NEW YORK — JPMorgan Chase CEO Jamie Dimon said corporate tax cuts boosted the bank’s profits to the tune of $3.7 billion last year.
In his annual letter to shareholders, Dimon noted that the Trump administration’s tax reform was a key factor in the bank’s record $32.5 billion haul. US bank profits, which were also buoyed by a healthy economy, reached all-time highs in 2018.
“For the long term, we expect that some or eventually most of that increase will be erased as companies compete for customers on products, capabilities and prices,” Dimon said. “However, we did take this opportunity in the short term to massively increase our investments.”
The yearly letter is a must-read on Wall Street, where Dimon, who also heads the powerful Business Roundtable, is the longest serving chief executive. He’s known to weigh in not just on the bank’s performance, but also on the broader economic environment and public policy.
This year, Dimon offered a defense of capitalism, which he called “the most successful economic system the world has ever seen.”
“Show me a country without any large, successful companies, and I will show you an unsuccessful country — with too few jobs and not enough opportunity as an outcome,” he wrote. “Private enterprise is the true engine of growth in any country.”
Dimon said that does not mean he is “an advocate for unregulated, unvarnished, free-for-all capitalism.” Rather, he said, “we shouldn’t forget that true freedom and free enterprise (capitalism) are, at some point, inexorably linked.”
The CEO, who is often vocal on policy issues, indicated that JPMorgan could increase its advocacy in the year to come.
The bank is strengthening its public policy teams to take its “ideas to the next level,” Dimon said, adding that businesses and CEOs have a role to play in fixing the country’s problems.
“We believe CEOs can and should get involved — particularly when they or their companies can uniquely help design policies that are good for America,” he said. The bank recently announced that it would invest $350 million over the next five years to train US workers for the jobs of the future.
Dimon said the bank expects the US economy to keep growing in 2019, even though the pace of growth is slowing.
But that doesn’t mean markets won’t veer wildly, as they did at the end of 2018. He said banks should be prepared for those swings.
“Market reactions do not always accurately reflect the real economy, and, therefore, policymakers and even companies should not overreact to them,” Dimon said. “But they do reflect market participant views of changing probabilities and possibilities of economic outcomes.”
He continued: “Thus, policymakers (and banks), particularly the Fed, must necessarily (because they need to think forward) take an assessment of these issues into account.”