JP Morgan CEO Jamie Dimon looks on during the inauguration of JP Morgan bank’s new French headquarters in Paris, France, June 29, 2021. Michel Euler/Pool via REUTERS
NEW YORK, April 4 – JPMorgan (JPM.N) chief Jamie Dimon warned on Monday that the bank could lose about $1 billion from its exposure to Russia, the first time it has scaled the scale of its potential losses due to the conflict in Ukraine.
In his closely followed annual letter to shareholders, the chairman and chief executive officer of the largest US bank by assets also urged the United States to increase its military presence in Europe and again urged it to adopt a plan to ensure energy security for itself develop and its allies.
Dimon gave no details on JPMorgan’s potential loss figure or a timeframe, but said the bank was concerned about the secondary impact of Russia’s invasion of Ukraine on companies and countries. Russia calls its actions a “special operation”.
Global banks have detailed their involvement in Russia in recent weeks, but Dimon is the highest-profile business leader in the world to comment on the broader implications of the conflict.
“America must be prepared for the possibility of an extended war in Ukraine with unpredictable outcomes. We should prepare for the worst and hope for the best,” he wrote. (For five key takeaways from Dimon’s letter, click Read More )
Addressing the relationship between the United States and China, Dimon said the United States should redesign its supply chain to limit its scope to suppliers within the United States or to include only “completely friendly allies.” He urged the United States to rejoin the Trans-Pacific Partnership (TPP), one of the largest multinational trade deals in the world.
Commenting on the macroeconomic environment, Dimon said the number of US Federal Reserve rate hikes “could be significantly higher than what the market was expecting”. He also explained the bank’s increasing expenses, partly due to technology investments and acquisition costs.
The letter marks Dimon’s 17th as CEO. Although Dimon is not the only CEO of a leading US bank to write such letters, his have become required reading among Wall Street elite and policymakers for providing an insight into his political and economic ideas.
‘FORT BALANCE SHEET’
This year’s letter comes at a time when the Russia-Ukraine war and high inflation are hurting the economy, and as Dimon faces renewed investor skepticism about spending.
Some question his plans to increase spending on the bank’s information technology and campaigns to gain market share in companies and regions where JPMorgan currently lags behind its competitors, such as Germany and the UK.
JPMorgan decided earlier this year to hold its first investor day since the pandemic began to assuage doubts about its spending plans. The meeting will take place on May 23rd.
Dimon has spent more than a decade building what he calls the bank’s “fortified balance sheet,” and he said it’s now resilient enough for JPMorgan to absorb losses of $10 billion or more and “still in very good shape.” constitution”.
While Dimon wrote that he was not concerned about the bank’s involvement in Russia, he said the war in Ukraine will slow the global economy and affect geopolitics for decades.
“We face challenges at every turn: a pandemic, unprecedented government action, a strong recovery from a sharp and deep global recession, a highly polarized US election, rising inflation, a war in Ukraine and dramatic economic sanctions against Russia,” he said he .
Regarding acquisitions, Dimon said the bank will be reducing share buybacks next year to meet capital increases mandated by federal regulations “and because we’ve made some good acquisitions that we believe will improve the future of our company.” will”.
JPMorgan has been on a buying spree, spending nearly $5 billion on acquisitions over the past 18 months. Dimon said this will add about $700 million to “additional capital expenditures” this year.
Investing in technology will add $2 billion to spending this year, Dimon said.
Edited by Michelle Price and Muralikumar Anantharaman