Q1 2023 JPMorgan Chase & Co Earnings Call

April 14, 2023

Speaker 2: Before reviewing our results for the quarter, let's talk about the recent bank failures. Jamie has addressed a number of important themes in his shareholder letter and his recent televised interview. So I will go straight to the specific impacts on the firm.

Speaker 1: will begin shortly.

Speaker 1: Regarding deposit inflows, at the firm-wide level, average deposits were down 3% quarter-on-quarter, while end-of-period deposits were up 2% quarter-on-quarter, implying an intra-quarter reversal of the recent outflow trend as a consequence of the March events. Regarding deposit inflows, at the firm-wide level, average deposits were down 3% quarter-on-quarter, while end-of-period deposits were up 2% quarter-on-quarter, implying an intra-quarter reversal of the recent outflow trend as a consequence of the March events.

Speaker 1: We estimate that we have retained approximately $50 billion of these deposit inflows at quarter end. We estimate that we have retained approximately $50 billion of these deposit inflows at quarter end.

Speaker 1: It's important to note that while the sequential period end deposit increase is higher than we would have otherwise expected, our current full year NII outlook, which I will address at the end, still assumes modest deposit outflows from here. It's important to note that while the sequential period end deposit increase is higher than we would have otherwise expected, our current full year NII outlook, which I will address at the end, still assumes modest deposit outflows from here.

Speaker 3: Please stand by. We are about to begin.

Speaker 3: Good morning, ladies and gentlemen. Welcome to the first quarter 2023 earnings call. This call is being recorded. Your line will be muted for the duration of the call.

Speaker 3: Please stand by. We are about to begin. Good morning, ladies and gentlemen. Welcome to the first quarter 2023 earnings call. This call is being recorded. Your line will be muted for the duration of the call. We will now go live to the presentation. Please stand by. Please stand by.

Speaker 3: We will now go live to the presentation. Please stand by. Please stand by.

Speaker 3: At this time, I would like to turn the call over to JPMorgan Chase's Chairman and CEO, Jamie Dimon, and Chief Financial Officer, Jeremy Barnum. Mr. Barnum, please go ahead.

Speaker 1: We expect these outflows to be driven by the same factors as last quarter as well as the expectation that we will not retain all of this quarter's inflows. We expect these outflows to be driven by the same factors as last quarter as well as the expectation that we will not retain all of this quarter's inflows.

Speaker 3: Thanks, and good morning everyone. The presentation is available on our website, and please refer to the disclaimer at the back.

Speaker 3: Now back to the quarter, touching on a few highlights. We grew our IB fee wallet share. Consumer spending remained solid, with combined debit and credit card spend up 10% year-on-year. Credit continues to normalize, but actual performance remains strong across the company.

Speaker 3: At this time, I would like to turn the call over to JPMorgan Chase's Chairman and CEO , Jamie Dimon, and Chief Financial Officer, Jeremy Barnum. Mr. Barnum, please go ahead. Thanks, and good morning everyone. The presentation is available on our website and please refer to the disclaimer in the back.

Speaker 4: Starting on page 1, the firm reported net income of $12.6 billion, EPS of $4.10 on revenue of $39.3 billion, and delivered an ROTCE of 23%.

Speaker 4: On Page 2, we have some more detail. Revenue of $39.3 billion was up $7.7 billion, or 25% year-on-year. NII ex-markets was up $9.2 billion or 78%, driven by higher rates, partially offset by lower deposit balances. However, market revenue was down $371 million or 4% year-on-year.

Speaker 4: Starting on page 1, the firm reported net income of $12.6 billion, EPS of $4.10 on revenue of $39.3 billion and delivered an ROTCE of 23%.

Speaker 4: Before reviewing our results for the quarter, let's talk about the recent bank failures.

Speaker 4: NII ex-markets was down $1.1 billion, or 10%, driven by the securities losses previously mentioned as well as lower IB fees and lower auto lease income on lower volume. On Page 2, we have some more detail. Revenue of $39.3 billion was up $7.7 billion or 25% year-on-year. NII ex-markets was up $9.2 billion or 78%, driven by higher rates, partially offset by lower deposit balances. NIR ex-markets was down $1.1 billion or 10%, driven by the securities losses previously mentioned as well as lower IB fees and lower Auto lease income on lower volume. And market revenue was down $371 million or 4% year-on-year.

Speaker 4: Jamie has addressed a number of the important themes in his shareholder letter and a recent televised interview, so I will go straight to the specific impacts on the firm. These results included $868 million of net investment securities losses in corporate.

Speaker 4: These results included $868 million of net investment securities losses in corporate.

Speaker 4: As you would expect, we saw significant new account opening activity and meaningful deposit and money market fund inflows. These results include the impact of the higher FDIC assessment I mentioned last quarter, which, of course, is unrelated to recent events.

Speaker 4: Before reviewing our results for the quarter, let's talk about the recent bank failures.

Speaker 4: Jamie has addressed a number of the important themes in his shareholder letter and a recent televised interview so I will go straight to the specific impacts on the firm.

