JAMIE DIMON WARNS: We’re getting a ‘bad recession’ plus ‘financial stress’ like the 2008 crisis – CNBC

JPMorgan Hotfoot chief Jamie Dimon said Monday he expects the coronavirus disaster to incorporate a “mistaken recession” and parts of monetary stress much like the 2008 downturn.

The chairman and CEO of the supreme U.S. bank said that whereas JPMorgan entered the disaster from a order of strength and that lenders include willing for this, the pandemic is playing out in systems that are “dramatically varied” from the industry’s Federal Reserve stress assessments.

“We produce no longer know exactly what the long plod will withhold — nonetheless at a minimal, we buy that it is far going to consist of a mistaken recession blended with some extra or much less monetary stress much like the worldwide monetary disaster of 2008,” Dimon said in his annual shareholders letter. “Our bank can no longer be immune to the outcomes of this extra or much less stress.”

While the lender is new off a file one year for income and income, Dimon said that the bank’s earnings “can be down meaningfully in 2020” on legend of of the coronavirus. He moreover warned that in an “extraordinarily negative” downturn within the U.S. economic system, JPMorgan would potentially mediate suspending its dividend to love capital.

That message is prone to reverberate among bank customers and analysts. Executives include said that whereas the supreme U.S. banks voluntarily pulled help on portion repurchases at the onset of the disaster, their dividends were exact. Now, with the leader of the sphere’s most indispensable bank by market capitalization broaching the topic of a dividend decrease, it may per chance well per chance per chance per chance seem that nearly all banks also can be susceptible if the economic system would not increase later this one year.

JPMorgan has incessantly raised its dividend in most recent years, reaching a quarterly payout of 90 cents a portion. 

As the coronavirus pandemic has gripped the U.S., JPMorgan has managed to love about 4,000 branches delivery and the “overwhelming majority” of ATMs stocked with cash, Dimon said. But there were peaceful indicators of stress: Name companies “include no longer fared as effectively” on legend of many of them were shuttered by local governments, main to longer wait occasions, he said. 

Dimon moreover summarized JPMorgan’s efforts to toughen people, companies and companies. The bank is giving a 90 day grace duration for mortgage and auto loan borrowers and waiving dull charges on bank cards, he said. Mountainous purchasers include pulled $50 billion from revolving lines of credit ranking and tapped one other $25 billion in unique credit ranking final month. 

The bank’s 2020 submission to the annual Federal Reserve stress assessments level to that even in an “extraordinarily negative order of affairs,” it’ll lend out an additional $150 billion for purchasers, Dimon said. The New York-basically basically based fully bank had $500 billion in full liquid property and $300 billion in borrowing ability from Fed sources, he added.

But as the economic system worsens and loan losses mount, laws build in arrangement after the final disaster a decade within the past would initiate to constrain the bank, Dimon warned.

“As we win nearer to the extraordinarily negative order of affairs, most recent regulatory constraints will restrict extra actions we can capture to help purchasers,” Dimon said, “despite the unheard of quantity of capital and liquidity we may per chance per chance per chance deploy.”

Dimon, 64, became once forced to step help from JPMorgan final month when he had an acute aortic dissection, or a drag within the liner of a extraordinarily crucial blood vessel branching off the coronary heart. His doctors declared the operation winning; he became once discharged after a week within the effectively being facility and returned to work as CEO final week.

Dimon added that whereas JPMorgan “will take part in authorities programs to take care of the severe economic challenges, we can no longer demand any regulatory reduction for ourselves.”

“After the disaster subsides (and it’ll), our nation ought to peaceful totally overview all design of our preparedness and response,” Dimon said. “And we ought to peaceful use the different to closely overview the industrial response and pick whether any extra regulatory adjustments are warranted to beef up our monetary and monetary arrangement. There is actually a time and arrangement for that — nonetheless no longer now.”

He praised the Federal Reserve’s actions to alleviate lines in monetary markets, announcing the central bank may per chance per chance per chance capture several extra steps, at the side of offering extra lending companies and stress-free capital and liquidity requirements to spice up the arrangement if wanted. 

“We’ve the resources to emerge from this disaster as a stronger nation,” Dimon said. “America is peaceful basically the most prosperous nation the sphere has ever considered.”

Here’s the fleshy letter.