JPMorgan's Dimon Says No to Higher Dividend, Stock Buyback

At a meeting on Wednesday with ten of the bank’s large investors JP Morgan Chase CEO Jamie Dimon reiterated what he’s been telling all his bank's shareholders of late.

Jamie Dimon
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Jamie Dimon

Namely that the expectation of higher capital requirements and a still muddled picture from Washington, D.C. on financial regulation limit JPMorgan’s willingness to consider buying back stock or raising its dividend, as many of its investors would like to see occur.

JPMorgan has been reporting strong results in recent quarters,leading shareholders to wonder if the bank will return some of its earnings to them rather than padding what some believe are already outsized capital cushions.

One portfolio manager who attended the meeting said it was clear that Dimon is more concerned about what’s going on in Washington with financial regulation than he is of the current financial turmoil in Europe.

That concern, coupled with the new regulations known as Basel III that will tighten capital requirements and leverage ratios, are giving pause to Dimon as he considers what do with JPMorgan’s cash.

While Basel III won’t go into effect for many years, Dimon is described as believing that when the new regulations are approved, JPMorgan will be expected to adhere to them regardless of how long a period of migration is allowed for.

To better understand the complexities of Basel regulations, here are some helpful definitions:

Even without the prospect of a dividend hike or a significant stock repurchase, managers who attended the meeting remain positive.

“If the world gets good they [JPMorgan] are massively overcapitalized and if the world gets worse they are very secure,” explained one manager.

  • Video Report of JPMorgan's Recent Shareholder Meeting

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