He said "increasingly sophisticated shadow banks" were seizing ground vacated by banks. "Non-bank financial competitors will look at every product we price, and if they can do it cheaper with their set of capital providers, they will," he said.
Mr Dimon discussed the costs of JPMorgan's own regulatory-driven retreat, including from commodities and student lending. It would cut about $3 billion from revenue but with "little impact" – about $300 million – on profits.
The chief executive's own finances were detailed in a regulatory filing that accompanied the letter. Under the prevailing Securities and Exchange Commission methodology Mr Dimon made less money in 2013, $11.8 million, a 37 percent reduction.
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But the SEC's figure only takes into account remuneration actually paid out during the year. JPMorgan's own calculation for the chief executive's pay, which has already been published and includes cash and stock awarded this year but paid out in future years, rose from $11.5 million to $20 million, a controversial increase in light of JPMorgan's vast regulatory problems.
After a year where JPMorgan paid a record $13 billion to settle claims it mis-sold mortgage-backed securities, Mr Dimon channelled Charles Dickens, Martin Luther King and Harvard professor Steven Pinker.
"It was the best of times, it was the worst of times," said Mr Dimon. "We came through it scarred but strengthened – steadfast in our commitment to do the best we can."
He quoted Dr King to support his argument that "the future of banking will be quite good", with the civil rights leader's quote: "The arc of the moral universe is long, but it bends toward justice."
In an even more unusual reference for a bank chief executive, Mr Dimon, who takes time on his missives to shareholders and has drawn praise from his letter-writing idol Warren Buffett, cited Mr Pinker on human beings' diminishing violence.
"Cruelties such as torture and slavery over many, many years have become increasingly rare (though they tragically still exist)," said Mr Dimon.