The bank also said it has been "solidly profitable" this quarter, and that the outlook for the three-month period is "roughly in line" with analyst forecasts. Shares rose 5.5 per cent in after-hours trading.

JPMorgan said its decision to lower its quarterly dividend to 5 cents per share from 38 cents will save $5 billion of common equity a year. It hopes the lowered payout will help it pay back the $25 billion of capital it got in October from the government's Troubled Asset Relief Program faster.

"Extraordinary times must call for extraordinary measures," Chief Executive Jamie Dimon said on a conference call. He said JPMorgan was "not asked by anybody" to cut the payout, but did so out of a "normal abundance of caution."

Shares of JPMorgan, a Dow Jones industrial average component, rose $1.08 to $20.59 after-hours, after falling 39 cents during regular trading. The New York-based lender announced the dividend cut after US markets closed.

"I will accept a lower dividend if they are able to repay the government faster," said Chris Armbruster, senior analyst at Al Frank Asset Management in Laguna Beach, California, which owns JPMorgan shares. "The sooner they get out from that, the better."

JPMorgan expects in the first quarter to record about $2 billion of credit costs and writedowns at its investment bank, to boost reserves for credit cards and home lending, and to write down about $400 million in private banking.

It also said earnings expectations are "on track" from its September purchase of the banking units of failed lender Washington Mutual Inc.