Despite CEO Jamie Dimon labeling the stock as expensive, JPMorgan Chase is increasing buybacks.

• JPMorgan Chase executives announced that the bank would increase share buybacks to prevent a growing excess cash pile of tens of billions of dollars from accumulating further.
• The largest American bank in terms of assets has accumulated reserves in anticipation of the Basel 3 guidelines, which would have mandated greater capital.
• In May, CEO Jamie Dimon opposed the idea of increasing his stock purchases.

To prevent a growing excess cash pile of tens of billions of dollars, executives announced that the bank would increase share buybacks.

Despite achieving a record year for profit and revenue, JPMorgan is facing inquiries about the issue of excess capital, as admitted by CFO Jeremy Barnum. The bank has approximately $35 billion in surplus funds that are not required to meet regulatory demands or analysts' definitions of "adequate capital."

"Barnum stated to analysts on Wednesday that he does not want the excess to continue growing. Since the company is generating a significant amount of organic capital, it means that unless there are immediate opportunities for organic deployment or other means, the excess capital will be returned through buybacks."

JPMorgan has accumulated earnings in anticipation of the Basel 3 regulatory rules, which mandated more capital. However, Wall Street analysts speculate that the Trump administration may propose a softer approach.

In May, during his bank's annual investor day, CEO Jamie Dimon expressed opposition to increasing purchases of his stock, which was then at a 52-week high of $205.88.

At that time, Dimon stated that we won't be purchasing a significant amount of stock at these prices.

Dimon stated that buying back stock of a financial company more than twice its tangible book value is a mistake, and the company will not do it.

Since Dimon made those remarks, the bank's stock has appreciated by 22%.

JPMorgan has suggested that it may face challenges in reducing its cash reserves if it is pressured to do so beyond what it deems necessary. Since 2022, Dimon and others have predicted a recession, but it has not yet occurred, leaving the end of an economic cycle uncertain.

On Wednesday, Barnum revisited the topic and stated that there was a "tension" between the risks in the economy and the high asset prices in the market. As a result, the bank had to prepare for a "variety of outcomes," he emphasized.

According to Charles Peabody, an analyst at Portales Partners, a sharp economic downturn would provide the bank with the chance to utilize more of its estimated $35 billion in excess cash by extending loans.

"Peabody believes that JPMorgan will exercise caution in not wasting capital and that the best time to gain market share is during a recession when competitors are weakened. He anticipates that JPMorgan will reduce buybacks from current levels, even though shareholders may pressure them to do more."