JPMorgan Chase boss Jamie Dimon has warned that losses for lenders to highly indebted companies will be higher than many expect because of weakening lending standards, as concerns grow around the health of the $1.8 trillion (€1.56 trillion) private credit industry.
Such non-bank lending has grown rapidly in the past decade as regulation has driven banks such as JPMorgan out of some parts of the market.
“I do believe that when we have a credit cycle, which will happen one day, losses on all leveraged lending in general will be higher than expected, relative to the environment,” Dimon wrote in his annual letter to shareholders, referring to lending to companies with a high level of debt relative to their earnings.
“This is because credit standards have been modestly weakening pretty much across the board.”
READ MORE
He cited as examples “aggressive and positive assumptions about future performance” in assessing borrowers, weaker covenants and more use of payment-in-kind, or PIK, where borrowers delay loan repayments.
His comments come days after the US treasury said it would meet domestic and international insurance regulators over the risks in private credit after recent upheaval in the multitrillion-dollar market. The move signalled growing concerns in Washington about the health of the private credit sector and its rapid growth.
Dimon, whose use of the term “cockroaches” last year has become ubiquitous on Wall Street to describe problematic loans, said the industry had “not had a credit recession in a long time and it seems that some people assume it will never happen”.
Touching on the US economy broadly, he said it “continues to be resilient, with consumers still earning and spending” despite an “unsettling landscape” and “some recent weakening”.
He cautioned that there was the potential for “significant ongoing oil and commodity price shocks” because of the US-Israel war with Iran.
He pointed to economic tailwinds in 2026 such as US president Donald Trump’s One Big Beautiful Bill Act, the White House’s deregulatory agenda, the Federal Reserve’s bond-buying programme and spending on AI infrastructure. On AI, Dimon predicted that it would create new jobs but “will definitely eliminate some jobs”.
“Our firm will have definitive plans on how we can support and redeploy our affected workforce,” he said.
The 70-year-old, who has led JPMorgan since 2006, uses his annual shareholder letter to opine on issues beyond industry and JPMorgan matters. He said the US “needs Europe to succeed” but doubled down on his criticism last year that “Europe is entering a decisive decade and it is unable to act”.
He wrote: “Europe never finished the economic union (see the Draghi report), which meant that European countries constantly underperformed economically. This has led to their GDP relative to the United States going from 90 per cent in the year 2000 to approximately 70 per cent today.” – Copyright The Financial Times Limited 2026
