Home Finance JPMorgan’s Dimon warns of possible $1 billion Russia loss

JPMorgan’s Dimon warns of possible $1 billion Russia loss

by Enochadmin
  • Dimon involved about secondary impression of Ukraine battle
  • Dimon requires elevated U.S. army presence in Europe
  • Dimon urges revamp of U.S. provide chain
  • Fed charge hikes may very well be increased than market expects -Dimon

NEW YORK, April 4 (Reuters) – JPMorgan (JPM.N) might lose about $1 billion on its Russia publicity, Chief Govt Jamie Dimon stated on Monday, detailing the extent of the financial institution’s potential losses from the battle in Ukraine for the primary time.

In his keenly watched annual letter to shareholders, the chairman and chief government of the largest U.S. financial institution by property additionally urged america to extend its army presence in Europe and reiterated a name for it to develop a plan to make sure power safety for itself and its allies.

Dimon didn’t present a time-frame for JPMorgan’s potential Russia losses however stated the financial institution was involved in regards to the secondary impression of Russia’s invasion of Ukraine on corporations and international locations. Russia calls its actions a “particular operation.”

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World banks have detailed their publicity to Russia in latest weeks however Dimon is essentially the most high-profile world enterprise chief but to touch upon the broader impression of the battle.

“America have to be prepared for the potential of an prolonged warfare in Ukraine with unpredictable outcomes. We should always put together for the worst and hope for the most effective,” he wrote. (For 5 key takeaways from Dimon’s letter, click on on learn extra )

Dimon might proceed as chairman when he ultimately relinquishes his function as chief government, the financial institution stated Monday.

The disclosure, in a report back to shareholders forward of JPMorgan’s annual assembly in Could, stated the financial institution had discovered that the majority main shareholders need Dimon to stay chairman.

The board additionally stated that it was inclined as a “normal coverage” to separate the roles of chairman and chief government after Dimon is gone. Many shareholders have a normal desire to separate the posts, it stated.

Dimon has made one thing of a joke of perpetually saying he’ll resign in 5 years. In 2019, he stated the five-year clock had really begun.

In his letter to shareholders, Dimon addressed the connection between america and China and stated america ought to revamp its provide chain to limit its scope to suppliers inside america or to solely embody “fully pleasant allies”. He urged america to rejoin the Trans-Pacific Partnership (TPP), one of many world’s largest multinational commerce offers.

Commenting on the macroeconomic surroundings, Dimon stated the variety of Federal Reserve rate of interest hikes “may very well be considerably increased than the market expects.” He additionally detailed the financial institution’s rising bills, partly attributable to know-how investments and acquisition prices.

The letter is Dimon’s 17th as CEO. Whereas Dimon just isn’t the one CEO of a high U.S. financial institution to put in writing such letters, his have turn into must-reads amongst Wall Road’s elite and policymakers for the view they supply into his political and financial concepts.

‘FORTRESS BALANCE SHEET’

This yr’s letter comes because the Russia-Ukraine warfare and excessive inflation are hurting the financial system, and as Dimon faces new skepticism from traders over bills.

Some query his plans to extend spending on the financial institution’s info know-how and campaigns to take market share in companies and geographies the place JPMorgan at present trails opponents, comparable to in Germany and the UK.

JPMorgan determined earlier this yr to carry its first investor day because the pandemic started to deal with doubts about its spending plans. The assembly shall be held on Could 23.

Dimon has spent greater than a decade constructing what he calls the financial institution’s “fortress steadiness sheet,” and he stated it’s now sturdy sufficient that JPMorgan might face up to losses of $10 billion or extra and “nonetheless be in excellent form.”

Whereas Dimon wrote that he’s not anxious in regards to the financial institution’s publicity to Russia, he stated the warfare in Ukraine will sluggish the worldwide financial system and can impression geopolitics for many years.

“We face challenges at each flip: a pandemic, unprecedented authorities actions, a powerful restoration after a pointy and deep international recession, a extremely polarized U.S. election, mounting inflation, a warfare in Ukraine and dramatic financial sanctions towards Russia,” he stated.

On acquisitions, Dimon stated that the financial institution shall be lowering inventory buybacks over the following yr to fulfill capital will increase required by federal guidelines “and since we have now made some good acquisitions that we consider will improve the way forward for our firm.”

JPMorgan has been on a shopping for spree, spending almost $5 billion on acquisitions over the previous 18 months. Dimon stated that can improve “incremental funding bills” by roughly $700 million this yr.

Investments in know-how will add $2 billion to bills this yr, Dimon stated.

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Extra reporting by David Henry; Enhancing by Michelle Value, Muralikumar Anantharaman and Nick Zieminski

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