Speaker 4: Expenses of $20.1 billion were up $916 million, or 5% year-on-year, driven by compensation-related costs, reflecting the annualization of last year's headcount growth and wage inflation. Expenses of $20.1 billion were up $916 million, or 5% year-on-year, driven by compensation-related costs, reflecting the annualization of last year's headcount growth and wage inflation.

Speaker 4: Most significantly, in the commercial bank, business banking, and AWM.

Speaker 4: As you would expect, we saw significant new account opening activity and meaningful deposit and money market fund inflows.

Speaker 4: Regarding the deposit inflows, at the firm-wide level, average deposits were down 3% quarter-on-quarter while end-of-period deposits were up 2% quarter-on-quarter, implying an intra-quarter reversal of the recent outflow trend as a consequence of the March event. We estimate that we have retained approximately $50 billion of these deposit inflows at quarter lash hour. We estimate that we have retained approximately $50 billion of these deposit inflows at quarter lash hour. It's important to note that while the sequential period end deposit increase is higher than we would have otherwise expected, our current full year NII outlook, which I will address at the end, still assumes modest deposit outflows from here. We expect these outflows to be driven by the same factors as last quarter.

Speaker 4: most significantly in the commercial bank, business banking, and AWM. Regarding the deposit inflows, at the firm-wide level, average deposits were down 3% quarter-on-quarter while end-of-period deposits were up 2% quarter-on-quarter, implying an intra-quarter reversal of the recent outflow trend.

Speaker 4: And credit costs of $2.3 billion included net charge-offs of $1.1 billion, predominantly in Card. And credit costs of $2.3 billion included net charge-offs of $1.1 billion, predominantly in credit cards.

Speaker 4: The net reserve build of $1.1 billion was largely driven by deterioration in our weighted average economic outlook. The net [ reserve ] build of $1.1 billion was largely driven by deterioration in our weighted average economic outlook.

Speaker 4: as a consequence of the March event. We estimate that we have retained approximately $50 billion of these deposit inflows at quarter lash hour.

Speaker 4: Onto the balance sheet and capital on Page 3. We ended the quarter with a CET1 ratio of 13.8%, up about 60 basis points, which was primarily driven by the benefit of net income less distributions and AOCI gains. And in line with what we previously said, we resumed stock buybacks this quarter and distributed a total of $1.9 billion in net repurchases back to shareholders.

Speaker 4: It's important to note that while the sequential period end deposit increase is higher than we would have otherwise expected, our current full year NII outlook, which I will address at the end, still assumes modest deposit outflows from here. We expect these outflows to be driven by the same factors as last quarter.

Speaker 4: as well as the expectation that we will not retain all of this quarter's entire flows.

Speaker 4: Now back to the quarter, touching on a few highlights and flows. Now back to the quarter, touching on a few highlights.

Speaker 4: Now let's go to our businesses, starting with CCB on Page 4. I will touch quickly on the health of U.S. consumers and small businesses based on our data. Both continue to show resilience and remain on the path to normalization as expected, but we continue to monitor their activity closely.

Speaker 4: as well as the expectation that we will not retain all of this quarter's entire

Speaker 4: We grew our IBC wallet share, consumer spending remains solid with combined debit and credit card spend up 10% year on year and credit continues to normalize but actual performance remains strong across the company, consumer spending remains solid with combined debit and credit card spend up 10% year on year and credit continues to normalize but actual performance remains strong across the company.

Speaker 4: flows. Now back to the quarter, touching on a few highlights.

Speaker 4: Spend remains solid, and we have not observed any notable pullback throughout the quarter.

Speaker 4: We grew our IBC wallet share.

Speaker 4: consumer spending remains solid with combined debit and credit card spend up 10% year on year and credit continues to normalize but actual performance remains strong across the company.

Speaker 4: On page two we have some more detail, revenue of $39.3 billion up $7.7 billion or 25% year on year, revenue of $39.3 billion up $7.7 billion or 25% year on year.

Speaker 4: Moving to financial results, CCB reported net income of $5.2 billion on revenue of $16.5 billion, which was up 35% year-on-year. In Banking & Wealth Management, revenue was up 67% year-on-year, driven by higher NII on higher rates. However, average deposits were down 2% quarter-on-quarter, in line with recent trends.

Speaker 4: On page two we have some more detail.

Speaker 4: revenue of $39.3 billion up $7.7 billion or 25% year on year.

Speaker 4: NIIX markets were up $9.2 billion, or 78%, due to higher rates partially offset by lower deposit balances.

Speaker 4: Throughout the quarter, we continued to see customer flows to higher-yielding products, as you would expect, but we're encouraged by what we are capturing in CDs and our Wealth Management offerings.

Speaker 4: The market is now up $9.2 billion or 78%, proven by higher rates partially offset by lower deposit balances, and IRX markets was down 1.1 billion or 10%, prevented by the securities losses previously mentioned, as well as lower IV fees and lower auto lease income on lower volume, and IRX markets was down 1.1 billion or 10%, prevented by the securities losses previously mentioned, as well as lower IV fees and lower auto lease income on lower volume.

