Jamie Dimon, JPMorgan Chase & Co.’s chief executive officer, used his annual letter to shareholders to comment on potential fallout from the U.K.’s decision to leave the European Union, detail the bank’s investments in technology and urge a cut in the U.S. corporate tax rate.

Here are some key passages from his 45-page letter, which value investor Warren Buffett has said is among his favorites for gleaning business wisdom.


Dimon said he’s concerned the U.K.’s departure from the European Union might trigger political unrest throughout the region that could split the currency union, resulting in “devastating economic and political effects.”

The potential for a U.K. “hard exit” wouldn’t require moving many people in the next two years, although some staff and technology transfers will be needed and JPMorgan will have to secure various regulatory approvals to shift operations, Dimon said. Before last year’s Brexit referendum, Dimon told U.K. staff that as many as 4,000 people could be relocated if the measure passed.

After the British exit, the EU probably will pressure banks not to outsource services to the U.K., Dimon wrote. JPMorgan is in talks to buy a Dublin office building as it considers an expansion into the Irish capital, people with knowledge of the matter said last week. The building in development would have space for more than 1,000 workers.


On banking regulation, to which Dimon devoted more than a third of his letter, he pushed back on a key argument underpinning the deregulation hopes of Republican lawmakers and Gary Cohn — the former Goldman Sachs Group Inc. president who now heads President Donald Trump’s National Economic Council. In opposition to Cohn and House Financial Services Committee Chairman Jeb Hensarling, Dimon asserted that the Dodd-Frank Act effectively ended the possibility of government bailouts for "too big to fail" banks.

Even as he endorsed a number of regulations put in place after the crisis, Dimon was especially critical of capital demands on banks, saying the rules have thwarted lending. He said if the government eased several capital and liquidity requirements to instead match lesser international standards, it could permit an additional $190 billion of loans.

Dimon also called for modifying the Financial Stability Oversight Council — the panel of regulators created by the Dodd-Frank Act that has authority to impose oversight on non-bank financial companies. Overhauling FSOC has become a common talking point among Republicans and is something the Treasury Department is looking at as part of a broader review of rules.


JPMorgan is among U.S. banks touting billions of dollars in investments in technology upgrades as they seek to improve profitability and stay ahead of startups. Dimon said JPMorgan spent more than $9.5 billion on technology in 2016, including $3 billion on new initiatives. About $600 million of the bank’s technology spending was for what Dimon called emerging "fintech" solutions, which include digital and mobile services and partnering with other companies.


Most other developed nations have cut their corporate tax rates in the past decade, leaving the U.S. with the highest levels and causing “considerable damage,” Dimon said.

“Our corporate tax system is driving capital and brains overseas,” he wrote, adding that American corporations are now better off investing capital outside the U.S., where they can earn higher returns. Lowering taxes would improve wages, he argued, citing a 2007 Treasury Department review.

U.S. Economy

“It is clear that something is wrong — and it’s holding us back,” Dimon said. He cited the labor-force participation rate, education and infrastructure spending, though he said he “strongly disagrees” with the idea that slower growth and lower productivity are a permanent fixture.

Dimon said he has confidence underlying growth in the U.S. economy will propel JPMorgan’s consumer businesses.

Dimon said in February that the U.S. would have a bright economic future if the president carries out plans to overhaul taxes, rein in regulation and boost infrastructure investment. In an interview last month, he credited Trump with boosting consumer and business confidence in growth, and reawakening “animal spirits.”


Women account for half of JPMorgan’s global workforce of more than 243,000, as well as 30 percent of Dimon’s direct reports and the company’s senior leadership worldwide, according to the CEO. “In addition to gender diversity, 48 percent of our firm’s population is ethnically diverse in the United States, and we are in more than 60 countries around the world,” Dimon wrote. “Diversity means running a company where people are respected, trusted and given equal opportunity to contribute and raise their ideas and voices.”

JPMorgan, however, hasn’t met self-prescribed standards when it comes to increasing the ranks of African-Americans and introduced an initiative “dedicated to helping us better attract and recruit external black talent while retaining and developing the talent within the company,” he wrote.


Various proposals for reforming the mortgage market could add more than $300 billion a year in new purchased loans, Dimon wrote. Costs to consumers could be 20 basis points lower and mortgage underwriters would be willing to take more risks on first-time, young and lower-income buyers. Had problems in the mortgage market been addressed five years ago, more than $1 trillion in additional mortgage loans could have been made, according to a JPMorgan analysis.

Among Dimon’s suggestions are new standards to reduce complexity and aid securitization. Private capital is needed to make the market less reliant on taxpayers, he said.

“Seven major federal regulators and a long list of state and local regulators have overlapping jurisdiction on mortgage laws and wrote a plethora of new rules and regulations appropriately focused on educating and protecting customers,” Dimon said.

Annual Report

Separately, JPMorgan said Tuesday in its annual report that it expects $49 billion of net interest income this year, up from about $46 billion in 2016, assuming additional loan growth and no changes in interest rates. Average core loan growth will be about 10 percent, and loan write-offs will remain close to historically low levels, according to the forecast.

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