Jamie Dimon On Just About Everything
While the bank's planned reduction of 4,000 jobs by 2013 made the headlines on Tuesday, Dimon highlighted the bank's gains in market share, its strong franchise and touted its diversified business model.
"We have been the port in the storm and we will be the port in the storm in the next storm too," he said.
As usual, analysts looked to Dimon to hold forth on everything from fiscal policy to financial regulation and the CEO, true to form, was outspoken in his comments.
Here are a few highlights from his Q&A.
On buybacks and capital
JPMorgan hopes to meet capital and liquidity requirements under new international rules by the end of 2013. That would mean a Basel 3 Tier 1 Common Ratio of at least 9.5% by 2013, compared to 8.7% at the end of 2012.
The company will likely not be returning much capital to shareholders this year, as a result.
But it says it will have a whopping $28 billion in excess capital in 2014 if it makes no buybacks, based on analyst estimates.
"The stock is still a very good deal," Dimon said, implying that buybacks are still attractive, but reiterated that the bank will prioritize opportunities for organic growth over buybacks.
Dimon also believes that all banks will likely have "too much capital" in the next couple of years and "will not know what to do with it."
That raises concerns that banks will do something stupid with it, of course. "Some will," Dimon acknowledged, "But not everyone is equally stupid."
But the kicker was his exchange with CLSA analyst Mike Mayo over capital. Mayo wondered if JPMorgan would want to build even more capital because clients might do business with a bank that has more capital and is implicitly considered safer. Apparently UBS(UBS) has been making that argument.
"You'd take your business to UBS over that?" Dimon asked. Mayo clarified that it is what other people are contending.
"That's why I am richer than you," Dimon responded.
On Black Swans
Dimon thinks there are three things that investors should worry about.
One, Europe's debt problem is not going away. "It is going to be a rollercoaster," he said. " Some days you will feel good, some days you will be sick to your stomach."
Two, the uncertainty over tax policy is holding back growth. The economic choice would be to strike a grand bargain, he said, but unfortunately this is all political.
And three, the end of QE3 is still a threat. Dimon believes that investors should prepare for a sudden rise in interest rates. "Is it possible for rates to go up in a recession? It can and that's the worst thing that can happen." He added that JPMorgan was positioned for a rise in interest rates even though it was currently expensive to do so.