JPMorgan Chase CEO Jamie Dimon warned investors on Monday that he is observing conditions reminiscent of those preceding the 2008 financial crisis, citing “dumb things” happening among some lenders in a competitive push for increased net interest income. Dimon, who led the largest U.S. Bank through the 2008 turmoil and oversaw the acquisitions of Bear Stearns and Washington Mutual during that period, indicated he anticipates a future deterioration in the credit cycle, though the timing remains uncertain.
“Unfortunately, we saw this in 2005, 2006 and 2007, pretty much the same thing: the rising tide was lifting all boats, everyone was making a lot of money,” Dimon told investors, according to a translation of his remarks reported by multiple outlets. Although JPMorgan Chase is not pursuing riskier lending practices to boost its net interest margin, Dimon stated he sees competitors engaging in such behavior.
Dimon has consistently cautioned about potential declines in credit quality in recent months. Following the struggles of auto lender Tricolor Holdings and auto parts supplier First Brands Group last year, he suggested that spotting even a single instance of distress – a “cockroach” – signaled the likelihood of further problems.
The emergence of artificial intelligence is also factoring into Dimon’s assessment of potential risks. He noted that various industries are experiencing “fear trading” related to AI, as investors grapple with the potential disruptive effects of the technology. “Always there’s a surprise in a credit cycle,” Dimon said, adding that the surprise often centers on which industry will be most affected. “This time, it could be software because of AI.”
While acknowledging that AI could prompt JPMorgan Chase to scrutinize certain loans, Dimon expressed skepticism that it would significantly impact credit losses. The financial industry, like many others, has seen its stock valuations decline in recent weeks amid concerns about the implications of AI.
Despite these concerns, Dimon expressed confidence in JPMorgan Chase’s position in the evolving AI landscape. “in 100 areas, we’ll be winners in 75 and losers in 25,” he stated.
During a lengthy question-and-answer session with investors, Dimon also addressed the topic of succession planning. Having led JPMorgan Chase for two decades, transforming it into the most profitable and largest bank in the United States, the question of his eventual retirement and the identity of his successor remains a frequent subject of speculation on Wall Street. Dimon indicated he expects to remain CEO for “a few years,” and potentially continue as executive chairman afterward, but ultimately deferred the decision to the JPMorgan Chase board of directors.