Jamie Dimon, chief executive of JPMorgan, said he is beginning to see parallels with the time before the 2008 financial crisis, when the lending rush ended disastrously.
“Unfortunately, we saw this in 2005, 2006 and 2007, pretty much the same thing: The rising tide was lifting everyone, everyone was making a lot of money,” Dimon told investors Monday. While JPMorgan is not willing to make riskier loans to increase net interest margin, he said, “I see a couple of people doing some stupid things. They’re just doing stupid things to generate net interest income.”
Dimon, who led the largest American bank during the 2008 financial crisis and absorbed two major competitors that collapsed, he said he expects the credit cycle to deteriorate again, although he is not sure when.
The CEO has been warning for months about the possible deterioration of credit quality. When the auto lender Tricolor Holdings and auto parts supplier First Brands Group collapsed last year, Dimon said seeing one “cockroach” meant more would likely emerge.
The role of artificial intelligence
In recent weeks, various industries have faced the “fear trade” of artificial intelligence, as investors weigh how this new technology could disrupt markets.
“There is always a surprise in a credit cycle,” Dimon said, adding that the surprise has often been which industry. “This time, it could be software because of AI.”
While this could lead JPMorgan to examine certain loans, Dimon expressed doubt that it would have a significant impact on credit losses.
The financial industry, like many others, has also seen shares decline in recent weeks due to concerns about AI. Dimon declared Monday that he considers his bank a winner in the AI race.
“In the end, in 100 areas, we will be winners in 75 and losers in 25,” Dimon concluded. In the wide-ranging question-and-answer session of what the bank called a “company update” for investors, Dimon was inevitably asked about the succession. He has led JPMorgan for 20 yearsmaking it the largest and most profitable bank in the United States. The question of when he might retire and who might succeed him has been a source of intrigue on Wall Street for years.
This time, his response was largely in line with recent responses: He will be at the bank for “a few years” as CEO, and “maybe a few more after that” as CEO, he said, adding that ultimately The decision is up to JPMorgan’s board of directors.
