JPMorgan CEO Dimon warns of risks in geopolitical, artificial intelligence, and private equity markets in annual letter to shareholders

Key Points

• JPMorgan Chase CEO Jamie Dimon mentioned the 250th anniversary of the founding of the United States in his annual letter to shareholders, urging a renewed and broad practice of the United States’ core values.
• He warned of multiple risks brought by geopolitical conflicts, persistent inflation, and artificial intelligence.
• Dimon specifically criticized so-called “bad banking regulation,” saying that some parts of the recent Basel III finalization package and the proposed additional capital for global systemically important banks (GSIBs) were “utterly absurd.”

JPMorgan Chase CEO Jamie Dimon called for the bank, as it addresses geopolitical uncertainty, a shaky economy, and the revolutionary impact of artificial intelligence, to once again broadly embrace the United States’ core values.

In his annual letter to shareholders published on Monday, Dimon said that the 250th anniversary of the founding of the United States is “an excellent time to recommit to the values that made this great nation achieve—freedom, self-determination, and opportunity.”

“The challenges we face together are extremely severe. The list of issues is long, but at the top are Ukraine’s relentless brutal war and violence, the current war in Iran and broader hostile actions in the Middle East region, terrorist activities, and increasingly heightened geopolitical tensions.” Dimon said. “Even in times of turmoil, we still believe that the United States will, as always, return to the values that define our unique nation and underpin our leadership of the free world.”

As the long-time steward of the largest bank by market value globally, Dimon is one of the most outspoken business leaders in the United States. His annual letter to shareholders not only records company performance, but also offers wide-ranging views on global developments.

In his letter on Monday, Dimon mentioned multiple headwinds, including global conflicts, persistent inflation, turbulence in the private markets, and what he calls “bad banking regulation.”

Dimon said that although the regulatory measures introduced after the 2008 financial crisis “have achieved some positive effects… but they have also created a fragmented, slow-moving system—rules that are cumbersome, overlapping, and overly stringent—some of which in fact weaken the financial system and suppress effective credit deployment.”

He singled out the negative impact brought by capital and liquidity requirements, the Federal Reserve’s current stress-testing framework, and the processes of the Federal Deposit Insurance Corporation that he said were “handled improperly.”

Dimon also said that regarding the Basel III finalization package (B3E) and the proposed revisions to additional capital for global systemically important banks (GSIBs) issued by U.S. regulators last month, JPMorgan Chase’s stance is “mixed.”

“While the recent Basel III finalization package and the GSIB proposals attempt to reduce the increase in capital requirements proposed in the 2023 package—this is worth acknowledging—but to be frank, some of the content is still utterly absurd.” Dimon said.

The CEO said that under the proposal’s roughly 5% total additional capital requirement, the bank’s “capital required to make the vast majority of loans it extends to U.S. consumers and businesses will be 50% higher than for non-GSIB large banks making similar loans.”

“To be frank, this is unreasonable and it doesn’t reflect the spirit of the United States,” he said.

Trade and Geopolitics

Dimon listed geopolitical tensions as the bank’s top risk, especially the wars in Ukraine and Iran and their impact on commodities and global markets—he said the wars are “the root of uncertainty.”

“Where current geopolitical events go is very likely to become a decisive factor in how the future global economic order evolves,” he said. “Of course, it might not be.”

He also mentioned “the reshaping of global economic relationships” driven by U.S. trade policy. U.S. President Donald Trump has made tariffs a signature policy of his second term, imposing higher tariffs on dozens of trading partners and categories of imported goods.

“A trade war is clearly not over yet, and it’s foreseeable that many countries are analyzing how and with whom to establish trade arrangements,” Dimon said. “Even though some measures are indeed necessary for national security and economic resilience—both of which are crucial—it’s hard to judge how the long-term impact will play out.”

Private Markets

Dimon also discussed recent turbulence in the private markets, where concerns about loans to software companies led to large-scale redemption requests from private credit funds.

“Overall, private credit often lacks sufficient transparency, and loan valuations’ ‘marking’ is not rigorous enough—which increases the likelihood that investors will sell if they believe the environment is worsening, even if actual realized losses have changed little,” Dimon said.

He added that in the current environment, realized losses are already higher than they should be.

“No matter how things develop, it can be expected that insurance regulators will eventually require stricter ratings or asset write-downs, which could in turn lead to requirements for additional capital,” he said.

Artificial Intelligence

On Monday, Dimon reiterated that the rate at which artificial intelligence is being adopted is unprecedented. He said that although its applications will be “highly transformative,” how the AI revolution will unfold remains to be seen.

“Overall, investment in artificial intelligence is not a speculative bubble; instead, it will generate huge returns. However, for now we cannot predict the ultimate winners and losers in AI-related industries,” Dimon said.

“We will not ignore it. We will deploy artificial intelligence, just like we deploy all technology, to provide better service to our clients (and employees),” he wrote.

JPMorgan Chase has been one of the institutions on Wall Street that introduced artificial intelligence across various business lines early. Last year, the bank’s Chief Analyst Derek Waldron gave an initial demonstration on CNBC of how the bank uses ** Agentic AI ** to improve work efficiency and deliver better outcomes for clients and shareholders.

In February this year, Dimon said that artificial intelligence is reshaping JPMorgan Chase’s workforce, and the bank has already developed a massive employee “redeployment plan.”

“We’ve focused on some ‘known and predictable’ and ‘known unknown’ events,” he said. “But major technology transformations like AI often create second- and third-order effects, which could deeply affect society… We should also keep a close eye on transformations like this.”

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Editor: Guo Mingyu