Bengaluru/New York: JPMorgan Chase & Co. unveiled a $20 billion investment plan on Tuesday to increase wages, hire more, open new branches and expand its business as it takes advantage of sweeping changes to the US tax law and improved regulatory environment.
The bank joined several other US corporations that have already announced spending plans following President Donald Trump’s tax overhaul that is expected to kick-start economic growth in part by offering incentives for capital investment.
Laying out the most explicit use of tax savings announced by any major bank, JPMorgan said it would increase wages for 22,000 employees by an average of 10%, ranging between $15 and $18 per hour, hire 4,000 employees and open up to 400 Chase branches in new cities.
The five-year investment plan comes after chief executive Jamie Dimon’s push to ramp up investment in businesses as the bank has now finished the majority of work it needed to do to clean up troubled home mortgages and comply with tougher capital requirements imposed by regulators after the financial crisis.
The largest US bank by assets will also increase small business lending by $4 billion and increase loans to customers seeking affordable homes by 25% to $50 billion.
Analysts expect JPMorgan to save about $4 billion a year on taxes because of the new federal tax law, but have been worried that banks will quickly “compete away" the savings from the new tax law in a bid to take business from one another.
Dimon has acknowledged that some of that will happen, but to varying degrees and at different rates in the bank’s assorted business lines.
Dimon had set the stage for Tuesday’s announcement on its post-earning conference call on 12 January, when he said new spending would eat into the bank’s savings from lower taxes, but “will enhance our growth in the future."
“It isn’t like a giveaway," he had then said.
In a statement on Tuesday, Dimon said “having a healthy, strong company allows us to make these long-term, sustainable investments."
The bank will also increase community-based philanthropic investments by 40% to $1.75 billion over five years, it said.
JPMorgan’s shares were nearly flat at $114.33 in premarket trading. The stock has risen nearly 37% in the past 12 months, outperforming the S&P 500 index’s 25% increase. Reuters