Why JPMorgan Chase CEO Jamie Dimon compares his bank to Netflix
In a bid to oppose the idea that banks have volatile financial results, JPMorgan Chase CEO Jamie Dimon says investors should think about his bank more like Netflix.
“We have a lot of subscription-like businesses,” he told Barron’s magazine in an interview published Monday. “The volatility of our results is very low over time — surprisingly in businesses like fixed-income trading, where a large chunk of the revenues are consistent year to year.”
The consistency comes from relatively stable businesses such as asset and wealth management and consumer banking, he told the news outlet.
Stocks for most sectors, such as technology and health care, climbed late last week.
But bond prices rose, pushing yields lower — a sign that the market is worried about slower economic growth. The yield on the 10-year Treasury fell to 2.08 percent from 2.12 percent on Thursday. That hurt banks, which rely on higher yields for profit from loan interest. Citigroup slid 1.2 percent.
JPMorgan stock closed at $109.13 per share on Friday. Meanwhile, the bank’s competitors, including Morgan Stanley and Citigroup, are only trading at about nine times their projected 2019 earnings, according to Barron's.
Dimon, 63, has been the head of the largest U.S. bank since 2006 and he plans to run it for at least another four years. When it comes to determining who will eventually replace him, he said that's up to the board.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| JPM | JPMORGAN CHASE & CO. | 179.97 | -0.69 | -0.38% |
“It’s a board decision,” Dimon said. “It’s discussed at every board meeting with and without me present. More than half of my senior direct reports are women and there are men and women on the operating committee who can run the company today. And more can run it in the years ahead.”
Earlier this year, Dimon tapped two senior women insiders — Marianne Lake and Jennifer Piepszak — as his possible successors.
“I am bursting with pride over those two,” Dimon previously told FOX Business’ Maria Bartiromo.
“It is very important, if you are on my board to say, you know, move people around, give them different experiences, seeing what they’re really good at. And so ... so I think it is part of a succession plan that you would see us moving people around, trying something different,” he added.
JPMorgan leads the market in investment banking, credit cards and private banking, which Dimon said is where the bank can continue to build and grow. Another place for growth is in wealth management for multi-million dollar households. At the moment, the bank reportedly has only 1 percent of the market share.
“The macro environment doesn’t change what we do,” Dimon told Barron's. “We invest through the cycle. The underlying economy is still doing OK.”
As far as JPMorgan’s share price, Dimon added: “It’s build, build, build. Do right by your customers and communities, and the stock will take care of itself.”
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In April, JPMorgan Chase reported record first-quarter profit, buoyed by higher interest rates and gains in the bank’s debt underwriting business.
The bank said in its release at the time that profit rose by 5 percent to $9.18 billion, or $2.65 per share, in the first quarter, beating analyst expectations of $2.35 per share. That’s up from $8.71 billion, or $2.37 per share, in the year-ago period.
Fox Business' Megan Henney, Henry Fernandez and The Associated Press contributed to this report.