JPMorgan investors weigh CEO Dimon's strategy, succession after record year

By Nupur Anand

NEW YORK (Reuters) -With JPMorgan Chase coming off a year of record profits, investors are eager to learn about the firm's succession plans, investments in artificial intelligence and opportunities beyond traditional banking.

Chief Executive Jamie Dimon and his team will be presenting their growth strategies and financial targets on Monday at JPMorgan's investor day in New York.

More than 18 years into Dimon's tenure as CEO of the bank, JPMorgan's shares are trading near record levels.

Still, Dimon said the bank needs to grow and stay ahead of a varied group of competitors including rival banks, fintech companies and private creditors.

He delivered the message at a gathering of hundreds of the bank's top leaders in Miami in February, reminding them not to get complacent, according to two sources who were present at the event but declined to be identified discussing an internal meeting. A JPMorgan spokesperson confirmed the content of the meeting.

Shareholders agree with Dimon's priorities.

"We would want to see what the bank is investing in, the growth pockets, the product diversification they are making and the opportunities that they see beyond traditional banking," said David Ellison, a portfolio manager at Hennessy Funds, which manages $4 billion and owns JPMorgan stock.

The largest U.S. lender has flourished on surging interest payments and an influx of deposits, including from its purchase of collapsed lender First Republic Bank last year. Its stock has risen about 20% in 2024, outpacing an S&P index of bank shares.

Investors will scrutinize the bank's forecast for net interest income (NII), or the difference between what it makes on loans and pays out on deposits. JPMorgan previously estimated its NII would reach $89 billion this year. While the forecast was higher than an earlier $88 billion estimate, it disappointed analysts who expected an even bigger jump.

Shareholders are also eager to hear more about JPMorgan's use of artificial intelligence and other advancements from its $15 billion technology budget.

"The constant investment made by the bank in people, products and technology, including artificial intelligence...is how the bank has managed to stay ahead of the curve," said Jason Goldberg, a banking analyst at Barclays.

SPOTLIGHT ON SUCCESSION

The CEO's own plans will also be in the spotlight as he takes the stage. As one of the world's most prominent business leaders, he has been floated as a contender for a senior role in U.S. economic policy. At last year's investor day, Dimon said he could step down in 3.5 years.

"It is important to provide investors with confidence on the strength of the bench, and so there will be focus on the emerging leaders," said Mac Sykes, portfolio manager at Gabelli Funds, who did not expect a significant announcement on succession on Monday.

JPMorgan's board has identified Jennifer Piepszak and Troy Rohrbaugh, recently appointed co-CEOs of its expanded commercial and investment bank, as candidates for the top job. Marianne Lake, CEO of consumer and community banking, and Mary Erdoes, CEO of asset and wealth management, are also in the running.

The executives are expected to discuss their respective businesses on Monday.

The event is "an excellent chance for investors to see them in their new roles and look for clues regarding how things might play out over the next few years," Scott Siefers, an analyst at Piper Sander, wrote in a note.

Dimon's assessment of the U.S. economy will also be closely watched. Strong employment and healthy consumer finances are propping up an "unbelievable" economic boom, he said last month, despite risks from a rising national debt, inflation and geopolitical conflicts.

Despite the bank's strong performance, some investors are frustrated by its restraint on stock buybacks, said Mike Mayo, an analyst at Wells Fargo.

"Investors are used to getting two scoops of ice cream from JPMorgan and now that they're only getting one scoop, so they seem upset," he said. Still, Mayo has a buy recommendation on the stock and ranks Dimon as the top-performing CEO among large banks.

The consensus analyst estimates for share buybacks is $12.7 billion for this year, according to a report by KBW.

Other investors are satisfied with the level of buybacks, as long as earnings stay robust and the bank sets aside money for acquisitions.

"We view the extra capital on the balance sheet as dry powder in case some assets come up at a better valuation," said Brian Mulberry, a client portfolio manager at Zacks Investment Management, which manages $8 billion and owns JPMorgan stock.

"On top of our agenda is that they show us clearly what future revenues look like, and that they're durable, with strong profit margins," Mulberry said.

(Reporting by Nupur Anand in New York; editing by Lananh Nguyen and Michael Erman)