Speaker 4: NIIX markets was up $9.2 billion or 78%, proven by higher rates partially offset by lower deposit balances. The market is now up $9.2 billion or 78%, proven by higher rates partially offset by lower deposit balances.

Speaker 4: and IRX markets was down 1.1 billion or 10%.

Speaker 4: prevented by the securities losses previously mentioned, as well as lower IV fees and lower auto lease income on lower volume.

Speaker 4: And markets revenue was down 371 million, or 4% year on year. Client investment assets were down 1% year-on-year but up 7% quarter-on-quarter, driven by market performance as well as strong net inflows.

Speaker 4: Expenses of $20.1 billion were up $916 million, or 5% year-on-year, driven by compensation-related costs reflecting the annualization of last year's headcount growth and wage inflation. These results include the impact of the higher FDIC assessment I mentioned last quarter, which, of course, is unrelated to recent events.

Speaker 4: And markets revenue was down 371 million or 4% year on year.

Speaker 4: In Home Lending, revenue was down 38% year-on-year, largely driven by lower net interest income from tighter loan spreads and lower production revenue.

Speaker 4: Client investment assets were down 1% year-on-year but up 7% quarter-on-quarter, driven by market performance as well as strong net inflows.

Speaker 4: And credit costs of $2.3 billion included net charge-offs of $1.1 billion, predominantly in cards.

Speaker 4: In Home Lending, revenue was down 38% year-on-year, largely driven by lower net interest income from tighter loan spreads and lower production revenue.

Speaker 4: Moving to Card Services & Auto, revenue was up 14% year-on-year, largely driven by higher Card Services NII on higher revolving balances, partially offset by lower Auto lease income. Credit card spend was up 13% year-on-year, and card outstandings were up 21%, driven by strong new account growth and revolve normalization. And in Auto, originations were $9.2 billion, up 10% year-on-year.

Speaker 4: These results include the impact of the higher FDIC assessment I mentioned last quarter, which of course is unrelated to recent events. And credit costs of $2.3 billion included net charge-offs of $1.1 billion predominantly in card.

Speaker 4: Expenses of $8.1 billion were up 5% year-on-year, reflecting the impact of wage inflation and higher headcount.

Speaker 4: Moving to Card Services & Auto, revenue was up 14% year-on-year, largely driven by higher Card Services NII on higher revolving balances, partially offset by lower auto lease income. Credit card spend was up 13% year-on-year, and card outstandings were up 21%, driven by strong new account growth and revolve normalization. And in the auto sector, originations were $9.2 billion, up 10% year-on-year.

Speaker 4: The net reserve build of $1.1 billion was largely driven by deterioration in our weighted average economic outlook, on the balance sheet and capital on page 3, on the balance sheet and capital on page 3. We ended the quarter with a CET1 ratio of 13.8%, up about 60 basis points, which was primarily driven by the benefit of net income, less distributions, and AOCI gains.

Speaker 4: The net reserve build of $1.1 billion was largely driven by deterioration in our weighted average economic outlook.

Speaker 4: Expenses of $8.1 billion were up 5% year-on-year, reflecting the impact of wage inflation and higher headcount.

Speaker 4: In terms of credit performance this quarter, credit costs were $1.4 billion, reflecting reserve builds of $300 million in Card and $50 million in Home Lending. Net charge-offs were $1.1 billion, up about $500 million year-on-year, in line with expectations as delinquency levels continue to normalize across portfolios.

Speaker 4: on the balance sheet and capital on page 3.

Speaker 4: We ended the quarter with a CET1 ratio of 13.8% up about 60 basis points, which was primarily driven by the benefit of net income, less distributions, and AOCI gains.

Speaker 4: And in line with what we previously said, we resumed stock buybacks this quarter and distributed a total of $1.9 billion in net repurchases back to shareholders.

Speaker 4: In terms of credit performance this quarter, credit costs were $1.4 billion, reflecting reserve builds of $300 million in card and $50 million in Home Lending. Net charge-offs were $1.1 billion, up about $500 million year-on-year, in line with expectations as delinquency levels continue to normalize across portfolios.

Speaker 4: And in line with what we previously said, we resumed stock buybacks this quarter and distributed a total of $1.9 billion in net repurchases back to shareholders.

Speaker 4: Next, the CIB on Page 5. CIB reported a net income of $4.4 billion on revenue of $13.6 billion.

Speaker 4: Now let's go to our businesses, starting with CCB on page 4. Next, CIB on page 5.

Speaker 4: touching quickly on the health of U.S. consumers and small businesses based on our data. Both continue to show resilience and remain on the path to normalization, as expected, but we continue to monitor their activity closely.

Speaker 4: Investment Banking revenue of $1.6 billion was down 24% year-on-year, and IB fees were down 19%. We ranked #1 with a first quarter wallet share of 8.7%.

Speaker 4: CIB reported net income of $4.4 billion on revenue of $13.6 billion. Investment Banking revenue of $1.6 billion was down 24% year-on-year. IB fees were down 19%, and we ranked #1 with a first quarter wallet share of 8.7%.

Speaker 4: Now let's go to our businesses starting with CCB on page 4.

