JPMorgan Chase expects to lose more than $1bn in the next few years on its new digital-only international consumer bank that began operations in the UK last year.
Sanoke Viswanathan, JPMorgan’s chief executive for international consumer growth initiatives, said during an investor day presentation on Monday that the bank hoped the digital Chase business would break even by 2027 or 2028.
He said JPMorgan, the largest US bank by assets, estimated that losses on the venture would be about $450mn in 2022 and a similar amount “for the next few years”. Viswanathan added that the business would “generate significant income thereafter”, depending on its ability to execute on its strategy.
Viswanathan’s forecast is the most in-depth the bank has made on its expansion into retail banking outside the US, which started last year with the opening of Chase in the UK. The bank has said it will expand the digital bank to other countries over time.
The all-digital overseas push contrasts with JPMorgan’s approach in the US, where it operates almost 5,000 branches under its Chase brand, making it one of the country’s biggest retail banks. The strategy is a bet by JPMorgan that it can build a profitable retail banking network that eschews bricks and mortar.
“There’s no chance that JPMorgan will put 100 branches in Mumbai or Hong Kong or London or anywhere and actually compete,” JPMorgan chief executive Jamie Dimon said at the investor day.
JPMorgan so far has made two outside investments to help with the efforts, a buyout of British robo-adviser Nutmeg and a minority stake in the Brazilian digital bank C6.
Since its launch in September, Chase in the UK had attracted over 500,000 customers and amassed over $10bn in deposits, Viswanathan said. By comparison, JPMorgan in the US has over $2tn in deposits.
The projected losses represent just a sliver of earnings at the bank, which generated $125bn in revenues last year. But they are meaningful at a time when its spending plans on new investments are under pressure from investors.
The expansion into international consumer banking in particular was a subject of shareholder criticism at a meeting Dimon and his management team held with large investors in February, the Financial Times has reported.
Viswanathan told investors that it would eventually be worth it. “Historically, banks have struggled to do well in markets outside their home markets in retail banking. We think this is changing with digital,” he said. “There’s massive digital disruption happening around the world. And this opens up a window of opportunity for us.”