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MarketScreener Homepage  >  Equities  >  Nyse  >  JPMorgan Chase & Co.    JPM


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JPMorgan CEO Writes in Shareholder Letter : Expecting 'a Bad Recession'

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04/06/2020 | 08:50am EDT

By David Benoit

JPMorgan Chase & Co. Chief Executive James Dimon said his bank hasn't sought looser regulations to help it handle the economic collapse caused by the coronavirus pandemic, detailing instead its ability to keep lending in even more dire circumstances.

In his annual letter published Monday, Mr. Dimon said the work preparing JPMorgan to be a "port in the storm" -- a long obsession of his -- means the bank can handle what he expects to be a "bad recession."

In internal stress testing, he said the nation's biggest bank would be able to increase lending to clients even if U.S. GDP were to drop 35% in the second quarter and stay there for the remainder of the year. Only then would the bank consider cutting its dividend, he wrote. JPMorgan and other big U.S. banks have already suspended buybacks.

That kind of collapse, once considered unthinkable, is now in line with some economists' predictions for the second quarter this year, though others expect a substantive rebound in the third quarter.

"Entering into a crisis is not the time to figure out what you want to be," Mr. Dimon wrote. "You must already be a well-functioning organization prepared to rapidly mobilize your resources, take your losses and survive another day for the good of all your stakeholders."

Writing only a month after undergoing emergency heart surgery and days after returning to work, Mr. Dimon released his letter as the bank deals with unprecedented economic turmoil. Mr. Dimon threw out his usual template for his annual letter -- detailing the bank's success and his views on public policy -- to address the coronavirus crisis, which he said he expects to be "a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008."

He said his bank has taken steps to protect employees and keep them safe, sending them home faster and more broadly than any plans the bank had. That's while seeing record volumes in securities trading, extending new loans to small businesses and delivering $1.9 billion in cash to smaller community bank clients, he said. Companies have already drawn down more than $50 billion in credit lines to prepare for the crisis, which Mr. Dimon said "dramatically exceeds what happened in the global financial crisis." The bank approved more than $25 billion in new credit extensions in March.

"While conditions may sometimes be unusual and difficult, we are functioning smoothly," he wrote.

The bank has closed some branches but still has thousands of employees at work in its retail operation and has seen an outbreak of the virus on its trading floor.

What the bank hasn't done, Mr. Dimon said, is ask the government to relax the rules that force JPMorgan and other U.S. banks to bulk up capital levels, which he and others have long said would restrain lending in a crisis. He suggested that the rules perhaps should be loosened, but called it a conversation for another time.

"Saying that we will not ask for regulatory relief does not mean the government shouldn't change some rules and regulations, however," Mr. Dimon wrote. "While a lot of the rules were constructive and made the financial system stronger, we are now seeing the impact of poorly coordinated, poorly calibrated and poorly organized rulemaking."

Typically Mr. Dimon's annual letter is full of ideas on fixing public policy, but that was largely removed this year other than to urge the country to come together and to criticize the initial U.S. response.

"The country was not adequately prepared for this pandemic -- however, we can and should be more prepared for what comes next," he said.

Mr. Dimon, 64, only briefly acknowledged he had been out -- thanking his team for running the bank -- and provided no new updates on his health or whether it would change his plans on how long he would stay at the bank.

Write to David Benoit at david.benoit@wsj.com


Stocks mentioned in the article
ChangeLast1st jan.
BYD COMPANY LIMITED -1.90% 43.95 End-of-day quote.13.13%
JPMORGAN CHASE & CO. 5.79% 101.37 Delayed Quote.-27.28%
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Financials (USD)
Sales 2020 109 B
EBIT 2020 43 399 M
Net income 2020 14 959 M
Debt 2020 -
Yield 2020 3,57%
P/E ratio 2020 20,1x
P/E ratio 2021 12,0x
Capi. / Sales2020 2,83x
Capi. / Sales2021 2,78x
Capitalization 309 B
Duration : Period :
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Mean consensus OUTPERFORM
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Average target price 106,58 $
Last Close Price 101,37 $
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James Dimon Chairman & Chief Executive Officer
Gordon A. Smith Co-President & Co-Chief Operating Officer
Daniel E. Pinto Co-President & Co-Chief Operating Officer
Jennifer A. Piepszak Chief Financial Officer
Lori A. Beer Chief Information Officer
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