Jamie Dimon warns markets are under-estimating global risks
The boss of JP Morgan, Jamie Dimon, has warned global markets not to underestimate current risks, as the US banking giant hiked its provisions for bad loans.
The world’s most influential banker said that whilst the US economy had remained “resilient” and consumer and business trends were “generally healthy,” ongoing risks persisted.
“Markets seem to under-appreciate the potential hazards – including from complex geopolitical conditions, the risk of sticky inflation and elevated asset prices,” Dimon said.
Dimon also weighed in on growing agitation surrounding the independence of the Federal Reserve after Trump’s latest attack on chair Jerome Powell.
“Anything that chips away” at the central bank’s independence “is not a good idea,” he said on Tuesday, adding “everyone we know believes in Fed independence”.
The banking titan’s warning to markets come after he sounded the alarm on an AI bubble telling the BBC he was “far more worried than others.”
“Most people involved won’t do well. Some of the money being invested will probably be lost,” he said.
Fears of an AI bubble have sent jitters across the UK following pledges of capital injections from US giants into the UK economy.
Microsoft earmarked £22bn to build the country’s largest supercomputer and AI infrastructure. Meanwhile, chipmakers Nvidia and OpenAI laid out plans to create the largest AI computing facility in Europe.
Still, markets have continued to notch record highs despite ongoing concerns. The FTSE 100 smashed the 10,000 milestone in its first trading session of the year, whilst S&P and Dow Jones wrapped up last week’s with new highs after rallies in chipmakers.
The banking chief has also issued warnings around the rise of private credit, following the collapse of car parts maker First Brands and subprime auto lenders Primalend and Tricolour.
Dimon cautioned more “cockroaches” were likely to emerge in a credit downturn, telling an analyst call that some banks’ underwriting of loans to private credit “won’t be as good as you think”.
Dimon hikes provisions for sour loans
The renewed concerns came as JP Morgan released its fourth-quarter earnings update for 2025, where the bank notched $46.8bn (£35bn) in managed revenue.
The bank officially announced it will become the new issuer of the Apple Card, a move expected to bring over $20bn in card balances to the Chase platform.
But JP Morgan continued the trend of bulking up its financial cushion amid broader economic nerves, with loan loss provisions rising to $4.7bn in the final quarter from $2.6bn the year prior and $3.4bn in the third quarter.
The hefty increase took a chunk out of the firm’s bottom line, with profit falling to $13bn, a seven per cent drop compared to the prior-year quarter.
Chris Beauchamp, chief market analyst at IG, said: “This is another great set of numbers from JPMorgan, notable for strong client inflows and payments revenues… investors worried about overstretched equities can at least ease back on concerns about earnings.”
This week Dimon is expected to introduce Chancellor Rachel Reeves as they jointly host an event at next week’s World Economic Forum, according to Sky News.
The roundtable gathering in Davos, Switzerland, will be attended by bosses of the world’s biggest multinational firms and comes as Reeves attempts to curry favour with global financiers in her bid to make Britain an investment destination.
Reeves has maintained a close relationship with the American banking boss as part of her attempts to drive economic growth across the UK.
Following the Autumn Budget – where banks were able to skirt a highly-anticipated tax raid – JP Morgan announced a whopping £10bn investment into the UK with a new Canary Wharf office.
The project is expected to create an additional 7,800 jobs across construction and other local industries. Once finished, it will house up to 12,000 and serve as the bank’s main headquarters in the UK, and it will be the bank’s biggest presence across Europe, the Middle East and Africa.
JP Morgan contributes nearly £7.5bn to the local economy and supports 38,000 jobs.