Jp Morgan revises 'payroll' as Dimon announces farewell

Jp Morgan, the largest bank in the United States, is preparing to say goodbye to Jamie Dimon, the dean at the helm. It is also preparing to review compensation for its bankers.

On investor day, the financial giant provided impressive figures for its consumer and community banking business. For instance, it tightened expectations on non-performing credit card loans to around 3.4 per cent this year, up from a previous forecast of less than 3.5 per cent. The company has recently added millions of new customers and hundreds of branches, and said it expects steady net interest income this year and an increase in non-interest income in this unit. "Consumer financial health has largely normalised and remains stable," the bank wrote in its presentation.

Certainly these are all good things for JPMorgan shareholders. But what works for America's largest bank is not necessarily synonymous with what many would like to see from the economy, especially in an election year. Even more, the fact that things are going well from the bank's point of view may not coincide with how the customers themselves see it. Customers with lower incomes are showing stronger spending growth, but 'with signs of downsizing'. Those with higher incomes, on the other hand, are showing lower spending growth with "a slowdown in discretionary spending, including in travel and luxury consumption".

The bank's division dedicated to low-income customers posted the largest relative gains: a median nominal growth of 41% since January 2020, against a 21% increase in prices. But the bank's pandemic-era cash reserves have also shrunk, falling from a peak of 15 days of outflows to just three days in March 2024. "As excess cash reserves have largely been depleted, we are closely monitoring consumers whose incomes have not kept pace with inflation," the bank continued.

The slowdown in macro spending is not necessarily a constraint to growth for Jp Morgan, as the bank's consumer and small business unit adds new customers and deepens business with existing ones. It added nearlythree million consumer customers in 2023 and increased the number of customers using multiple product categories by 9% in 2023 compared to 2022. It has seen more than 30% growth in active card accounts compared to 2019 and is capturing a greater percentage of its Chase Travel card customers' travel spend.