Jamie Dimon warns that JPMorgan faces a $1 billion loss from its Russia exposure
J. Lawler Duggan/For The Washington Post via Getty Images
- Jamie Dimon warned Monday that JPMorgan faces a $1 billion loss from its exposure to Russia.
- JPMorgan is pulling out of the country, along with a host of other Western banks and companies.
- The war in Ukraine will slow the global economy, the JPMorgan CEO said in his latest letter to shareholders.
Jamie Dimon has warned that JPMorgan faces a loss of around $1 billion from its exposure to Russia, as global financial institutions feel the impact of the war in Ukraine.
"We are not worried about our direct exposure to Russia, though we could still lose about $1 billion over time," Dimon wrote in his closely watched annual letter to shareholders on Monday.
"We are actively monitoring the impact of ongoing sanctions and Russia's response, concerned as well about their secondary and collateral effects on so many companies and countries."
JPMorgan earned a record $48.3 billion of profit on revenue of $125.3 billion in 2021.
Dimon, who has been JPMorgan's CEO since 2005, said the bank expects the war in Ukraine to slow global growth relatively sharply. He added that the situation is highly uncertain and could easily get worse.
JPMorgan said last month that it was withdrawing from Russia, following the invasion of Ukraine ordered by President Vladimir Putin. The bank said at the time it had fewer than 200 employees in the country.
However, it's been playing a key role in ensuring foreign bondholders receive their payments on Russian sovereign debt, as the country's foreign correspondent bank. The lender has been seeking US Treasury approval for all payments.
Dimon said the bank has also been undertaking complex work to comply with the new rules on Russia.
"This entails sanctioning individuals, including their ownership of assets and companies; reducing exposures across multiple products and services; analyzing and stopping billions of dollars of payments as directed by governments; and many other actions," he said.
Dimon did not go into any more detail about where exactly the losses would come from, or over what time frame they might materialize. But Russian assets have fallen dramatically in price, while many markets have been effectively frozen.
At the same time, the JPMorgan boss said he thinks the Federal Reserve will have to hike interest rates aggressively to tame the strongest US inflation in 40 years.
"I do not envy the Fed for what it must do next: The stronger the recovery, the higher the rates that follow (I believe that this could be significantly higher than the markets expect)," he wrote.
The combination of the recovery from the coronavirus pandemic, sky-high inflation, and the war in Ukraine "dramatically increase the risks ahead," Dimon said.
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