JPMorgan Chase & Co Chief Executive Jamie Dimon said his bank will not be goaded into doing something dumb with its capital, even as it prepares an aggressive expansion in consumer and private banking over the next five years.

Speaking at the bank's annual investor day on Tuesday, Dimon said the bank could raise its dividend or possibly do a special dividend or share buyback.

He said JPMorgan is prepared to withstand any phasing out of mortgage financiers Fannie Mae and Freddie Mac , despite being the third-largest U.S. provider and servicer of mortgages.

Along with domestic expansion, Dimon said he sees growth for the investment bank overseas, specifically in its market share in Latin America and Asia. The bank's asset management and treasury and securities services units could also grow overseas, he said.

As the global economy stabilizes, JPMorgan plans to increase its dividend payout ratio to more than 30 percent of normalized earnings, bank executives said.

The nation's second-largest bank by assets slashed its annual dividend 87 percent to 20 cents per share in February 2009. Dimon said last month that JPMorgan could raise the annual payout to between 75 cents and $1 once regulators give the go-ahead, likely at the end of March.

Dimon, a Democrat, also downplayed persistent speculation he might leave JPMorgan to go into the political arena.

I'm not going into politics and I'm not opening a restaurant. I love what I do. I want to be here. I want to stay, he said, but added: There are people here who can take my spot.

BRANCH BANKING GROWTH

JPMorgan plans to will add at least 1,000 branches in the next three years and could add up to 2,000 within five years, said retail financial services Chief Executive Charlie Scharf.

The bank said it expects aggressive growth in California and Florida in particular. It ended September with 5,172 U.S. branches, trailing Wells Fargo & Co's roughly 6,500 and the nearly 6,000 that Bank of America Corp operates.

Scharf said branch expansion will largely be in areas where Chase operates now. He also said there were few attractive opportunities for Chase to grow by buying another bank.

When you look at our existing footprint, we know exactly who we'd be interested in and not interested in, and we know the same for out-of-footprint and it's not a long list of names, he said. A lot of the smaller transactions that you see for us don't seem to make a whole lot of sense.

JPMorgan significantly boosted its branch network in 2008 when it bought the banking business of Washington Mutual Inc, the largest U.S. bank or thrift to fail.

JPMorgan also expects to add 50 private client locations in 2011, and have more than 150 locations by 2013.

CONCERNS

Despite beating analyst estimates for fourth-quarter earnings, JPMorgan faces questions about declining trading volumes, its long-time ties to imprisoned Ponzi schemer Bernard Madoff, its foreclosure practices and pending financial regulation, which could crimp profits.

Scharf addressed part of the regulation issue, saying JPMorgan was looking to offset the $1.3 billion of revenue it expects to lose because of new regulations on debit card processing fees.

Dimon declined to personally address the pending $6.4 billion lawsuit against JPMorgan by the trustee seeking money for Madoff's victims, who accused the bank of being thoroughly complicit in the Ponzi scheme.

But general counsel Stephen Cutler, a former U.S. Securities and Exchange Commission enforcement chief, said JPMorgan would challenge how the trustee conflates timelines, takes quotes out of context, seeks to penalize our firm for raising the sorts of issues you'd expect to be raised in a due diligence process and generally applies 20/20 hindsight to make his claims.

Though trading revenue trended downward over the course of 2010, falling to $2.9 billion in the fourth quarter from $5.5 billion in the first quarter, investment banking chief Jes Staley emphasized the stability within those results.

Staley, considered one of the leading candidates to succeed Dimon as chief executive, said his unit had only eight days of trading losses in 2010, and a perfect second half.

Shares of JPMorgan closed up 28 cents, or 0.6 percent, at $46.82, compared with a 0.3 percent decline in the KBW Bank Index <.BKX>.

Two months after investor days, shares of a bank have historically risen an average of 15 percent, according to a Barclays Capital research note published last week.

(Writing by Ben Berkowitz and Jonathan Stempel; Editing by Gunna Dickson, Steve Orlofsky and Bernard Orr)