JPMorgan ramps up buybacks after Dimon says stock prices are expensive | Wilnesh News

JPMorgan Chase Executives said the bank would increase share buybacks to avoid further building up tens of billions of dollars in excess cash.

JPMorgan Chase, fresh off a record year for profits and revenue, is facing CFO questions Jeremy Barnum Acknowledging it’s a “high-level problem”: According to some estimates, the bank has about $35 billion in capital it doesn’t need to meet regulators’ requirements, or what analysts call “capital excess.”

“We don’t want to see excessive growth here,” Barnum told analysts on Wednesday. “Given the amount of organic capital generation that we’re generating, that means that — unless we find an opportunity in the near term, organically deployed or otherwise — —That means greater returns on capital through buybacks.”

The bank has heard from investors and analysts who want to know what JPMorgan plans to do with the cash. The largest U.S. bank by assets has been hoarding earnings to prepare for Basel 3 regulations that will require more capital, but Wall Street analysts now believe the incoming Trump administration may Propose a milder solution.

Back in May, when the issue came up at the bank’s annual investor day, CEO Jamie Dimon bristled at the idea of ​​expanding purchases of his stock, which at the time was trading close to 52 weeks High $205.88.

“I want to be clear, okay? We’re not buying back a lot of stock at these prices,” Dimon said at the time.

That’s because the company’s valuation is too high even in his own view, Dimon said: “Repurchasing shares of a financial company for significantly more than twice its tangible book value is a mistake. We won’t do it.”

The bank’s stock has appreciated since then: A shares are now trading 22% higher than when Dimon made those comments.

In an effort to resist calls to cut its cash reserves more than it deems necessary, JPMorgan signaled there could be tougher times ahead. Dimon and others have warned of the possibility of a looming recession since at least 2022, but it has not yet arrived and the end of the economic cycle remains far off.

Barnum returned to the topic on Wednesday, telling reporters that there is a “tension” between economic risks and high asset prices in the market; therefore, the bank must be prepared for “a variety of scenarios,” he said.

Portales Partners analyst Charles Peabody said a sharp economic downturn would give the bank the opportunity to deploy more of its estimated $35 billion in excess cash through loans.

“I think JPMorgan is going to be disciplined and not waste capital,” Peabody said. “The best time to capture market share is after a recession because your competitors are somewhat damaged. I expect he will start from Withdrawal of share buybacks at current levels despite pressure from shareholders for more action.”