Magazine article American Banker

JPM's Dimon Shies from Credit Quality Forecasting

Magazine article American Banker

JPM's Dimon Shies from Credit Quality Forecasting

Article excerpt

JPMorgan Chase & Co. chairman James Dimon said Thursday that he remains bullish about building certain consumer credit lines but is reluctant to make broad predictions about the deterioration of credit quality.

Housing prices and the direction of the overall economy are the two factors that will determine consumer loan losses, said Mr. Dimon, who is also chief executive of the $1.6 trillion-asset New York banking company.

"You're going to have make your own assumptions" about where housing prices and the economy are headed, he told investors several times during his presentation.

Mr. Dimon did offer this statement: "We lived through the most benign credit environment you'll ever see in your lifetime. It's now gone." He spoke Thursday morning at Credit Suisse Group's Financial Services Forum in Naples, Fla.

JPMorgan Chase, like other banking companies, is trying to tackle consumer problems head on, he said. It has beefed up the staff assigned to work out credit problems with consumers, he said, and it is likely to spend $200 million more this year than last in its effort to collect consumer loans. It has hired about 100 employees specifically for the collection department of its credit card business, he added.

In the fourth quarter, JPMorgan Chase recorded chargeoffs in its home equity portfolio that were 1.05% of all such loans. Thursday, he tweaked the guidance the company gave in its Jan. 16 earnings report, when it said that the quarterly chargeoff ratio in that portfolio could rise to between 1.55% and 1.6%. Given falling housing values, the ratio could go up to 1.7%, he said.

Several investors pressed for more details Thursday about prospective losses in the broad consumer portfolio. Mr. Dimon repeatedly said it depends on the economy but declined to say whether his company expects a recession. …

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