JPMorgan's Do-Good Pledge Is Mostly Business as Usual

(Bloomberg Gadfly) -- JPMorgan Chase & Co. deserves some credit for passing on a chunk of savings garnered from U.S. tax cuts to its employees and the community. But drilling in to its Tuesday announcement, a serious portion of the bank's "$20 billion, five-year comprehensive investment" can be simply attributed to business as usual. 

Among the initiatives being touted by the Jamie Dimon-led bank is an expansion of its branch network by adding 400 locations in five years in new markets such as Washington, Boston and Philadelphia. That may sound like a lot, but it fits with the bank's recent strategy of building new branches in specific regions where it has identified opportunities or isn't yet represented. The lender isn't providing any guidance around its targeted branch count for 2022 but assuming an ongoing shuttering or consolidation of branches in existing markets, its overall number will likely shrink. 

JPMorgan's Do-Good Pledge Is Mostly Business as Usual

It's also easy to see the appeal of untouched markets, especially when trying to win new business. Even though the majority of new credit-card applications are coming through digital platforms, the bank's second-largest method of acquiring those customers are its branches. They're also crucial for customers including small businesses. Even in this day and age, more than half of such clients prefer to open accounts in a branch, and 70 percent transact at a branch at least once a quarter. 

Speaking of small businesses, JPMorgan's pledge to increase lending to these clients by $4 billion over three years appears to be a path that it embarked on a while ago, in the pursuit of loan growth:

JPMorgan's Do-Good Pledge Is Mostly Business as Usual

The same goes for its planned effort to bolster lending for affordable housing, where JPMorgan is stretching itself only slightly. The bank is targeting a 25 percent increase over the next five years, shooting for a total of $50 billion, or an increase of $10 billion. But considering that its 2017 outlay of $10.4 billion represents a 20 percent increase from the prior year, the bank is evidently well on its way.

To be sure, the New York-based lender is making some inroads when it comes to wage hikes and sweetened health-care benefits. And while its planned philanthropic investments seem respectable at $1.75 billion over five years, assuming that figure is divided equally, then $350 million works out to just 1.2 percent of its projected profit in 2018, and 1.1 percent in 2019. That's actually less generous than the 2 percent of after-tax profit that's been pledged by JPMorgan's embattled rival Wells Fargo & Co., but comparable to Bank of America Corp.. 

The overall takeaway is that the check for JPMorgan's truly new efforts appears to fall well short of $20 billion. According to Compass Point's Charles Peabody, any incremental spending on employees, philanthropy and branch expansion is closer to $1 billion to $1.5 billion annually, representing roughly 30 percent of its projected tax windfall of $3.6 billion this year. 

But the lender hasn't exactly reinvented the wheel in touting its tax-cut largess: Boeing Co., AT&T Inc. and other companies came before it with gimmicky releases of their own. Still, its motives seem painfully predictable: Dimon is set to rub shoulders with President Donald Trump this week at Davos. If any praise is showered on Dimon or if that $20 billion figure is bandied around, it's worth remembering that much of that total was already part of the plan, tax cuts or not.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Gillian Tan is a Bloomberg Gadfly columnist covering deals and private equity. She previously was a reporter for the Wall Street Journal. She is a qualified chartered accountant.

To contact the author of this story: Gillian Tan in New York at

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