Chairman and CEO Jamie Dimon hammered on a predominant theme during JPMorgan Chase & Co.'s annual investor day: The company has the resources, acumen and determination to extend the competitive advantages that have made it one of the world's most prominent companies.
"We will do whatever it takes," Dimon said during the Feb. 27 event in New York. "We have a lot of money" and "a lot of capacity" to invest in new technology, markets, business lines and talent.
He said JPMorgan could create its own version of Facebook or compete with an array of other major companies if the company concluded it was necessary in order to meet clients' needs or to win new customers. "We can build whatever we have to build to compete."
JPMorgan Chase Chairman and CEO Jamie Dimon
Source: Getty Images
Dimon, who closed the event with a lengthy question-and-answer session, picked up on earlier comments provided by CFO Marianne Lake, who said JPMorgan would invest up to $1.4 billion of additional money this year on technology efforts and talent, driving innovation of new products and services across all of the company's business units. It is pushing for more share in everything from treasury services to small-business lending.
JPMorgan is already the biggest U.S.-based bank, with more than $2.5 trillion in assets, and the most profitable when compared to peers Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. The company projected that pretax net income could increase to a range of $44 billion to $47 billion over the next three years. The company earned nearly $40 billion on a pretax basis in 2017.
The company also is using some of the $3.5 billion tax benefit it has estimated from recent cuts to federal corporate levies to open some 400 new bank branches over several years in new markets. Gordon Smith, co-president and co-COO of the company, said that while banks are heavily focused on bolstering online and mobile offerings, they still need branches to manage businesses that are inherently local. He said home lending is a prime example. Residential real estate varies by market, making local expertise valuable, and mortgages are the biggest loans that most consumers ever seek, making in-person consultation important.
JPMorgan, Smith said, sees plenty of opportunity to grow its mortgage market share. He also noted that, while inevitable downturns loom, JPMorgan is using increasingly sophisticated computer models and massive amounts of customer data to ferret out risky loans and to identify the smartest products for borrowers.
"Credit is about constantly, constantly managing the details," Smith said.
Dimon said the company will continue to look for growth opportunities and new markets, without worrying about recession or shifts in credit cycles. He said the one thing that concerns him is policymakers — in Congress or in regulatory bodies — creating bad public policy that needlessly stunts banks' ability to extend credit.
He cited, for example, the international "global systemically important financial institutions" designation created by the Financial Stability Board. It requires major global banks to hold additional capital. The problem is, Dimon said, that comes on top of the already high requirements imposed by the international Basel III rules and U.S. regulatory demands. It amounts to excessive regulation with little benefit, Dimon suggested.
It is "one of the stupidest things I've seen in my life," Dimon said.
Though he said blockchain technology is already useful for banks to communicate with each other and is bound to become increasingly valuable, Dimon dismissed Bitcoin and other cryptocurrencies as "basically irrelevant to JPMorgan Chase."
He also labeled quarterly earnings forecasts "stupid" and promised to lobby others on Wall Street to get behind his suggestion to eliminate them. He said there are far too many unknowns in any given quarter — weather, one-off episodes in given business lines, etc. — and that makes meaningful forecasts difficult to produce with consistency.
"It forces people inside the company to bull---- up the chain," Dimon said. "I think it's a good idea to dump it."
Dimon also seized an opportunity to joke with the sometimes contentious and often brash bank analyst Mike Mayo of Wells Fargo Securities. After a series of rapid-fire questions from Mayo to a range of JPMorgan executives, Dimon noted to the analyst that he does not have to accept the word of management and could find answers through his own analyses.
"I happen to know you think you are pretty damn good," Dimon told Mayo. Of the analyst community at large, Dimon added at another point, "Some of you have no idea what you are talking about; some of you do."