Damon JPMorgan: ‘The intensity is the same’ after decades at the top

Jamie Dimon, CEO of JPMorgan Chase (JPM), said Monday he knows he can’t be CEO “forever,” but stated his strength is “the same” after nearly 18 years as head of the nation’s largest bank.

The comments came from the 67-year-old Dimon during JPMorgan’s annual Investor Day in New York City, where the CEO discussed how long he might stay in the job and what kind of person he could succeed without offering any hints that his tenure might be. ends soon.

These issues become more important with each passing year. Dimon became CEO of JPMorgan in late 2005, after its merger with Bank One, and is the only CEO of a large bank still in existence who was in charge during the height of the 2008 financial crisis. He also previously served as CEO of Bank One from 2000 to 2004.

One of his peers, Morgan Stanley CEO James Gorman, announced Friday that he will step down within the next 12 months. Gorman, 64, has been running this Wall Street bank since 2010.

An analyst asked Dimon on Monday how many more years he plans to stay in power. “Three and a half,” the CEO said with a laugh, but then said “we have the same plan we had before” without specifying whether the number he uttered was real or not.

Dimon, second from the right, testifies with CEOs of other major banks Charles Scharf, Brian Moynihan and Jane Fraser in 2022. He is the only major bank CEO in charge during the 2008 financial crisis. (Photo by Drew Angerer/Getty Images)

When asked if he still has the same drive for the job he says he does. He said, “I will not change.” “I’m not going to play golf. I can’t do this forever, I know that. But my intensity is the same. I think when I don’t have that kind of strength, I should quit.”

He offered no hints about which of his executives might have the best chance of taking his job one day, but said the bank’s directors knew all of his senior managers, and said the question of succession was up to them. “

“The board is very comfortable with really the best options here.”

The most important qualities in the next leader? Damon mentioned hard work, grit, and courage while also using some swear words to drive home his points.

He said, “If you don’t have the courage, you won’t have it. If you don’t have the courage, you won’t have it.”

A $3 billion bump from First Republic

Top executives spent most of their day telling analysts how the nation’s largest and most profitable bank intends to get bigger and make more money despite the chaos in its industry, soaring interest rates and a potential recession.

The key update was that JPMorgan raised its forecast for net interest income, the difference between what it earns on its loans and is paid for its deposits, by $3 billion. The jump was attributed to JPMorgan’s May 1 acquisition of the bulk of First Republic, which was seized by regulators after a massive influx of deposits.

Pedestrians walk past the headquarters of First Republic Bank in San Francisco, Monday, May 1, 2023. Regulators seized the troubled bank early Monday, making it the second-largest bank failure in US history, and promptly sold all of its deposits and most of its deposits.  Its assets were transferred to JPMorgan Chase in an effort to avoid further banking turmoil in the United States (AP Photo/Godofredo A. Vásquez)

First Republic’s old headquarters in San Francisco. (AP Photo/Godofredo A. Vasquez)

The bank now projects net interest income of $84 billion in 2023. Many banks, especially regional lenders, expect lower net interest income this year as they pay more for deposits and keep up with higher interest rates.

The bank said the acquisition of First Republic would “moderately” improve its overall net income at an annual rate of $500 million before including the cost of restructuring over the next two years.

“If we end up doing better than we expected, great,” said JPMorgan CFO Jeremy Barnum.

Dimon warned that interest rates could continue to rise after a year of aggressive increases by the Federal Reserve, and that banks should be ready for rates as high as 7%.

“I think everyone should be prepared for higher rates from here.”

Artificial intelligence and bank branches

JPMorgan provided several examples Monday of areas where it expects additional investment and growth.

Global Chief Information Officer Laurie Beer said the company plans to invest an additional $1 billion in AI investments by the end of the year, while its consumer banking CEO said JPMorgan also expects to add more brick-and-mortar banking buildings across the US. .

JPMorgan expects to be able to cover 70% of the US population within a 10-minute drive of its branches, up from 60% today, says Jennifer Roberts, chief executive of consumer banking. The company currently has more than 4,800 retail locations.

“You will see us build more branches and then close resulting in a modestly larger branch network over time,” she said.

FILE - In this March 24, 2020 file photo, a Chase Bank employee, right, cleans a branch ATM where a customer uses another in the Flushing neighborhood of Queens, New York.  Shares of some banks are falling in pre-market trading on Friday, March 10, 2023, after SVB Financial Group announced that it plans to raise up to $1.75 billion in order to strengthen its position amid fears of rising interest rates and the economy.  (AP Photo/Mary Altaffer, File)

JPMorgan Bank branch in New York. (AP Photo/Mary Altaffer, File)

The First Republic deal helps JPMorgan lift its weight. The acquisition added 200 advisors and $200 billion in client assets to JPMorgan’s wealth management operations. The number of financial advisors rose 5.3% to 4,950.

The bank said it would close some First Republic branches where it already has nearby brick-and-mortar banks, while helping others in “premium locations” including San Francisco and New York accelerate its strategy with affluent clients.

“A good price to pay”

Daniel Pinto, chief operating officer of JPMorgan, said the US economy is “right now” but “it’s very unlikely that we won’t see a recession”.

We cannot ignore that there are many challenges at this time and sources of uncertainty. “

He cited his Argentine background to say that he lived under inflation and hyperinflation, and that recession was “a good price to pay” to solve the inflation problem.

JPMorgan set aside $22.8 billion in reserves for credit losses during the first quarter, up from 22% from a year ago, as it expects credit quality, loan growth and economic conditions to deteriorate.

“We’re already seeing a tightening in credit,” Dimon said.

It also expects expenses to rise another $3 billion due to the acquisition of First Republic, to $84.5 billion.

Pinto said JPMorgan expects investment banking and trading fees to fall about 15% during the second quarter from the same period last year, with a pickup in the third and fourth quarters of the year.

“We now have a period of low volatility, but I don’t think that will be the case for the rest of the year,” he said of the trading sector.

JPMorgan will not be able to completely escape the fallout from the failure of Silicon Valley Bank and Signature Bank in March. It said it expected it would have to pay a special assessment to the Federal Deposit Insurance Fund of $3 billion to help absorb the losses from those seizures.

Other large and medium-sized banks will also be asked to help cover these costs.

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