It appears that U.S. stocks may close out 2015 on a down day, with the Dow Jones Industrial Average (^DJI 0.67%) and the S&P 500 (^GSPC 0.87%) down 0.21% and 0.17%, respectively, at 12:20 p.m. EST. Shares of JPMorgan Chase & Co. are outperforming slightly, up 0.12% on CEO Jamie Dimon's 10-year anniversary of the country's largest bank by total assets.
It's 10 years to the day that Jamie Dimon was promoted from chief operating officer to CEO at JPMorganChase (oddly, there is no press release announcing Jamie Dimnon's promotion to CEO on the bank's website, and none to announce he had added the responsibilities of chairman of the board, a year later).
The anniversary seems like an opportune time to review Dimon's performance over that period, which includes one of the most tumultuous in U.S. banking history.
Source: DonkeyHotey. Republished under CC BY 2.0.
Let's get down to brass tacks with the hard numbers representing the market's assessment: The following chart shows the total return performance of JPMorgan shares (blue line) under Dimon's tenure:
JPM Total Return Price data by YCharts.
The bank has managed to outperform its large-capitalization peer group by a limited margin (7.8% vs. 7.2% on annualized basis), but it has smashed a tighter peer group -- the S&P 500 Financials sector (XLF is the Financial Select SPDR Fund ETF). Moreover, the gap between its two closest comparables, universal banks Bank of America (10-year total return: -56%) and Citigroup (-88%) is much wider still (although I think it's fair to say that B of A and Citi set a very low bar).
On that basis, then, investors appear to have given Dimon a stellar report card. However, note that under his leadership, JPMorgan lost its crown as the most valuable U.S. bank to Wells Fargo in 2013, and it looks to be in no danger of reclaiming it any time soon (the difference is currently some $35 billion).
In terms of JPMorgan's operating record, the global financial crisis of 2008 to 2009 was Jamie Dimon's finest hour. What he himself labelled the bank's "fortress balance sheet" served it well, enabling it to sail through the crisis without so much as a single losing quarter.
Nearly seven years after the stock market's crisis low, JPMorgan is the only universal bank earning a return in excess of its cost of capital.
There have been some hiccups along the way: The $6 billion in losses racked up by the "London whale" -- a U.K.-based trader in the bank's Chief Investment Office -- in 2012 raised genuine concerns about even Dimon's ability to manage an organization of JPMorgan's complexity (his early qualification of the problem as "a tempest in a teapot" came back to haunt him).
Nevertheless, at the beginning of 2014, Dimon received the highest possible praise from the dean of U.S. capitalism, Berkshire Hathaway CEO Warren Buffett, who told The Wall Street Journal:
If I owned J.P. Morgan Chase, he would be running it and he would be making more money than the directors are paying him ... If Jamie decides he wants to make more money, all he has to do is call me and I'd hire him at Berkshire.
This columnist won't disagree with Buffett: Jamie Dimon is arguably the finest bank CEO of his generation. But that only raises a different concern: the fact that the best-managed organization at the top of an oligopolistic industry has only produced a sliver of outperformance over to the broad market. Is this because banks were at the heart of the global financial crisis? Perhaps the next 10 years will yield the answer to that question.