Speaker 4: touching quickly on the health of U.S. consumers and small businesses based on our data.

Speaker 4: Spend remains solid, and we have not observed any notable pullback throughout the quarter. Moving to financial results, CCB reported net income of $5.2 billion on revenue of $16.5 billion, which was up 35% year on year.

Speaker 4: In advisory, fees were down 6% compared to a strong first quarter last year. Our underwriting businesses continued to be affected by market conditions, with fees down 34% for debt and 6% for equity.

Speaker 4: Both continue to show resilience and remain on the path to normalization, as expected, but we continue to monitor their activity closely.

Speaker 4: In terms of the outlook, the dynamics remain the same. Our pipeline is relatively robust, but conversion is sensitive to market conditions and the economic outlook.

Speaker 4: Spend remains solid and we have not observed any notable pullback throughout the quarter.

Speaker 4: We expect the second quarter and the rest of the year to remain challenging. In terms of the outlook, the dynamics remain the same. Our pipeline is relatively robust, but conversion is sensitive to market conditions and the economic outlook. We expect the second quarter and the rest of the year to remain challenging.

Speaker 4: Moving to financial results, CCB reported net income of $5.2 billion on revenue of $16.5 billion, which was up 35% year on year.

Speaker 4: In banking and wealth management, revenue was up 67% year on year, driven by higher NII on higher rates.

Speaker 4: Average deposits were down 2% quarter on quarter, in line with recent trends. However, throughout the quarter, we continued to see customer flows to higher yielding products, as you would expect.

Speaker 4: In banking and wealth management, revenue was up 67% year on year, driven by higher NII on higher rates. Average deposits were down 2% quarter on quarter in line with recent trends. Throughout the quarter, we continued to see customer flows to higher yielding products as you would expect. As users move closer, people are increase income on??? vowed B fast as

Speaker 4: Total revenue was $8.4 billion, down 4% year-on-year, and fixed income was flat. Rates were strong during the rally early in the quarter as well as through the elevated volatility in March. Credit was up on the back of higher client flows. And currencies in emerging markets were down relative to a very strong first quarter in the prior year.

Speaker 4: but we're encouraged by what we are capturing in CDs and our wealth management offerings. Fine investment assets were down 1% year on year but up 7% quarter on quarter, driven by market performance as well as strong net inflows.

Speaker 4: but we're encouraged by what we are capturing in CDs and our wealth management offerings.

Speaker 4: Fine investment assets were down 1% year on year but up 7% quarter on quarter, driven by market performance as well as strong net inflows.

Speaker 4: Equity Markets was down 12%, driven by lower revenues in derivatives relative to a strong first quarter in the prior year and lower client activity in cash.

Speaker 4: In home lending, revenue was down 38% year on year, largely driven by lower net interest income from tighter loan spreads and lower production revenue.

Speaker 4: Equity Markets was down 12%, driven by lower revenues in derivatives relative to a strong first quarter in the prior year and lower client activity and cash.

Speaker 4: Moving to card services and auto, revenue was up 14% year on year, largely driven by higher card services and AI on higher revolving balances, partially offset by lower auto lease income. Credit card spend was up 13% year on year. Card outstandings were up 21%, driven by strong new account growth and revolve normalization.

Speaker 4: In home lending, revenue was down 38% year on year, largely driven by lower net interest income from tighter loan spreads and lower production revenue. Moving to card services and auto, revenue was up 14% year on year, largely driven by higher card services and AI on higher revolving balances, partially offset by lower auto lease income.

Speaker 4: Payments revenue was $2.4 billion, up 26% year-on-year. Excluding the net impact of equity investments, primarily a gain in the prior year, it was up 55%, with the growth driven by higher rates, partially offset by lower deposit balances.

Speaker 4: Securities Services revenue of $1.1 billion was up 7% year-on-year, driven by higher rates, partially offset by lower deposit balances and market levels. Securities Services revenue of $1.1 billion was up 7% year-on-year, driven by higher rates, partially offset by lower deposit balances and market levels.

Speaker 4: Credit card spend was up 13% year on year. Card outstandings were up 21% driven by strong new account growth and revolve normalization.

Speaker 4: Expenses of $7.5 billion were up 2% year-on-year as higher headcount and wage inflation were largely offset by lower revenue-related compensation. Expenses of $7.5 billion were up 2% year-on-year as higher headcount and wage inflation were largely offset by lower revenue-related compensation.

Speaker 4: And in the auto sector, originations were 9.2 billion, up 10% year on year.

Speaker 4: Expenses of $8.1 billion were up 5% year on year, reflecting the impact of wage inflation on a higher headcount.

Speaker 4: And in auto, originations were 9.2 billion, up 10% year on year.

Speaker 4: Expenses of $8.1 billion were up 5% year on year, reflecting the impact of wage inflation on a higher headcount.

Speaker 4: In terms of credit performance this quarter, credit costs were $1.4 billion, reflecting reserve bills of $300 million in card and $50 million in home lending. And that charge-offs were $1.1 billion, up about $500 million year on year, in line with expectations as delinquency levels continue to normalize across portfolios.

