Jamie Dimon’s optimism about the economy is costing JPMorgan Chase & Co (JPM.N) money, the bank’s latest financials show.
The CEO said this week the country’s largest lender continues to stockpile cash instead of investing it in securities, such as U.S. Treasuries and mortgage-backed bonds, which pay more than cash deposits.
How the country’s largest lenders manage an unprecedented glut of cash weighing down their balance sheets will be important in separating winners from losers in coming quarters as uncertainty grows over the inflation and interest rate outlook, according to analysts.
“The balance sheet mix will be a key driver for the stocks as we move into 2022,” David Konrad, an analyst at Keefe, Bruyette & Woods, wrote in a recent report to clients. “In our view, the risk/reward favors holding cash and under- earning in this environment.”
JPMorgan is waiting for the chance to buy securities with higher yields once exceptionally strong economic growth kicks in and drives up inflation and interest rates, Dimon and Chief Financial Officer Jeremy Barnum told analysts on Tuesday.