By Elizabeth Dilts Marshall and Matt Scuffham
NEWYORK -JPMorgan might lose about $1 billion on its Russia publicity, Chief Government Jamie Dimon stated on Monday, detailing the extent of the financial institution’s potential losses from the battle in Ukraine for the primary time.
In his keenly watched annual letter to shareholders, the chairman and chief govt of the most important U.S. financial institution by property additionally urged the USA to extend its navy presence in Europe and reiterated a name for it to develop a plan to make sure vitality safety for itself and its allies.
Dimon didn't present a timeframe for JPMorgan’s potential Russia losses however stated the financial institution was involved in regards to the secondary impression of Russia’s invasion of Ukraine on corporations and international locations. Russia calls its actions a “particular operation.”
World banks have detailed their publicity to Russia in latest weeks however Dimon is essentially the most high-profile world enterprise chief but to touch upon the broader impression of the battle.
“America should be prepared for the potential for an prolonged struggle in Ukraine with unpredictable outcomes. We should always put together for the worst and hope for the most effective,” he wrote. (For 5 key takeaways from Dimon’s letter, click on on)
Dimon could proceed as chairman when he ultimately relinquishes his function as chief govt, the financial institution stated Monday.
The disclosure, in a report back to shareholders forward of JPMorgan’s annual assembly in Might, stated the financial institution had discovered that the majority main shareholders need Dimon to stay chairman.
The board additionally stated that it was inclined as a “common coverage” to separate the roles of chairman and chief govt after Dimon is gone. Many shareholders have a common choice to separate the posts, it stated.
Dimon has made one thing of a joke of perpetually saying he'll resign in 5 years. In 2019, he stated the five-year clock had really begun.
In his letter to shareholders, Dimon addressed the connection between the USA and China and stated the USA ought to revamp its provide chain to limit its scope to suppliers inside the USA or to solely embrace “utterly pleasant allies”. He urged the USA to rejoin the Trans-Pacific Partnership (TPP), one of many world’s largest multinational commerce offers.
Commenting on the macroeconomic surroundings, Dimon stated the variety of Federal Reserve rate of interest hikes “may very well be considerably increased than the market expects.” He additionally detailed the financial institution’s rising bills, partially resulting from know-how investments and acquisition prices.
The letter is Dimon’s seventeenth as CEO https://studies.jpmorganchase.com/investor-relations/2021/ar-ceo-letters.htm. Whereas Dimon isn't the one CEO of a high U.S. financial institution to write down such letters, his have turn out to be must-reads amongst Wall Road’s elite and policymakers for the view they supply into his political and financial concepts.
‘FORTRESS BALANCESHEET‘
This yr’s letter comes because the Russia-Ukraine struggle and excessive inflation are hurting the economic system, and as Dimon faces new skepticism from buyers over bills.
Some query his plans to extend spending on the financial institution’s data know-how and campaigns to take market share in companies and geographies the place JPMorgan presently trails opponents, akin to in Germany and the UK.
JPMorgan determined earlier this yr to carry its first investor day for the reason that pandemic started to handle doubts about its spending plans. The assembly might be held on Might 23.
Dimon has spent greater than a decade constructing what he calls the financial institution’s “fortress stability sheet,” and he stated it's now sturdy sufficient that JPMorgan might face up to losses of $10 billion or extra and “nonetheless be in excellent form.”
Whereas Dimon wrote that he's not fearful in regards to the financial institution’s publicity to Russia, he stated the struggle in Ukraine will gradual the worldwide economic system and can impression geopolitics for many years.
“We face challenges at each flip: a pandemic, unprecedented authorities actions, a powerful restoration after a pointy and deep international recession, a extremely polarized U.S. election, mounting inflation, a struggle in Ukraine and dramatic financial sanctions towards Russia,” he stated.
On acquisitions, Dimon stated that the financial institution might be decreasing inventory buybacks over the subsequent yr to satisfy capital will increase required by federal guidelines “and since we have now made some good acquisitions that we imagine will improve the way forward for our firm.”
JPMorgan has been on a shopping for spree, spending almost $5 billion on acquisitions over the previous 18 months. Dimon stated that can improve “incremental funding bills” by roughly $700 million this yr.
Investments in know-how will add $2 billion to bills this yr, Dimon stated.
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