Speaker 4: In terms of credit performance this quarter, credit costs were $1.4 billion, reflecting reserve bills of $300 million in card and $50 million in home lending.

Speaker 4: Moving to the Commercial Bank on Page 6, Commercial Banking reported a net income of $1.3 billion. Revenue of $3.5 billion was up 46% year-on-year, driven by higher deposit margins. Payments revenue of $2 billion was up 98% year-on-year, driven by higher rates. And gross Investment Banking revenue of $881 million was up 21% year-on-year on increased M&A and bond underwriting from large deal activity. Expenses of $1.3 billion were up 16% year-on-year largely driven by higher compensation expense, including front office hiring and technology investments as well as higher volume-related expenses.

Speaker 4: And that charge offs for $1.1 billion, up about $500 million year on year, in line with expectations as delinquency levels continue to normalize across portfolios.

Speaker 4: Expenses of $1.3 billion were up 16% year-on-year, largely driven by higher compensation expense, including front-office hiring and technology investments as well as higher volume-related expenses.

Speaker 4: Next, the CIB on page 5. CIB reported a net income of $4.4 billion on revenue of $13.6 billion.

Speaker 4: Investment banking revenue of $1.6 billion was down 24% year on year, and IB fees were down 19%. We ranked number one with a first quarter wallet share of 8.7%.

Speaker 4: Next, the CIB on page 5.

Speaker 4: Average deposits were down 16% year-on-year and 5% quarter-on-quarter, predominantly driven by continued attrition and nonoperating deposits as well as seasonally lower balances.

Speaker 4: CIB reported net income of $4.4 billion on revenue of $13.6 billion.

Speaker 4: Average deposits were down 16% year-on-year and 5% quarter-on-quarter, predominantly driven by continued attrition and nonoperating deposits as well as seasonally lower balances. However, loans were up 13% year-on-year and 1% sequentially.

Speaker 4: Loans were up 13% year-on-year and 1% sequentially. C&I loans were up 1% quarter-on-quarter with somewhat different dynamics based on client size. In middle market banking, higher rates and recession concerns have decreased new loan demand and utilization, which is also leading to weakness in CapEx spending. In Corporate Client Banking, utilization rates increased modestly quarter-on-quarter as capital market conditions led more clients to opt for bank debt. C&I loans were up 1% quarter-on-quarter, with somewhat different dynamics based on client size. In middle market banking, higher rates and recession concerns have decreased new loan demand and utilization, which is also leading to weakness in CapEx spending. In Corporate Client Banking, utilization rates increased modestly quarter-on-quarter as capital market conditions led more clients to opt for bank debt.

Speaker 4: Investment banking revenue of $1.6 billion was down 24% year on year.

Speaker 4: In Advisory, fees were down 6% compared to a strong first quarter last year.

Speaker 4: IB fees were down 19%. We ranked number one with first quarter wallet share of 8.7%.

Speaker 4: Our underwriting businesses continued to be affected by market conditions, with fees down 34% for debt and 6% for equity.

Speaker 4: In Advisory, fees were down 6% compared to a strong first quarter last year. Our underwriting businesses continued to be affected by market conditions with fees down 34% for debt and 6% for equity.

Speaker 4: In terms of the outlook, the dynamics remain the same. Our pipeline is relatively robust, but conversion is sensitive to market conditions and the economic outlook. Our pipeline is relatively robust, but conversion is sensitive to market conditions, and the CRE loans were also up 1% sequentially with higher rates creating headwinds for both originations and prepayments.

Speaker 4: We expect the second quarter and the rest of the year to remain challenging.

Speaker 4: Moving to markets, total revenue was $8.4 billion, down 4% year on year, while fixed income was flat. Rates were strong during the rally early in the quarter, as well as through the elevated volatility in March. Credit was up on the back of higher client flows, and currencies in emerging markets were down relative to a very strong first quarter in the prior year. Equity markets were down 12% driven by lower revenues and derivatives relative to a strong first quarter in the prior year and lower client activity and cash.

Speaker 4: CRE loans were also up 1% sequentially, with higher rates creating headwinds for both originations and prepayments. And given the recent focus on commercial real estate, let me remind you that our office sector exposure is less than 10% of our portfolio and is focused on urban dense markets. and nearly 2/3 of our loans are multifamily, primarily in supply-constrained markets.

Speaker 4: We expect the second quarter and the rest of the year to remain challenging.

Speaker 4: And given the recent focus on Commercial Real Estate, let me remind you that our office sector exposure is less than 10% of our portfolio and is focused on dense urban markets. And nearly 2/3 of our loans are multifamily, primarily in supply-constrained markets.

Speaker 4: Moving to markets, total revenue was $8.4 billion, down 4% year on year.

Speaker 4: Fixed income was flat. Rates was strong during the rally early in the quarter, as well as through the elevated volatility in March. Credit was up on the back of higher client flows, and currencies in emerging markets was down relative to a very strong first quarter in the prior year.

Speaker 4: Finally, credit costs of $417 million included a net reserve build of $379 million, predominantly driven by what I mentioned upfront.

