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JPMorgan Chase & Co. (JPM, Financial) apparently is making good on a promise to boost the U.S. economy in a big way.
On Tuesday, the major U.S. bank announced plans to invest $20 billion on raising wages for its employees, increasing lending for small businesses and providing more opportunities for affordable housing across the U.S.
The bank's shares were down 0.01%. The stock was valued at $114.21 a share.
During a Jan. 12 conference call to report fourth-quarter earnings, JPMorgan Chairman and CEO Jamie Dimon made references to a broad strategy to create sustainable benefits for bank employees, customers and communities. Dimon said the effort would be directly tied to a $4 billion tax benefit from the Tax Cuts and Jobs Act. In its announcement today, the bank also said its decision was prompted by a "more constructive regulatory and business environment."
On Jan. 12, the bank reported fourth-quarter earnings per share of $1.76, or seven cents higher than projections. Managed revenue of $25.5 billion was up 5%, according to the bank’s estimates.
The bank has $2 trillion in assets under management.
$20 billion investment
The company says the $20 billion investment will focus on the following key areas:
- Investing in employees with further increases to wages and benefits. Wages will increase 10% on average—ranging from between $15 and $18 per hour—for 22,000 employees.
- Expanding the branch network into new U.S. markets, leading to increased small business lending and philanthropic investments, and further support for local low-and moderate-income communities.
- Increasing community-based philanthropic investments by 40% to $1.75 billion over five years.
- Increasing small business lending by $4 billion.
- Accelerating affordable housing lending by (a) increasing mortgage lending in low-and moderate-income communities and (b) accelerating commercial lending to build affordable housing.
GuruFocus indicators
According to GuruFocus, the bank has a financial strength rating of 4 out of 10. It is ranked 5 out of 10 in profitability and growth.
Its price-earnings ratio (P/E) is reportedly 16.06, higher than 53% of the global banking industry.
Its price-book ratio (P/B) of 1.67 is lower than 64% of its industry competitors.
Its dividend payout ratio of 0.29 is 88% higher than its industry competitors.
