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JPMorgan’s Dimon says he has the same intensity to the job, confident to manage

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NEW YORK (Reuters) – JPMorgan Chase & Co’s (JPM.N) CEO Jamie Dimon said he leads the largest U.S. bank with the same intensity he did when he was younger, but indicated with a laugh on Monday that he plans to stay. Other “3-1/2” years.

Dimon stressed that the bank’s plans for his tenure had not changed, though he did not elaborate.

“I’m not going to change, I’m not going to play golf, I love my country, my company, my family,” Dimon said during the bank’s investor day. “I can’t do this forever, I know, but my intensity is the same. When I don’t have that kind of strength, I have to leave.”

When asked at various points during his 17-year tenure about succession plans, Dimon, 67, had previously given a five-year timeline for stepping down. On Monday, he expressed confidence in the next generation of management and board succession planning.

“One of the most important things about governance is that the board meets once a year without the CEO,” Dimon said. “If you want to give the board a free hand and the ability to talk to each other, there’s no need for me to be in the room.”

Succession plans for the Wall Street giants have come into focus after Morgan Stanley chief James Gorman indicated last week that he would hand over the reins in 12 months.

President and Chief Operating Officer Daniel Pinto is one of the leaders who could eventually succeed Dimon. He has been identified as a “principal executive who is immediately ready to step into the role of sole CEO, should the need arise in the near term,” a previous company filing reads.

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On Investor Day, the bank said its net interest income will rise by $3 billion as interest payments from its purchase of the failed First Republic Bank increase this month.

Net interest income will rise to $84 billion from higher interest payments in 2023, JPMorgan estimates, adding to a previous forecast of $81 billion, due to First Republic being shut down by authorities this month.

Integration costs from the deal would add $3.5 billion to its 2023 expenditures, on top of an earlier forecast of $81 billion. The Wall Street giant is integrating the regional lender, a process that will likely take about 12 months.

“We remain very optimistic that this acquisition will help us accelerate our rich strategy, but mergers are challenging,” said Marian Lake, co-CEO of Consumer and Community Banking at JPMorgan.

JPMorgan has emerged as one of the biggest beneficiaries of the latest banking crisis due to an influx of deposits from customers looking for safety in larger institutions.

JPMorgan Chase bank is seen in New York City, US, March 21, 2023. REUTERS/Caitlin Ochs

The First Republic was the third U.S. regional lender to fail since March in sector-wide turmoil that roiled financial stocks, deepening fears of a crisis and squeezing mid-sized banks at a time when investors already feared a looming recession.

“We cannot ignore that there are a lot of challenges at this time and sources of uncertainty,” Pinto said.

Pinto added that while the global and US economies are doing well, there are signs of deterioration as consumers erode their savings stores, interest rates rise and inflation persists.

“Everyone should be prepared for higher rates from here,” Dimon said. “Five percent isn’t high enough for the feds—I’ve been recommending this to clients, and to banks, you have to be ready for six or seven.”

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The federal funds rate stands in a range of 5%-5.25%, after 500 basis points of hikes since March 2022.

JPMorgan investment banking and trading revenues are expected to decline 15% in the second quarter, Pinto said, and he expected market volatility to increase as central banks approach the end of monetary tightening cycles.

However, JPMorgan plans to increase its investment expenditures to $15.7 billion in 2023 from $13.7 billion last year.

The bank’s shares fell 0.8 percent.

JPMorgan also re-set its target of 17% for return on tangible common stock, a key measure of how well the bank uses shareholder money to generate profit.

Jennifer Roberts, Chief Executive Officer of Retail Banking, said the bank plans to modestly increase the size of its branches. It serves nearly 80 million customers and 5.7 million small businesses and is the first bank to operate in all 48 contiguous US states.

Wells Fargo analysts led by Mike Mayo said the bank’s presentation reflected the “Goliath wins” theme.

“The tranches reflect the benefits of volume,” the brokerage said in a note.

Additional reporting by Nupur Anand and Lanan Nguyen in New York and Mehnaz Yasmin in Bengaluru; Edited by Soumiadeb Chakrabarty

Our standards: Thomson Reuters Trust Principles.

Lanan Nguyen

Thomson Reuters

Lanan Nguyen is the US Finance Editor for Reuters in New York, leading coverage of US banks. She joined Reuters in 2022 after writing on Wall Street for the New York Times. Lannan has spent more than a decade at Bloomberg News in New York and London, writing extensively on banking and financial markets, and previously worked for Dow Jones Newswires/The Wall Street Journal. Mr. Lananeh holds a BA in Political Science from Tufts University and an MA in Political Science. in Finance and Economic Policy from the University of London.

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