Speaker 4: Then to complete our lines of business, AWM on Page 7. Asset & Wealth Management reported net income of $1.4 billion and a pretax margin of 35%. Revenue of $4.8 billion was up 11% year-on-year, driven by higher deposit margins on lower balances and a valuation gain on our initial investment triggered by taking full ownership of our Asset Management joint venture in China, partially offset by the impact of lower average market levels on management fees and lower performance fees. Expenses of $3.1 billion were up 8% year-on-year, predominantly driven by compensation, reflecting growth in our Private Banking advisory teams, higher revenue-related compensation, and the run rate impact of acquisitions.

Speaker 4: Finally, credit costs of $417 million included a net reserve build of $379 million, predominantly driven by what I mentioned upfront.

Speaker 4: Equity markets was down 12% driven by lower revenues and derivatives relative to a strong first quarter in the prior year and lower client activity and cash.

Speaker 4: Payments revenue was $2.4 billion, up 26% year on year. Excluding the net impact of equity investments, primarily a gain in the prior year, it was up 55%, with the growth driven by higher rates, partially offset by lower deposit balances.

Speaker 4: Payments revenue was $2.4 billion, up 26% year on year. Excluding the net impact of equity investments, primarily a gain in the prior year, it was up 55% with the growth driven by higher rates, partially offset by lower deposit balances.

Speaker 4: Then to complete our lines of business, AWM on Page 7. Asset & Wealth Management reported net income of $1.4 billion and a pretax margin of 35%. Revenue of $4.8 billion was up 11% year-on-year, driven by higher deposit margins on lower balances and a valuation gain on our initial investment triggered by taking full ownership of our asset management joint venture in China, partially offset by the impact of lower average market levels on management fees and lower performance fees. Expenses of $3.1 billion were up 8% year-on-year, predominantly driven by compensation, reflecting growth in our private banking advisory teams, higher revenue-related compensation, and the run rate impact of acquisitions.

Speaker 4: Security services revenue of $1.1 billion was up 7% year on year driven by higher rates, partially offset by lower deposit balances and market levels.

Speaker 4: Expenses of $7.5 billion were up 2% year on year as higher headcount and wage inflation were largely offset by lower revenue.

Speaker 4: For the quarter, net long-term inflows were $47 billion, led by fixed income and equities. And then for liquidity, we saw net inflows of $93 billion, inclusive of our ongoing deposit migration.

Speaker 4: Security services revenue of $1.1 billion was up 7% year on year driven by higher rates, partially offset by lower deposit balances and market levels.

Speaker 4: Finally, credit costs of $417 million included a net reserve build of $379 million, predominantly driven by what I mentioned upfront.

Speaker 4: AUM of $3 trillion was up 2% year-on-year, and overall client assets of $4.3 trillion were up 6%, driven by continued net inflows into liquidity and long-term products.

Speaker 4: Expenses of $7.5 billion were up 2% year on year as higher headcount and wage inflation were largely offset by lower revenue related.

Speaker 4: Compensation.

Speaker 4: Moving to the Commercial Bank on page 6, Commercial Banking reported a net income of $1.3 billion. The revenue of $3.5 billion was up 46% year-on-year driven by higher deposit margins. Payments revenue of $2 billion was up 98% year-on-year driven by higher rates. And gross investment banking revenue of $881 million was up 21% year on year on increased M&A and bond underwriting from large deal activity.

Speaker 4: Compensation.

Speaker 4: And finally, loans were down 1% quarter-on-quarter, driven by lower securities-based lending, while average deposits were down 5%.

Speaker 4: compensation. Moving to the Commercial Bank on page 6.

Speaker 4: Commercial Banking reported net income of $1.3 billion. The revenue of $3.5 billion was up 46% year-on-year driven by higher deposit margins.

Speaker 4: AUM of $3 trillion was up 2% year-on-year, and overall client assets of $4.3 trillion were up 6%, driven by continued net inflows into liquidity and long-term products.

Speaker 4: Turning to Corporate on Page 8, Corporate reported a net income of $244 million. Revenue was $985 million compared to a net loss of $881 million last year. NII was $1.7 billion, up $2.3 billion year-on-year due to the impact of higher rates. NIR was a loss of $755 million compared with a loss of $345 million in the prior year and included the net investment securities losses I mentioned earlier. Expenses of $160 million were down $24 million year-on-year. And credit costs of $370 million were driven by reserve builds on a couple of single-name exposures.

Speaker 4: And finally, loans were down 1% quarter-on-quarter, driven by lower securities-based lending, while average deposits were down 5%.

Speaker 4: Payments revenue of $2 billion was up 98% year on year driven by higher rates. And gross investment banking revenue of $881 million was up 21% year on year on increased M&A and bond underwriting from large deal activity.

Speaker 4: The expenses of $1.3 billion were up 16% year on year, largely driven by higher compensation expense, including front office hiring and technology investments, and the as well as higher volume-related expenses.

