JPMorgan Chase boosted Tier 1 capital ratio to 9.8% in 2010
JPMorgan Chase (JPM) boosted its Tier 1 capital ratio throughout most of 2010, as banks continue to strengthen reserves in the new regulatory environment. The banking giant estimated Basel 1 Tier 1 common capital of $115.16 billion, for a ratio of 9.8%, at Dec. 31, up from $110.84 billion, or 9.5%, as of the end of the third quarter. The non-GAAP metric is used by regulators, investors and analysts to compare the capital positions of banks and other financial services companies. JPMorgan Chase estimated a Tier 1 capital ratio of 7% under the requirements of Basel 3 as of the end of the year, with capital reserves of $33 billion and a loan-loss coverage ratio of 4.5%. Earlier Friday, JPMorgan reported record earnings of $17.4 billion for the year with fourth-quarter income of $4.83 billion, or $1.12 a share. The company also said the level of nonperforming loans and repossessed homes through foreclosure rose 27% for the fourth quarter to $13.3 billion. On a conference call, Chief Financial Officer Doug Braunstein said the company now meets the capital ratio mandate of 7% under Basel 3, although banks aren't required to do as much until Jan. 1, 2019. Basel 3 increases the minimum common-equity requirement to 4.5% from 2% and orders banks hold a capital-conservation buffer of 2.5%. He said fourth-quarter results were strong across all the company's business, and JPMorgan Chase ended the period with total loans of $56.9 billion, which is up 6% from the end of the third quarter. "We are beginning to see new business activity build, and as a result of that, some increasing demand in loans, as the market for credit and the economy generally pick up," Braunstein said. JPMorgan Chase collected $1.8 billion in global investment banking fees in 2010. Write to Jason Philyaw.