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JPMorgan CEO Says Might Suspend Dividend In Extremely Adverse Scenario

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JPMorgan Chase CEO Jamie Dimon said it expects the bank's earnings to be "down meaningfully" in 2020 due to the disruptions created by coronavirus pandemic. He also noted that the U.S. was not adequately prepared for the pandemic.

In his annual letter to the company's shareholders, Dimon said that the bank's board may consider suspending the dividend in an extremely adverse scenario in order to preserve capital. The bank has already stopped buying back its shares.

"We don't know exactly what the future will hold - but at a minimum, we assume that it will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008. Our bank cannot be immune to the effects of this kind of stress," Dimon said.

However, Dimon added that the bank would have sufficient capital even in this extreme case scenario that projects a 35 percent contraction of U.S. gross domestic product in the second quarter and unemployment peaking at 14 percent in the fourth quarter.

Dimon noted that during the coronavirus crisis, JPMorgan has been utilizing its disaster recovery sites and implementing alternative work arrangements globally. The company now has more than 180,000 employees working from home.

To help its customers amid the pandemic, JPMorgan is providing a 90-day grace period for mortgage and auto loan/lease payments, removing minimum payment requirements on credit cards, and waiving associated late fees. The company is also waiving or refunding some fees, including early withdrawal fees on certificates of deposit.

JPMorgan has extended $950 million in new loans to small businesses in the past 60 days alone. The bank is also waiving and refunding fees for those businesses in need and servicing clients with additional credit through revolving facilities.

In addition, the bank is continuing to maintain undrawn revolving commitments in its wholesale businesses, which totaled approximately $295 billion as of the close of business on March 31, 2020.

Dimon noted that of the bank's nearly 5,000 Chase branches, it has managed to keep three-quarters of them open for customers. Almost all of the bank's 2,300 branches with drive-up windows have remained open for business, allowing people to maintain a safe distance.

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