JPMorgan Chase executives have announced plans to boost share buybacks in order to prevent further accumulation of excess cash reserves. After a highly profitable year, the bank is now grappling with what CFO Jeremy Barnum described as a “high-class problem” – an estimated $35 billion in surplus capital.

“We aim to prevent further growth of this excess capital,” Barnum stated. “Unless we identify immediate opportunities for deployment, our focus will be on returning capital through buybacks.”

The bank has faced scrutiny from investors and analysts regarding its plans for the excess cash. While JPMorgan had been preparing for stricter regulatory requirements under Basel 3, a shift in government policies is expected to ease these obligations.

During the bank’s annual investor day, CEO Jamie Dimon had dismissed the idea of increasing stock repurchases when the stock price was at a peak. Despite subsequent appreciation in the stock value, Dimon has maintained a cautious stance on buybacks.

Looking ahead, JPMorgan remains cautious about potential economic downturns and market volatility. The bank is prepared to navigate various scenarios and adapt its strategies accordingly.

Analysts suggest that a recession could provide opportunities for the bank to deploy its excess cash reserves through lending activities. Despite shareholder pressure, JPMorgan is focused on maintaining financial discipline and seizing market opportunities post-recession.

Charles Peabody, an analyst at Portales Partners, believes that JPMorgan will prioritize strategic capital deployment over aggressive buybacks. He anticipates the bank’s prudent approach to capital management in anticipation of market fluctuations.