Updated from 8:59 a.m. EST

JPMorgan Chase

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on late Monday said it is slashing its dividend by 86% as a "precautionary step" to conserve capital.

The New York-based company, which has weathered the financial crisis better than most large financial institutions, said it is lowering its quarterly dividend to 5 cents a share from 38 cents previously. The change will be effective for the dividend payable on April 30. The bank plans to retain $5 billion in additional common equity each year from the dividend cut, it said.

At the same time, JPMorgan Chase affirmed that its first-quarter financial performance was so far "solidly profitable," even after additions to loan loss reserves, it said in a release.

The company said its first-quarter earnings outlook is "roughly in line" with analyst expectations. Analysts, on average, expect the company to make 33 cents a share for the first quarter, according to Thomson Reuters.

"While we recognize our tremendous obligation to shareholders to maintain dividend levels, we also understand that extraordinary times require extraordinary measures," CEO Jamie Dimon said in a statement. "Our action today is being done as a strong precautionary measure to help ensure that our fortress balance sheet remains intact -- even if conditions worsen significantly."

The dividend cut provides the company with "maximum flexibility to protect our company in a more highly stressed environment" and the ability to continue to build and invest in its businesses, Dimon added.

He emphasized that the dividend cut was not "directly related" to the Troubled Asset Relief Program, or TARP.

JPMorgan Chase received $25 billion from the U.S. Treasury last fall. Dimon has said repeatedly that the company did not need the TARP capital, but was strongly encouraged by regulators to take it "to help stabilize the banking system and economy." The perspective is in stark contrast to struggling rivals


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Bank of America

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, each of which had to return to the federal government for second, $20 billion TARP investments on top of the original $25 billion investments they received. Citi and BofA also received government guarantees on hundreds of billions of dollars of risky assets on their balance sheets.

JPMorgan Chase's dividend cut also puts it in a better position to repay TARP as soon as possible, Dimon said. The company said it hopes to return to a more normalized dividend payout ratio as soon as feasible after the environment has stabilized.

Shares of the company opened higher, but lately fell 17 cents to $19.34. The stock closed Monday down 2% to $19.51.