Four of Jamie Dimon's biggest concerns, per his letter

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Emily Elconin/Bloomberg

JPMorgan Chase CEO Jamie Dimon called the current global environment "the most perilous and complicated" since World War II, noting that geopolitics posed the greatest risk to the bank.

Macro perils like a global nuclear arms race and the future of American trade alliances, along with JPMorgan's capital strategy and its place in the economic environment took feature spots in Dimon's annual letter to shareholders on Monday.

"The United States has had a rather healthy and steady economy for years, although it was already weakening as I began writing this letter — and that was before the recent tariff announcement," Dimon wrote in the nearly 60-page address.

After President Donald Trump announced aggressive tariff policies last Wednesday, the stock market has been in a seeming free fall, leading economists — including JPMorgan's Bruce Kasman — to raise their expectations of a recession in 2025.

JPMorgan's stock price has dropped some 13% since the tariff announcement, and the company is slated to announce its first-quarter earnings results this Friday.

The bank's CEO also used his note to double down on JPMorgan's
capital strategy, sound off again on regulatory burdens and address the culture of the company, even as Dimon has faced pushback regarding new return-to-office policies.

Here are some of the top takeaways from the letter.

1. Capital cushion

JPMorgan has built up capital in recent years to prepare for regulatory policies increasing requirements that now seem unlikely to materialize. Still, the company isn't ready to deflate its capital cushion. "Now is a good time to retain lots of extra capital and liquidity," Dimon said.

He said the bank has grown its excess capital to between $30 billion and $60 billion, depending on future regulations. JPMorgan has been resolute in prioritizing capital use for organic growth opportunities.

Dimon said the bank's second capital priority, acquisitions, seem "hard to imagine" at this time.

He said he thinks stock buybacks should only be exerted when they benefit ongoing shareholders, instead of returning cash to exiting shareholders. He said share repurchases that "might be a no-brainer" become a stretch at certain valuations, which is why the bank hasn't used up its capital generation. Although bank stocks have been walloped by Wall Street in recent days, JPMorgan is still trading at two times its tangible book value.

"We are very patient and don't believe that there is any magic to the next 12 months, and, therefore, we look at excess capital as earnings in store or reserve — waiting to be used," Dimon said.

In its fourth-quarter earnings — before the tariff announcements began coming out — Chief Financial Officer Jeremy Barnum signaled the bank could be ready to start increasing buybacks after growing its capital for nearly three years. Capital levels at the bank grew in the fourth quarter, with Common Equity Tier 1 capital ratio of 15.7%, and the bank repurchased about $4 billion in common stock.

"I've never thought having cash in your pocket is a bad thing," Dimon said on the fourth-quarter earnings call.

2. 'Our largest risk'

Last April, Dimon called the "free and Western world" a sine qua non. A year later, he wrote in his letter that "today's world is more complex and more interconnected than ever before." He said only the U.S. has the economic, military and moral power to handle the imperative action required.

Dimon listed "the war in Ukraine; terrorism in the Middle East and the real possibility that Iran may develop a nuclear weapon; Europe's potential fragmentation; and ongoing trade disputes and the rise of China" as some of the global challenges.

He said economics and security are connected, but a global nuclear arms race is the "worst outcome that could happen to our world."

The U.S. must set aside partisan divides to develop effective domestic policies and bolster its national security and military "at whatever cost" to "secure the future we should want for our country and our companies," Dimon said. He added that many of the country's relationships with allies exist because of the benefits they receive from the American military umbrella and strong economic ties.

For international megabanks like JPMorgan, turmoil across borders can tamp down massive capital markets lines of business and put pressure on clients in other countries.

"The success of JPMorganChase has always been predicated on the success of the United States of America and the health of the world, particularly the strength of free and democratic countries," Dimon said.

3. A snag in the American economy

While the economy is facing "considerable turbulence," the U.S. has managed to avoid a major recession even as it navigated a pandemic, massive inflation and geopolitical pressures. Still, Dimon said in the letter "there is a really big 'but' about what is considered America's exceptional economic performance" — the U.S. deficit of nearly $2 trillion.

"These large deficits are not sustainable — I do not know whether it will cause a real problem in six months or six years — the sooner we deal with it, the better," Dimon said.

The U.S. must initiate comprehensive economic foreign policy to win the "new global 'economic' war," he said.

Amid the tariff milieu underscoring the future of international trade, Dimon said his "most serious concern" is long-term economic alliances. He said whether tariffs would cause a recession "remains in question," but they will slow down growth.

In conjunction with tariffs, the effects of quantitative tightening and the likelihood of increased inflation will impact interest rates — both those controlled by the Federal Reserve and the 10-year interest rates that are based on inflation.

He added that so-called stagflation — the confluence of high inflation, high unemployment and slow economic growth — didn't stop rising rates in the 1970s.

JPMorgan would remain healthy throughout a gamut of economic conditions, though, he said.

"All of these cross currents and turbulence may take years to play out," Dimon said. "It is almost impossible to confidently put them into a quarterly or even annual forecast."

"The quicker this issue is resolved, the better because some of the negative effects increase cumulatively over time and would be hard to reverse," the JPMorgan Chase & Co. CEO wrote in his annual letter to shareholders.

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Jamie Dimon

4. Culture question

Over the last few months, JPMorgan has made a series of changes to return-to-office policies, diversity, equity and inclusion initiatives and climate change commitments. Dimon said in his letter that the company is taking steps to be more efficient and innovative, not "out of anger," but to reinforce basic disciplines.

In a section titled "Why complacency, arrogance, bureaucracy and BS kill companies," Dimon scorned "dishonest numbers, failure to set standards, bad people, bad compensation schemes, disincentives, bad incentives, politics" as "cancers that kill companies."

He said culture is created "by what you do and not by what you say." Dimon took heat earlier this year for using expletives in a town hall about a new policy requiring bank employees to return to the office five days a week. Although he said he shouldn't have cursed, after the audio from the meeting was leaked, he didn't back down from the policy.

"Don't give me the s*** that 'work from home Friday' works," Dimon said during a February town hall.

The bank also renamed its diversity, equity and inclusion program, as government attacks on such programs have rapidly increased. JPMorgan now calls the initiative "diversity, opportunity and inclusion."

Dimon said, though, that the rebrand won't change the bank's responsibility to "create a stronger, more inclusive economy." He also noted in the letter the need for the U.S. to tackle education system reform and health care system policies to reduce costs and improve outcomes.

Addressing climate change, he said, is important but should not overshadow other strategic imperatives. JPMorgan Chase exited the Net-Zero Banking Alliance earlier this year, as did Bank of America, Citigroup, Morgan Stanley, Wells Fargo and Goldman Sachs.

Dimon also noted some of the bank's activities financing oil and energy companies in a two-page summary of JPMorgan's commitment to Texas, where it has faced challenges from the government in the past related to its environmental, social and governance policies.

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