Brian Snyder/Reuters
- Jamie Dimon’s annual letter to JPMorgan shareholders was published Monday.
- In it, the bank’s CEO addressed the coronavirus pandemic and the impact it could have on the US economy and JPMorgan.
- The bank has stopped buybacks but has not asked for regulatory relief, Dimon said.
- Watch JPMorgan trade live on Markets Insider.
- Read more on Business Insider.
In his annual letter to JPMorgan shareholders, published Monday, CEO Jamie Dimon said that while the bank is strong, it won’t be untouched by the fallout from the coronavirus pandemic.
The pandemic will be damaging to the US economy, Dimon said. “At a minimum, we assume that it will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008,” he said.
“Our bank cannot be immune to the effects of this kind of stress,” he added.
The US is grappling with the economic consequences of the pandemic, which has roiled global markets and shut down much of the country in an attempt to curb the spread of the disease.
Most firms agree that the US is either already in a recession or will soon be in one, marked by massive slowdowns in output and an elevated unemployment rate — in the past two weeks alone, 10 million Americans have filed for unemployment benefits as coronavirus layoffs persist.
In response to the crisis, JPMorgan has stopped buying back its own stock, Dimon said, adding that halting buybacks “was simply a very prudent action.” Dimon also said the board would consider suspending the bank’s dividend only in “an extremely adverse scenario” that would include a 35% contraction of gross domestic product in the second quarter and an unemployment rate of 14%.
“If the Board suspended the dividend, it would be out of extreme prudence and based upon continued uncertainty over what the next few years will bring,” Dimon wrote.
Still, Dimon said that the bank’s capital resources and liquidity remained strong and that JPMorgan is lending or plans to lend an additional $150 billion for client needs.
JPMorgan is “working closely with all levels of government during this crisis” but has not asked for any regulatory relief, Dimon said. But he said that the financial system needed an overhaul when the crisis subsides.
Next, there needs to be a solid plan to “carefully” return Americans to work, with precautions that include testing, Dimon said.
“The country was not adequately prepared for this pandemic — however, we can and should be more prepared for what comes next,” he wrote. “Done right, a disciplined transition would maximize the health of Americans and minimize the time, extent and suffering caused by the economic downturn.”
Dimon briefly thanked people who wished him well after his emergency heart surgery in March, but he didn’t give any further updates on his health.
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