| |  | | | | Jamie Dimon's Annual Letter This week, JPMorgan Chase Chairman and CEO, Jamie Dimon, released his annual letter to shareholders. -
He discusses the resiliency of the U.S. economy, geopolitical and policy challenges, artificial intelligence, global economic security and the private sector and JPMorgan Chase's role in communities and the world. "Throughout these challenging past few years, we have never stopped doing all the things we should be doing to serve our clients and our communities. As you know, we are champions of banking's essential role in a community — its potential for bringing people together, for enabling companies and individuals to attain their goals, and for being a source of strength in difficult times." Jamie suggests solutions to challenges and emphasizes that for 225 years, JPMorgan Chase continues to be a source of strength to help individuals, communities and companies in good and difficult times. Read on for key highlights from this year's letter, and view the firm's full annual report. |
| U.S. economy: growth, risks and opportunities  The U.S. economy remains resilient, and key indicators steadily point towards positive growth. However, Jamie emphasizes that persistent factors also generate economic risks and opportunities: -
The economy being fueled by large amounts of government deficit spending and stimulus, which might lead to stickier inflation and higher rates than markets expect; -
Ongoing wars in Ukraine and the Middle East have the potential to disrupt energy and food markets, migration, and military and economic relationships, in addition to their dreadful human cost; and -
Capital needs of the new green economy, and possibly higher energy costs in the future (even though there is currently an oversupply of oil and gas) due to a lack of investment in the energy infrastructure. Jamie also asserts that "Washington's 'Basel III Endgame' proposal damages market making, hurts Americans and drives activity to less transparent, less regulated markets." If this proposal is enacted as drafted: -
Households contending with inflation could also feel the effects of higher capital requirements on market-making activities when they shop; -
Mortgages for consumers —including first-time homebuyers and historically underserved, low-to-moderate-income borrowers with smaller down payments — will face higher interest rates or will have a tougher time accessing one; -
Saving for retirement or college will be harder, as the cost of products that families count on to save for retirement or college will go up as a result of this proposal; and -
Government infrastructure projects and corporate development will become more expensive. |
| How to rethink U.S. growth policy and global economic security  Jamie asserts that despite economic and geopolitical uncertainties, positive growth and increased global security can be achieved with two key ingredients: A robust U.S. policy, which includes: -
Consistent tax policies, conducive to both employment and capital investment; -
Efficient regulations like timely permits on projects large and small, and proper federal government budgeting and fiscal management; -
Collaboration with businesses of all sizes; and -
Support for low-income citizens via enhanced workforce training and an Earned Income Tax Credit expansion. A global economic security strategy for the U.S. and its allies, which encompasses: -
The U.S. no longer relying on any potential adversaries for materials essential to our national security; -
Improving on our trade engagements, which is good economics and great geopolitics; -
Carefully constructing an industrial policy, which would involve using government resources to subsidize investments to help make businesses more competitive; -
Engaging with China, thoughtfully and without fear (despite the complex relationship); and -
Strengthening and rebuilding the international order, which is somewhat weakened by its own failures and inability to keep up with the increasingly complex world. The bottom line: "The whole Western world is rethinking and reimagining its military strategies and alliances. We need to do the same for our economic strategies and alliances, but we should be guided by a comprehensive global strategy that deals with critical issues. Done properly, such a strategy would help strengthen, coalesce and possibly be the glue that holds together Western democratic alliances over decades." |
| The critical importance of AI  While JPMorgan Chase has been actively using predictive AI and Machine Learning for years, Jamie asserts we still do not know the full effect of how AI will change our business — or how it will affect society at large. However, Jamie believes that its impact will be extraordinary. -
Specifically, Jamie says the impact of AI is "...possibly as transformational as some of the major technological inventions of the past several hundred years: Think the printing press, the steam engine, electricity, computing and the Internet, among others." As the firm continues to explore AI's potential, JPMorgan Chase has a robust, well-established risk and control framework that helps us proactively stay in front of AI-related risks, particularly as the regulatory landscape evolves. The bottom line: Jamie asserts that as the firm looks to explore and carry out AI across its businesses, "...we will, of course, continue to work hard with our regulators, lawyers, clients and subject matter experts to make sure we maintain the highest ethical standards and are transparent in how AI helps us make decisions." |
| Management insights from Jamie's journey In his letter, Jamie also breaks down management lessons and insights he's learned from watching others, reading and through his own journey. Key lessons he emphasizes include: -
Performing full and complete assessments of your business, challenging the status quo and recognizing the difficulty to see some long-term trends. -
A process around decision making and acting, giving yourself time to decide and act, and remembering that crowdsourcing, compromise, consensus and committees have benefits and risks. -
The importance of vision, communication, inspiration and heart cannot be overstated, and "not only to build trust with employees, customers, constituencies and, yes, even competitors," but... "To become a true leader, you need to be trusted and you must earn your respect, every day. People need to know that even when you make mistakes, you're willing to admit them and take corrective action." |
| Local impact: A Florida case study  Jamie also spotlights how the firm serves as an engine of the economy and champion of opportunity in local markets. Why it matters: In his letter, Jamie provides a look at the firm's investments and impact in Florida. For more than 130 years, the firm has been contributing to local economic growth across the state. By the numbers: -
Serving over 150 government, higher education, healthcare and nonprofit clients, providing more than $20.2 billion in credit and capital over the last five years; -
Having more than 654,000 small business customers; -
Committing nearly $65 million in philanthropic support over the last five years; -
Providing $24 billion in credit and capital for financial institutions such as local banks, insurance companies, asset managers and securities firms over the last five years. Worth the mention: Through a new partnership with Inter Miami CF, and the newly named Chase Stadium, we are furthering our commitment to South Florida's local communities with one of the most globally recognized sports teams. The bottom line: Each year, JPMorgan Chase contributes billions of dollars to the Florida economy, hires and trains local residents, helps to revitalize neighborhoods and remove barriers to opportunity for all Floridians. "Our partnerships with businesses, nonprofits, government entities and community organizations have enabled us to drive sustainable impact and help them achieve their goals. We couldn't be more proud to help make opportunity happen in Florida." |
| Closing thought from Jamie: "Throughout the year, we demonstrated the power of our investment philosophy and guiding principles, as well as the value of being there for clients — as we always are — in both good times and bad times." | | | | |  | |
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