JPMorgan Chase & Co.'s Jamie Dimon has once again warned that a credit market downturn could be more severe than many expect, even after his firm and other Wall Street banks reported strong quarterly results with resilient loan portfolios.
Concerns Over Private Credit Market
Speaking at a Norges Bank Investment Management conference on Tuesday, Dimon highlighted the risks in the private credit sector, which has grown to an estimated US$1.8 trillion. He noted that the presence of over 1,000 firms in this space means not all will survive a downturn.
“Some firms may be brilliant, but I guarantee you not all 1,000 of them are,” Dimon said. “So in my view, because of that and the underwriting standards, we haven’t had a credit recession in so long, so when we have one it will be worse than people think.”
He added that while the situation “won’t be terrible,” it will be worse than anticipated in private credit, and that the same could apply to some banks.
Dimon's Previous Alarms
Dimon has been raising concerns about the private credit market for months. In his annual letter earlier this month, he stated that private credit “probably does not” pose a systemic risk, a view he reiterated at the conference. Despite these warnings, JPMorgan is actively expanding in the space. The bank's asset manager is in discussions with institutional investors to raise several billion dollars for a private credit strategy sourced by its commercial bankers.
Geopolitical and Inflationary Pressures
Dimon also cautioned that geopolitical tensions, including the Iran war, are contributing to price pressures, though he said he is not currently worried about inflation. He has previously described inflation as a potential “skunk at the party.”
“My view is that there’s a lot of inflationary things out there including the Iran war, the remilitarization of the world, the infrastructure needs of the world and our deficits,” Dimon said.
