JPMorgan Chase expects AI and other new tech to increase employee productivity but remains wary of AI tech companies’ inflated valuations. 

“Tech valuations, or any valuations, won’t stand these very inflated values,” Chief Executive Jamie Dimon said during the bank’s third-quarter earnings call today. The bank has a significant cash surplus “sitting in the store” for the right investments and acquisitions, he said.

The bank reported $1.5 trillion in cash and marketable securities, up by 7% year over year, according to its earnings report. 

“Cash is a very valuable asset in a turbulent world, and you see my friend Warren Buffett, who is not buying [and is sitting on] cash right now,” Dimon said. 

While AI valuations are high, the $3.5 trillion bank expects AI to increase worker productivity in the long term, Dimon said, adding that “there are huge opportunities in innovation economy that [combine] bankers and certain technology” to grow operations. 

BY THE NUMBERS: In Q3, JPMorgan reported: 

• Net income of $12.9 billion, down 2% YoY; 

• Net interest income of $23.4 billion, up 3% YoY; 

• Active mobile customers at 57 million, up 7% YoY; and 

• Net income from corporate banking of $1.8 billion, up 123% YoY.

BIGGER PICTURE: The bank has hired 1,000 artificial intelligence workers in the past year to help improve the bank’s operations and develop new products, Dimon said in an Oct. 8 interview with Bloomberg. 

“AI is real and will change an awful lot of things,” Dimon said during the Oct. 8 interview. AI can help reduce “error rates on trading equity floors, in risk, fraud and marketing.”  

The AI hires brought JPMorgan’s headcount to 316,043, up 2% YoY, while its technology, equipment and communications expense was $2.4 billion, up 3% YoY. 

Citizens, Capital One and Deutsche Bank have also been increasingly hiring in tech roles to improve customer offerings and internal efficiency, according to Bank Automation News’ previous reporting. 

FUTURE LOOK: JPMorgan is preparing for an outflow of deposits after the Federal Reserve cut the federal funds rate by 50 basis points last month. 

“We are seeing a slowdown in customer yield-seeking activity, including CD volumes, and expect deposits to remain flat for the remainder of the year,” Chief Financial Officer Jeremy Barnum said during today’s earnings call. 

Dimon expects consumers to withdraw from high-yield savings accounts and put those funds elsewhere as rates drop, which is expected over the coming quarters. 

Loan originations, on the other hand, are seeing a rebound as long-term rates fall, Barnum said, adding that “we expect overall growth to be muted in the near term.” 

MARKET REACTION:  Shares of JPMorgan Chase (NYSE: JPM) were up 4.44% from market open to $222.29 as of market close today. JPMorgan has a market capitalization of $632 billion. 

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