Jamie Dimon, the Chief Executive Officer of JPMorgan, recently expressed his concerns about the current geopolitical landscape and the need for effective leadership to navigate through it. According to CNBC, earlier today, speaking from Riyadh at Saudi Arabia’s Future Investment Initiative conference, commonly referred to as “Davos in the Desert,” Dimon compared the present situation to the complexities seen in the years 1938 and 1948. He emphasized that wishful thinking would not be enough to resolve these issues and called for “real leadership” from multiple parties.
Dimon also touched upon the financial situation, particularly in the United States, although he noted that similar trends are observable globally. He pointed out that fiscal spending is at an all-time high during peacetime, accompanied by unprecedented levels of government debt. Despite this, there seems to be a prevailing sentiment that central banks and governments can effectively manage these challenges. Dimon expressed caution, stating that he doesn’t believe a 25 basis point increase in interest rates would make any significant difference. He even suggested that people should be prepared for the possibility of the entire yield curve rising by 100 basis points.
Discussing environmental, social, and governance (ESG) efforts, Dimon expressed support but criticized the current approach. He said that governments seem to be forcing changes without implementing rational measures like carbon taxes. He also mentioned the difficulties in obtaining permits for building pipelines to reduce coal emissions or for constructing solar and wind energy projects. According to Dimon, these inefficiencies will likely delay the necessary breakthroughs in climate solutions.
Dimon also emphasized the role of private capital in development finance, stating that the scale of financial needs far exceeds what governments can provide. He warned that private capital would be hesitant to invest if there is a risk of assets being seized by governments.
Lastly, Dimon expressed skepticism about economic forecasting, citing that central banks were entirely incorrect in their predictions 18 months ago. He advised caution and preparation for various economic scenarios, rather than relying on specific forecasts.
On 13 October 2023, JPMorgan Chase announced its Q3 2023 financial results, revealing a net income of $13.2 billion and a Return on Tangible Common Equity (ROTCE) of 22%. Dimon attributed these strong figures to higher net interest income and low credit costs, which he expects to normalize. The company’s Common Equity Tier 1 (CET1) capital ratio rose to 14.3%, and its total loss-absorbing capacity reached $496 billion. JPMorgan’s liquidity remained high, with $1.4 trillion in cash and marketable securities.
Dimon also discussed the company’s readiness for the upcoming Basel III regulations but warned of potential market implications. In business performance, the firm saw growth across various sectors. In Consumer & Community Banking, it led in U.S. retail deposits and tripled its new account growth compared to competitors. Corporate & Investment Banking maintained its top Dealogic ranking and increased its market share. Commercial Banking saw a 30% increase in Payments revenue, and Asset & Wealth Management had net inflows of $60 billion. The company also raised $1.7 trillion in capital for various entities.
While acknowledging the general good health of U.S. consumers and businesses, Dimon warned of risks from tight labor markets, high government debt, and large fiscal deficits. He also expressed concerns about the global impacts of the war in Ukraine and recent attacks on Israel, describing the current times as potentially the most dangerous in decades.