JPMorgan Chase & Co. Chief Executive Officer James Dimon said Monday that he expects America's largest banking companies to continue to gain market share and that the financial industry is ripe for more consolidation.

Dimon, speaking on a conference call with investors and analysts, said the financial crisis will continue to restructure the banking industry for some time. He said he expects more deals to get done and that he does not rule out an acquisition by his own company that would add more branches.

Merger and acquisition activity might pick up once the major U.S. players receive results of the government's stress tests this week, Dimon said. The nation's 19 largest financial companies are expected to receive their test results late Wednesday.

"The banks in the stress test are roughly half the system for deposits and loans; that means the other 8,000 are the other half," Dimon said during the conference call. "Some are good at what they do, but some will roll up over time. Some many not be able to survive, and I think you'll see consolidation."

Dimon said he believes the biggest U.S. banks will be active buyers, despite debate in financial and political circles about banks growing too large. "The thing that drives size is economies of scale," he said.

JPMorgan Chase recently acquired Bear Stearns and Washington Mutual. Both buyouts were organized by the government to help stabilize the nation's banking system.

Echoing a statement by the billionaire investor Warren Buffett, Dimon said he believes the future earnings power of major U.S. banks will offset past losses.

"The banking system can handle an awful lot of loss and be OK," Dimon said.

Dimon would not comment on his company's stress test. However, he said it does not need more capital and that he is prepared to repay the $25 billion it received through the government's Troubled Asset Relief Program "as soon as possible."

He said business at JPMorgan Chase, while significantly lower compared with the past few years, improved steadily during the first three months of 2009 He said initial public offerings are getting done, merger and acquisition deals are beginning to thaw and "the financial markets are healing."

Loans also are not losing traction — JPMorgan Chase is making loans of $2 billion a day, Dimon said. However, its credit card operation remains one of its most stressed businesses as consumers rein in spending.

"One of the great misconceptions out there is that banks aren't lending," he said. "If you look at bank lending the last couple of quarters, it is up. They are lending."

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