Of all the numbers revealed at JPMorgan Chase & Co.'s investor day, this one caught the attention of top analysts: $17 billion.
That's the total investment the $562 billion financial company plans to spend on technology this year, said Mike Mayo, a prominent large bank analyst. “This is a record. No bank has ever spent $17 billion on tech investments in one year,” Mayo told CNBC on Monday. “This is equivalent to the total expenses of eight large banks, and the amount that JPMorgan spends on technology alone.”
Mr. Mayo, a managing director at Wells Fargo Securities, tends to be outspoken about the bank and its leaders. Mr. Dimon even admitted that he enjoyed the “banter” of reading his own report. Mayo said Monday that JPMorgan's high-tech investments are turning JPMorgan into the “NVIDIA of banking” and Dimon into a digital leader, even if bank CEOs have not yet “instilled that information internally.” said.
“They're spending it on AI. They're spending it on digital banking. They're modernizing their back office. They're trying to be a great digital bank 2.0, the next version of banking. “We're doing that,” Mayo said. That next iteration will include creating new products, services, relationships and engagements that weren't previously available in analog form, he said. “JPMorgan is at the forefront as a digital leader,” he added.
The bank, which has $5 trillion in client assets and 310,000 employees, announced on Monday that it would distribute high-tech investments across its businesses and strategy. Approximately $4.5 billion will fund product and user experience, and $3.1 billion will go toward modernization, security, and software development. The remainder will be distributed between wealth management, community, commercial banking and investment banking.
Mayo pointed out that one thing JPM hasn't done is buybacks. JPMorgan stock hit a high of $205 on Monday, but has since fallen to $196. Dimon said it would be a “mistake” to buy back shares at that price.
Regarding Dimon's stance on stock buybacks, Mayo said the CEO borrowed from the words of legendary investor Warren Buffett, “Be fearful when others are greedy, and be greedy when others are fearful.'' I think that there may be.
Mr. Mayo said Mr. Dimon had a “healthy paranoia” as the CEO of a global bank, because anything could hurt the company. On the other hand, it would be frustrating for investors if JPMorgan didn't buy back its stock at current prices while Mr. Dimon sells stock for the first time in his career. Dimon cashed out 1 million JPMorgan shares in February and April, worth about $183 million. These sales were the first of two in the CEO's 19-year career at the bank, and had been announced in advance.
Overall, Dimon's comments and JPMorgan's investor materials were overall bullish for Citigroup, one of Mayo's favorite stocks. He quipped that Citigroup's CEO may want to thank Dimon for his attitude.
“Jane Fraser should send a letter to Jamie Dimon thanking her and saying, 'Thank you for supporting our stock with your theme.'”
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