JPMorgan Chase is boosting buybacks even after CEO Jamie Dimon called the stock expensive
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JPMorgan Chase executives said the bank would increase share buybacks so that a mounting pile of tens of billions of dollars in excess cash doesn't grow further.
Fresh off a record year for profit and revenue, JPMorgan is facing questions over what CFO Jeremy Barnum admitted was a «high-class problem»: the bank has, by some estimates, roughly $35 billion in money that it doesn't need to satisfy regulators, or what analysts call «excess capital.»
«We would like to not have the excess grow from here,» Barnum told analysts Wednesday. «Given the amount of organic capital generation that we're producing, it means that — unless we find in the near term, opportunities for organic deployment or otherwise — it means more capital return through buybacks.»
The bank has heard it from investors and analysts who want to know what JPMorgan intends to do with the cash. The biggest American bank by assets has stockpiled earnings in preparation for the Basel 3 regulatory rules that would've required more capital, but Wall Street analysts now believe that the incoming Trump administration is likely to propose something far gentler.
Back in May, when the question came up at his bank's annual investor day, CEO Jamie Dimon bristled at the notion of scaling up purchases of his stock, which was then trading near a 52-week high of $205.88.
«I want to make it really clear, OK? We're not going to buy back a lot of stock at these prices,» Dimon said at the time.
That's because the company's valuation was too rich, even in its own eyes, Dimon said: «Buying back stock of a financial company greatly in excess of two times tangible book is a mistake. We aren't going to do it.»
The bank's stock has only appreciated since: A share trades
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