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JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon<\/a> said artificial intelligence may be the biggest issue his bank is grappling with, likened its potential impact to that of the steam engine and said the technology could \u201caugment virtually every job.\u201d\u00a0<\/p>\n The CEO devoted a chunk of his annual shareholder letter to the importance of AI<\/a> for the Wall Street giant\u2019s business and for society at large. The bank has identified more than 400 use cases for the technology across marketing, fraud and risk, amassed thousands of AI experts and data scientists and begun exploring deploying generative AI, Dimon said.\u00a0<\/p>\n \u201cWe are completely convinced the consequences will be extraordinary and possibly as transformational as some of the major technological inventions of the past several hundred years,\u201d Dimon said in the letter. \u201cThink the printing press, the steam engine, electricity, computing and the Internet, among others.\u201d\u00a0<\/p>\n Dimon delivered his verdict on AI\u2019s importance in an expansive dispatch that also lambasted a set of regulatory proposals, sounded a stark warning on geopolitics, took aim at shareholder advisory firms and offered a spirited defense of the role of market making in the financial system. And as expected, the 68-year-old weighed in on the economy, reiterating his concern that risks of persistent inflation, quantitative tightening and the ongoing wars in Ukraine and the Middle East loom large even as the US economy remains robust.\u00a0<\/p>\n \u201cThese markets seem to be pricing in at a 70% to 80% chance of a soft landing \u2014 modest growth along with declining inflation and interest rates,\u201d Dimon wrote. \u201cI believe the odds are a lot lower than that.\u201d<\/p>\n Dimon released his letter after JPMorgan notched the highest annual profit in the history of American banking last year. The lender, which reports first-quarter earnings on Friday, benefited from turmoil among regional lenders that began just over a year ago, sending depositors seeking the safety of larger financial institutions. JPMorgan played a major part as those events unfolded, ultimately staging a rescue of First Republic after it failed.<\/p>\n The deal \u201cwas not something that we would have done just for ourselves,\u201d Dimon wrote. At the time, JPMorgan said the acquisition would add more than $500 million to earnings annually, acknowledging that was probably conservative. In his letter, Dimon said that figure would likely be \u201ccloser to $2 billion.\u201d<\/p>\n The regional banking turmoil unfolded as regulators put the finishing touches on proposals expected to saddle US banks with tougher capital requirements, known as Basel III Endgame. Dimon, an outspoken critic of the proposals, devoted an entire section of his shareholder letter to what he said was the need for a serious review of the bank regulatory and supervisory process. He also reiterated earlier criticisms about the potential for the proposals to cause economic harm.<\/p>\n The proposed rules could also damage market making, where banks help investors buy and sell securities, according to the CEO. Dimon dedicated multiple pages defending the role banks play in that business, which he said some regulators seem to view as speculative, hedge-fund like activity.<\/p>\n \u201cThis thinking is what might be leading them to constantly increase capital requirements,\u201d he wrote.\u00a0<\/p>\n JPMorgan earns about $100 million in daily revenue from the business, which has only lost money on 30 trading days over the last decade, according to Dimon. The proposed rules, which Federal Reserve Chair Jerome Powell signaled last month will be scaled back, could harm market stability, Dimon wrote.\u00a0<\/p>\n Dimon also used his letter to take aim at proxy advisers \u2014 firms which investors like state pension funds and other big asset managers pay for recommendations on how they should vote their stock on contentious topics such as executive compensation.<\/p>\n Dimon has long chided shareholders for casting votes solely based on recommendations from those firms as\u00a0lazy and irresponsible<\/a>. But he went a step further on Monday, calling out the two main US advisers, Institutional Shareholder Services and Glass Lewis & Co., for having what he deemed too much sway determining the outcome of shareholder elections.<\/p>\n \u201cWhile asset managers and institutional investors have a fiduciary responsibility to make their own decisions, it is increasingly clear that proxy advisors have undue influence,\u201d Dimon wrote.\u00a0<\/p>\n Dimon over the years has had to fend off a number of resolutions the two firms backed. He noted Monday that ISS is owed by German firm Deutsche Boerse AG, while Canadian private equity firm Peloton Capital owns Glass Lewis, and questioned if American corporate governance should be determined by for-profit institutions with \u201ctheir own strong feelings about what constitutes good corporate governance.\u201d<\/p>\n Dimon also said the bank is taking steps to diminish the role of proxy adviser recommendations. By the end of this year, JPMorgan Asset Management will have largely eliminated third-party proxy adviser voting recommendations from its voting systems, he said. The firm will also work with third-party proxy voting advisers to remove their voting recommendations from research reports they provide to the division by the 2025 proxy season.<\/p>\n Other highlights from the letter:<\/p>\n\nProfit Record<\/h2>\n
Market Making<\/h2>\n
Proxy Votes<\/h2>\n
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