Tomahawk, WI 9/10/2013 (BasicsMedia) – The leading investment banker, JPMorgan Chase & Co. announced that the mortgage volumes faced rapid and dramatic decline in a presentation made at the Barclays Financial Services Conference. Heavy increase in interest rates was quoted to be the reason behind such dramatic reduction in mortgage volumes as put forward by the investment banking firm.

It was reported that the refinance applications declined by 60% in early May 2013 and it is expected that H2 originations of such applications would be around 30 to 40% lesser than that reported for H1. However, the JPMorgan looks out to offset this heavy decline in mortgage volume through its focus on increasing the bank’s share in the purchase markets and further noted that this share increased to 10.7% for H1 compared to 8.6% share for the previous year.

Effective positioning to face rise in rates

JPMorgan insists that the company is effectively in a position to meet out the impacts of rising interest rates and the financial models present that there would be an increase of $3.7 billion in income for the next year from a parallel 200 basis points increase in the interest rates. In addition, the investment banker is also confident that this extra income would grow higher in the subsequent years owing to its investments in segments of higher yields. It was further noted that the impact on capital due to such increase in interest rates would be very small and under the capacity of the banker to manage.

Aims to increase dividends

JPMorgan still has higher ambitions to increase the dividend payments to its shareholders and to further boost their confidence with more buybacks of shares in the near future. The company presently has a dividend yield of 2.9% based on the recent dividend payments made at $0.38 per share in July 2013. It is worth noting that this was the first time that the company increased its dividends to $0.38 per share after staying consistently at $0.30 per share of dividends for the past five quarters. The banks were barred from paying higher level of dividends to its shareholders during the financial crisis.

Awaiting regulatory approval

The move for increasing the dividend payments and share buybacks to higher levels made by the CEO Jamie Dimon and his board is not yet approved by the regulators under the capital allocation plan. JPMorgan was until recently under the hold of London Whale debacle which proved to cost billions of dollars to the banking giant and further tarnished its reputation in the recent years. However, the investment banker proved successful to overcome this struggle and it could thereby be expected that the Board would efficiently secure the approval of regulators to increase dividends and buybacks. This is further evident from the recent presentation made by the Chief Financial Officer of the company at the Barclays Conference assuring that the banking giant would once again move towards gaining back the investor confidence through its surge in dividends and buybacks.

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