Co. (NYSE: JPM), is presenting to investors on Tuesday at the Barclays Global Financial Services Conference.  Dimon is usually the ax to watch of all banking CEOs, and he’s set to address the dividend, growth prospects, capital levels and more now that the new Basel III rules are out.  Dimon will address the JPMorgan franchises, earnings power for organic growth, management and more…. Most importantly, we have an update on the dividend.

He will note that JPMorgan has strengthened its balance sheet further and its Tier-1 capital is roughly $137 billion, or 12.1%, of its Tier 1 Common is $108 billion,or 9.6%,; he will say its level of reserves is $36.7 billion with loan loss reserves of 5.34%.  For its funding and liquidity profile, Dimon will show $888 billion in deposits and 1.3-times loan coverage.  The ROE of 35% is called the best of its peers and it claims to be the only one of peers with a loan to deposit ratio under 100%.

Dimon is also looking to expand. The company noted that its real estate portfolios are expected to make a positive contribution to earnings and capital over time as credit losses are reduced and significant expense reductions are realized.

There are some changes coming in how it runs itself as it will mostly manage to the new capital rules effective immediately and there is NO need to issue common stock.  The bank will also “probably not operate with an additional self-imposed buffer, as we have in the past, because we believe the new capital requirements are sufficient.”

Here is the data on the dividend:

• We intend to restore the dividend and ultimately return to dividend payout ratio of 30-40% of normalized earnings (pending tax rule changes).  The initial increase is not likely to hit payout ratio, but would be material and is subject to final analysis of Basel III in November and regulatory capital adequacy.  And the timing…. “Hopefully early 2011.”

Dimon notes a hierarchy of capital after the restoration of the common dividend that will allow it to invest in organic growth, stock buybacks that will be higher when stock price is lower and will be lower when stock price is higher, will be adjusted for other future opportunities and allow for acquisitions.

FULL PRESENTATION SUMMARY HERE

JON C.OGG