By Emily Glazer
JPMorgan Chase & Co. is unrolling a $20 billion, five-year
investment across its businesses based on benefits from recent
tax-law changes, a softer regulatory environment and its overall
growth.
The largest U.S. bank by assets is planning to open up to 400
branches in new markets across the country, grow its home lending
to lower-income consumers and boost wages for some retail-banking
employees, among other changes, Chief Executive James Dimon said in
an interview.
JPMorgan is one of many large companies passing its employees or
clients some of the windfall of billions of dollars in expected
additional profit from the tax-code overhaul enacted late last
year. The bank's effective tax rate will be about 19% this year and
20% over the near term, down from 35% previously, finance chief
Marianne Lake said during an earnings call earlier in January.
Mr. Dimon said during the same call that the bank could have
roughly $3.6 billion in additional net income in 2018 as a result
of the tax overhaul.
JPMorgan took a one-time, $2.4 billion charge in the fourth
quarter due to the tax changes. But Ms. Lake and Chief Executive
James Dimon spoke at length about future benefits and hinted at
some changes the bank was planning.
"In anticipation [of tax reform], we asked our people: 'What can
we do? What different things can we do to help? What can we do to
accelerate our growth?'" Mr. Dimon said of the planned new
investments. "This is good for the business, good for employees,
[good for] wages, skills, jobs."
JPMorgan's move to open hundreds of new branches in new cities
is at odds with some of its competitors, which have been closing
locations in recent years. The bank has also been slimming down the
number of branches in certain areas while boosting its digital and
mobile banking options.
JPMorgan currently has about 5,130 branches in 23 states. Over
the next five years, it is planning to expand to 15 to 20 new
markets and add 3,000 people, said Gordon Smith, head of consumer
and community banking. That could include Washington, D.C., Boston
and Philadelphia, among other cities.
A quarter of JPMorgan's branches are in lower-income
communities. Mr. Smith said each of such branches supports about
6,000 families and about 450 small businesses.
"The improved regulatory environment has [helped] open this
opportunity for us," Mr. Smith said. "Once you open a branch,
you're helping customers to get mortgages, helping customers to get
credit cards, helping small businesses to be able to get business
loans, helping commercial bank customers to be able to grow their
businesses."
The growth in branches is also connected to the bank's plans to
boost small-business lending by nearly 20%, or $4 billion, hiring
500 new bankers over three years, he said. It is planning to open
offices in Charleston, S.C., and Bethesda, Md., in 2018 and
evaluating other locations across the country.
JPMorgan also plans to hire 500 new mortgage employees to grow
home lending in low- and moderate-income communities to $50 billion
over the next five years. The bank lent an average of $7.7 billion
to such communities from 2015 to 2017.
Mr. Smith said the $50 billion is equivalent to about 250,000
mortgages in lower-income communities. JPMorgan is also boosting
the amount of certain homeownership grants and expanding its
program to be available across the country.
Messrs. Dimon and Smith added that changes in Federal Housing
Administration rules could lead to further growth in that type of
lending. Since the financial crisis, JPMorgan has slimmed its
mortgage business and worked with higher-end borrowers.
Mr. Dimon wrote in his 2017 annual shareholder letter that FHA
reform "can bring banks back and expand access to credit."
Meanwhile, some of the bank's planned investments will directly
benefit employees.
JPMorgan said it would boost wages for 22,000 lower-paid, full-
and part-time U.S. employees largely in branches and customer
service centers. Wages will increase to between $15 to $18 an hour,
starting Feb. 25, up from $12 to $16.50 an hour. This is the second
time the bank has boosted wages in the past two years; the most
recent raise follows a number of large banks' increases announced
in December.
JPMorgan is also giving eligible lower-paid employees an annual
award of $750 later in January, which it has done in prior years.
Bank of America Corp. and U.S. Bancorp, among other large companies
in other sectors, previously announced $1,000 one-time bonuses to
many employees.
And for employees making less than $60,000, JPMorgan will reduce
medical-plan deductibles by $750 a year.
The bank said it also plans to boost its philanthropic giving by
40% to $1.75 billion over five years, aiming to drive economic
growth in local communities.
Write to Emily Glazer at emily.glazer@wsj.com
(END) Dow Jones Newswires
January 23, 2018 05:45 ET (10:45 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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