That’s especially true for the private credit space, where the sheer number of companies—upwards of 1,000—means not all of them will do well in the market falls, Jamie Dimon said Tuesday (April 28).

Some of them “may be brilliant, but I guarantee you not all 1,000 of them are,” said Dimon, whose comments at a Norges Bank Investment Management conference were reported by Bloomberg News.

“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.

“It won’t be terrible, it’ll just be worse than people think in private credit. That may be true for some banks too, by the way.”

As Bloomberg noted, Dimon has been sounding warnings about some issues related to private credit amid fears related to the health of the $1.8 trillion market.

In his annual letter to shareholders earlier this month, Dimon said private credit probably isn’t a systemic risk in the “grand scheme of things.” He added that the size of the market pales next to that  of investment grade bonds and residential mortgages and securities, each $13 trillion.

“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,” the letter continued. “This is because credit standards have been modestly weakening pretty much across the board.”

Dimon addressed the topic again during the company’s most recent earnings call, stressing that even in a downturn, the scale of private credit limits broader contagion.

“You have to have very large losses in private credit before … banks are going to get hit,” he told analysts.

But against a larger backdrop, Dimon argued, “when there’s a credit cycle, losses will be worse than people expect,” he said, citing the underwriting drift across markets and the likelihood that stress will appear unevenly across sectors.

As PYMNTS wrote last month, lending from banks to non-deposit financial institutions—a category that includes private credit funds—has seen a marked increase in recent years. Data from the Federal Reserve Bank of St. Louis shows that bank loans to these institutions reached around $1.14 trillion last year.