JPMorgan Chase (NYSE: JPM), America’s largest bank, had an eventful year in 2020. While the coronavirus pandemic hit the bank hard and forced it to set aside tens of billions of dollars for future potential loan losses, the bank showed incredible resiliency, turning a very solid profit given the circumstances. JPMorgan’s stock price is down only about 11% from where it began the year. Let’s look at four things to expect from the bank in 2021.
As soon as the Federal Reserve lifted its ban on share repurchases by large banks, JPMorgan Chase announced a $30 billion share repurchase program, and I don’t see any reason why the bank won’t repurchase this entire allotment in 2021. CEO Jamie Dimon has been chomping at the bit to return to repurchases since the Fed banned them in the third quarter, believing that is the bank’s best use of its excess capital. If the bank does repurchase all $30 billion worth, that would be much more than the $24 billion in aggregate stock repurchases the bank made in 2019.
If coronavirus vaccines prove effective and the economy recovers quickly like it is supposed to, the bank will also likely increase its quarterly common dividend, which is currently $0.90 per share. The bank had been increasing its dividend over the past few years, and when the bank has a more regular quarter of profits like it did in the third quarter of this year and in 2019, JPMorgan Chase only had a dividend payout ratio in the 30th percentile.