Speaker 4: Turning to Corporate on Page 8, Corporate reported a net income of $244 million. Revenue was $985 million compared to a net loss of $881 million last year. NII was $1.7 billion, up $2.3 billion year-on-year due to the impact of higher rates. NII was a loss of $755 million compared with a loss of $345 million in the prior year and included the net investment securities losses I mentioned earlier. Expenses of $160 million were down $24 million year-on-year. And credit costs of $370 million were driven by reserve builds on a couple of single-name exposures.

Speaker 4: The expenses of $1.3 billion were up 16% year on year, largely driven by higher compensation expense, including front office hiring and technology investments, and the

Speaker 4: Average deposits were down 16% year on year and 5% quarter on quarter, predominantly driven by continued attrition in non-operating deposits as well as seasonally lower balances.

Speaker 4: Loans were up 13% year on year and 1% sequentially.

Speaker 4: as well as higher volume related expense.

Speaker 4: Next, the outlook on Page 9. We now expect 2023 NII and NII ex-markets to be approximately $81 billion. This increase in guidance is primarily driven by lower rate paid assumptions across both Consumer and Wholesale in light of the expectation of Fed [ cuts ] later in the year as well as slightly higher Card revolving balances. Note that, in line with my comments at the outset, recent deposit balance increases are not a meaningful contributor to the upward revision in the NII outlook, given that we expect a meaningful portion of the recent inflows to reverse later in the year

Speaker 4: Average deposits were down 16% year on year and 5% quarter on quarter, predominantly driven by continued attrition in non-operating deposits as well as seasonally lower balances.

Speaker 4: CNI loans were up 1% quarter on quarter, with somewhat different dynamics based on client size.

Speaker 4: Loans were up 13% year on year and 1% sequentially.

Speaker 4: In middle market banking, higher rates and recession concerns have decreased new loan demand and utilization, which is also leading to weakness in Quebec spending.

Speaker 4: CNI loans were up 1% quarter on quarter with somewhat different dynamics based on client size.

Speaker 4: In corporate client banking, utilization rates increased modestly quarter on quarter as capital market conditions led more clients to opt for bank debt.

Speaker 4: In middle market banking, higher rates and recession concerns have decreased new loan demand and utilization, which is also leading to weakness in Quebec spending.

Speaker 4: Next, the outlook on Page 9. We now expect 2023 NII and NII ex-markets to be approximately $81 billion. This increase in guidance is primarily driven by lower rate paid assumptions across both consumer and wholesale in light of the expectation of Fed rate cuts later in the year as well as slightly higher card revolving balances. Note that, in line with my comments at the outset, recent deposit balance increases are not a meaningful contributor to the upward revision in the NII outlook, given that we expect a meaningful portion of the recent inflows to reverse later in the year.

Speaker 4: CRE loans were also up 1% sequentially, with higher rates creating headwinds for both originations and prepayments.

Speaker 4: And given the recent focus on commercial real estate, let me remind you that our office sector exposure is less than 10% of our portfolio and is focused on dense urban markets, and nearly two-thirds of our loans are multifamily, primarily in supply-constrained markets.

Speaker 4: In corporate client banking, utilization rates increased modestly quarter on quarter as capital market conditions led more clients to opt for bank debt. CRE loans were also up 1% sequentially with higher rates creating headwinds for both originations and prepayments.

Speaker 4: I would point out that this outlook still embeds significant reprice lags. We think a more sustainable NII ex-markets run rate in the medium term is well below this quarter's $84 billion as well as below the $80 billion that is implied for the rest of the year by our full year guidance. And while we don't know exactly when this lower run rate will be reached, when it happens, we believe it will be around the mid-70s.

Speaker 4: And given the recent focus on commercial real estate, let me remind you that our office sector exposure is less than 10% of our portfolio and is focused in urban dense markets and nearly two-thirds of our loans are multifamily, primarily in supply constrained markets.

Speaker 4: Finally, credit costs of $417 million included a net reserve build of $379 million, predominantly driven by what I mentioned up front.

Speaker 4: Then, to complete our lines of business, AWM on page 7.

Speaker 4: And of course, as we mentioned last quarter, this NII outlook remains highly sensitive to the uncertainty associated with the timing and the extent of deposit reprice, investment portfolio decisions, the dynamics of QT and RRP, the trajectory of Fed funds, as well as the broader macroeconomic environment, including its impact on loan growth.

Speaker 4: Asset and wealth management reported net income of $1.4 billion with a pre-tax margin of 35%. Revenue of $4.8 billion was up 11% year on year driven by higher deposit margins on lower balances and a valuation gain on our initial investment triggered by taking full ownership of our asset management joint fund.

Speaker 4: Then, to complete our lines of business, AWM on page 7.

Speaker 4: Separately, it's worth noting that market NII may start to trend slightly positive towards the end of the year as a function of mix and rate effects.

Speaker 4: Moving to expenses, our outlook for 2023 continues to be about $81 billion. Importantly, this does not currently include the impact of the pending FDIC special assessment.

Speaker 4: And on credit, we continue to expect the 2023 Card net charge-off rate to be approximately 2.6%. Moving on, Our outlook for 2023 continues to be about $81 billion. However, important, this does not currently include the impact of the pending FDIC special assessment.

Speaker 4: Teams, IR revenue-related compensation, and the run rate impact of acquisitions.

