JPMorgan Chief James Dimon Likes the Bank's Growth Prospects, Despite Risks – Wall Street Journal


JPMorgan


JPM 1.52%

Chase & Co. chief

James Dimon

shared an optimistic view of the bank’s growth prospects in his annual shareholder letter published Thursday.

Mr. Dimon, chairman and chief executive of the largest U.S. bank by assets, focused on potential boosts in JPMorgan’s businesses ranging from fixed-income trading to new-country expansion to opportunities in wealth management.

That represents a more positive tone than letters in recent years that emphasized U.S. regulatory shortcomings, a defense of the bank’s size and the threat of Silicon Valley upstarts.

Mr. Dimon spent a good chunk of his 47-page letter focused on things that could be better and things that worry him, from “poor public policy” to cybersecurity gaps and the risks that come from interest-rate policy changes and proliferation of exchange-traded funds.

Still, Mr. Dimon cast a generally optimistic message about the bank’s prospects, as he stressed that recent U.S. tax changes and a “more constructive regulatory environment” should allow the bank to expand into new markets, expand businesses and support employees. He reiterated that the bank should be able to keep its return on tangible equity at around 17%, a relatively high level compared with recent postcrisis years.

Mr. Dimon also reiterated his position on changing public policy, including overhauls in education, infrastructure and immigration. Most notably, he shed light on the bank’s health-care initiative with

Amazon.com
Inc.

and

Berkshire Hathaway
Inc.

that was announced in January and has been largely kept under wraps.

Mr. Dimon said that while the U.S. has “some of the best healthcare in the world” it has some of the worst “outcomes and costs.”

He added: “We need to form a bipartisan group of experts whose direct charge is to fix our healthcare system.”

Mr. Dimon said the health-care initiative among the three industry giants will start “very small” and use big data, virtual technology and other methods to address areas needing improvement. Those include: aligning incentives; studying the amount spent on administration and fraud; empowering employees to own their health-care data; and studying the use of specialized medicine and pharmaceuticals.

While Mr. Dimon didn’t go into detail on most geopolitical issues, he did write that the bank will “be prepared for Brexit” even though “it’s complex and hard to figure out.” Mr. Dimon wrote that the bank will move 300 to 400 jobs around Europe in the short term and change some of its legal entities to conduct business the day after Brexit.

Mr. Dimon also wrote of growth opportunities in fixed income, currencies and commodities trading as capital markets grow. He also said the bank’s high-net-worth and affluent wealth-management businesses should be able to double their respective market shares over the next 10 years.

One risk he is watching for: the possibility that the reversal of quantitative easing by the world’s central banks may be different from what people expect.

“We have to deal with the possibility that at one point, the Federal Reserve and other central banks may have to take more drastic action than they currently anticipate—reacting to the markets, not guiding the markets,” he wrote. “A simple scenario under which this could happen is if inflation and wages grow more than people expect.”

Write to Emily Glazer at emily.glazer@wsj.com



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