Breakingviews - Dimon’s mega-missive has more spin than substance

Jamie Dimon, CEO of JPMorgan Chase, leaves after the launching of the Advancing Cities Challenge, in Pantin, a suburb of Paris, France, November 6, 2018. REUTERS/Benoit Tessier

NEW YORK (Reuters Breakingviews) - Jamie Dimon has a lot to say that shareholders in JPMorgan want to hear. The chief executive’s annual open letter, published on Wednesday, covers some of it. Then there’s the other two-thirds of his 66-page opus, in which he muses on politics, leadership, racial justice, Covid-19 and America’s role in the world. The result is a document that says more about the cult of the CEO than it does about the case for investing in JPMorgan.

Dimon’s patience-testing missive is unnecessary because JPMorgan can be summed up in a few choice numbers and facts. The bank makes around $50 billion of annual profit, before bad-debt provisions. Last year’s revenue was a record $123 billion, despite and partly because of the Covid-19 pandemic. Its biggest threats include cyber crime, the rise of fintech firms that benefit from relatively lax regulation, and overly intricate capital rules that impair banks’ ability to lubricate markets in a crisis.

The letter covers those just fine. There are, however, areas where Dimon skirts over some relevant detail. He trumpets the $2.3 trillion of credit that JPMorgan extended or facilitated to its clients. Yet the only additional loans JPMorgan took on in 2020, outside its investment bank or the asset management business that serves the wealthy, were those backed by the government paycheck-protection program. In other words, in a bumper year it took on no additional risk by lending to consumers and small businesses.

Similarly, Dimon mentions racial injustices a dozen times. True, the talk is backed up by initiatives to lend more to Black and Hispanic communities, and rely more on minority-owned suppliers. Yet that sits awkwardly with JPMorgan’s failed attempt to block a shareholder proposal that it should audit the impact of its activities on racial injustice – a proposal that fund manager BlackRock also received from a shareholder and agreed to.

Shareholders want a CEO who can turn in big numbers, fight the bank’s corner with regulators and politicians, and keep the company roughly on the right side of history. None of that requires a 66-page letter spanning everything from complaints about Zoom to the polarizing effect of social media. JPMorgan trades at roughly twice the forward price-to-earnings multiple of its large bank peers, according to Refinitiv. That says more than self-indulgent prose.


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