By Elizabeth Dilts Marshall and Matt Scuffham

NEW YORK (Reuters) – JPMorgan (NYSE:) boss Jamie Dimon warned on Monday that the financial institution may lose about $1 billion on its Russia publicity, the primary time it has detailed the extent of its potential losses ensuing from the battle in Ukraine.

In his keenly watched annual letter to shareholders, the chairman and chief govt of the most important U.S. financial institution by property additionally urged the US to extend its army presence in Europe and reiterated a name for it to develop a plan to make sure power safety for itself and its allies.

Dimon didn’t present particulars on JPMorgan’s potential loss quantity or a timeframe however stated the financial institution was involved in regards to the secondary impression of Russia’s invasion of Ukraine on corporations and international locations. Russia calls its actions a “particular operation.”

International banks have detailed their publicity to Russia in latest weeks however Dimon is essentially the most high-profile world enterprise chief but to touch upon the broader impression of the battle.

“America should be prepared for the potential for an prolonged conflict in Ukraine with unpredictable outcomes. We should always put together for the worst and hope for one of the best,” he wrote. (For 5 key takeaways from Dimon’s letter, click on on)

Dimon addressed the connection between the US and China and stated the US ought to revamp its provide chain to limit its scope to suppliers inside the US or to solely embrace “utterly pleasant allies”. He urged the US to rejoin the Trans-Pacific Partnership (TPP), one of many world’s greatest multinational commerce offers.

Commenting on the macroeconomic setting, Dimon stated the variety of Federal Reserve rate of interest hikes “could possibly be considerably larger than the market expects.” He additionally detailed the financial institution’s rising bills, partially on account of know-how investments and acquisition prices.

The letter is Dimon’s seventeenth as CEO. Whereas Dimon will not be the one CEO of a prime U.S. financial institution to put in writing such letters, his have turn into must-reads amongst Wall Avenue’s elite and policymakers for the view they supply into his political and financial concepts.

‘FORTRESS BALANCE SHEET’

This 12 months’s letter comes because the Russia-Ukraine conflict and excessive inflation are hurting the financial system, and as Dimon faces new skepticism from buyers over bills.

Some query his plans to extend spending on the financial institution’s info know-how and campaigns to take market share in companies and geographies the place JPMorgan presently trails rivals, corresponding to in Germany and the UK.

JPMorgan determined earlier this 12 months to carry its first investor day for the reason that pandemic started to handle doubts about its spending plans. The assembly might be held on Might 23.

Dimon has spent greater than a decade constructing what he calls the financial institution’s “fortress stability sheet,” and he stated it’s now sturdy sufficient that JPMorgan may face up to losses of $10 billion or extra and “nonetheless be in excellent form.”

Whereas Dimon wrote that he’s not frightened in regards to the financial institution’s publicity to Russia, he stated the conflict in Ukraine will gradual the worldwide financial system and can impression geopolitics for many years.

“We face challenges at each flip: a pandemic, unprecedented authorities actions, a robust restoration after a pointy and deep international recession, a extremely polarized U.S. election, mounting inflation, a conflict in Ukraine and dramatic financial sanctions in opposition to Russia,” he stated.

On acquisitions, Dimon stated that the financial institution might be decreasing inventory buybacks over the subsequent 12 months to satisfy capital will increase required by federal guidelines “and since we’ve made some good acquisitions that we imagine will improve the way forward for our firm.”

JPMorgan has been on a shopping for spree, spending almost $5 billion on acquisitions over the previous 18 months. Dimon stated that can enhance “incremental funding bills” by roughly $700 million this 12 months.

Investments in know-how will add $2 billion to bills this 12 months, Dimon stated.