Speaker 4: For the quarter, net long-term inflows were $47 billion, led by fixed income and equities.

Speaker 4: teams, IR revenue-related compensation, and the run rate impact of acquisitions.

Speaker 4: And on credit, we continue to expect the 2023 card net charge-off rate to be approximately 2.6%.

Speaker 4: So to wrap up, our strong results this quarter once again highlight the earnings power of this diversified franchise.

Speaker 4: And in liquidity, we saw net inflows of $93 billion, inclusive of our ongoing deposit migration.

Speaker 4: For the quarter, net long-term inflows were $47 billion led by fixed income and equities.

Speaker 4: So to wrap up, our strong results this quarter once again highlight the earnings power of this diversified franchise.

Speaker 4: We have benefited from our fortress principles and commitment to investing, which we will continue to do as we head into an increasingly uncertain environment.

Speaker 4: AUM of $3 trillion was up 2% year on year, and overall client assets of $4.3 trillion were up 6%, driven by continued net inflows into liquidity and long-term products.

Speaker 4: And in liquidity, we saw net inflows of $93 billion, inclusive of our ongoing deposit migration.

Speaker 4: We have benefited from our fortress principles and commitment to investing, which we will continue to do as we head into an increasingly uncertain environment.

Speaker 4: AUM of $3 trillion was up 2% year on year and overall client assets of $4.3 trillion were up 6% driven by continued net inflows into liquidity and long-term products.

Speaker 4: With that said, operator, please open the line for Q&A. With that said, operator, please open the line for Q&A.

Speaker 4: And finally, loans were down 1% quarter on quarter, driven by lower securities-based lending, while average deposits were down 5%.

Speaker 4: Learning to corporate on page 8.

Speaker 4: From the line of Steve Chubak with Wolfe Research. [Operator Instructions] From the line of Steve Chubak with Wolfe Research.

Speaker 4: And finally, loans were down 1% quarter on quarter, driven by lower securities based lending, while average deposits were down 5%. Learning to corporate on page 8.

Speaker 4: Jamie, I was actually hoping to get your perspective on how you see the recent developments with SVB impacting the regulatory landscape for the big banks. In your letter, you spent a fair amount of time highlighting the consequences of overly stringent capital requirements and the risk of steering more activities to the less regulated nonbanks.

Speaker 4: or a reported net income of $244 million.

Speaker 4: Revenue was $985 million, compared to a net loss of $881 million last year.

Speaker 4: NIIA was 1.7 billion, up 2.3 billion year on year due to the impact of higher rates. NIR was a loss of 755 million compared with a loss of 300 million years due to the impact of higher rates.

Speaker 4: or per reported net income of $244 million.

Speaker 4: Revenue was $985 million compared to a net loss of $881 million last year.

Speaker 4: up 2.3 billion year on year due to the impact of higher rates.

Speaker 4: What are some of the changes that you're scenario planning for, whether it's higher capital, or an increase in FDIC assessment fees? And along those same lines, how are you thinking about the buyback given continued strong capital build but a lot of macro uncertainty at the moment?

Speaker 4: NIR had a loss of $755 million compared with a loss of $345 million.

Speaker 4: up 2.3 billion year on year due to the impact of higher rates. NIR was a loss of $755 million compared with a loss of $345 million.

Speaker 4: in the prior year and included the net investment securities losses I mentioned earlier. Expenses of $160 million were down $24 million year on year.

Speaker 4: Well, I think you've already kind of completed answering your own question there. Look, we're hoping that everyone just takes a deep breath and looks at what happened and the breadth and depth of regulations already in place. Obviously, when something happens like this, you should adjust and think about it.

Speaker 4: in the prior year and included the net investment securities losses I mentioned earlier.

Speaker 4: and credit costs of $370 million were driven by reserve bills on a couple of single name exposures, and credit costs of $370 million were driven by reserve bills on a couple of single name exposures.

Speaker 4: Expenses of $160 million were down $24 million year on year.

Speaker 4: So I think down the road, there may be some limitations on held to maturity, maybe more TLAC for certain types of size banks and more scrutiny and history exposure, stuff like that.

Speaker 4: and credit costs of $370 million were driven by reserve bills on a couple of single name exposures.

Speaker 4: and credit costs of $370 million were driven by reserve bills on a couple of single name exposures. Next, the outlook on page 9.

Speaker 4: Next, the outlook on page 9, and credit costs of $370 million were driven by reserve bills on a couple of single name exposures.

Speaker 4: We now expect 2023 NII and NIIX markets to be approximately $81 billion. This increase in guidance is primarily driven by lower rate paid assumptions across both consumer and wholesale in light of the expectation of FedCups later in the year as well as slightly higher card revolving balances.

Speaker 4: We now expect 2023 NII and NIIX markets to be approximately $81 billion.

Speaker 4: So I think down the road, there may be some limitations on held to maturity, maybe more TLAC for certain types of size banks and more scrutiny and history exposure, stuff like that.

Speaker 4: But it doesn't have to be a revamp of the whole system. It's just recalibrating things the right way. I think it should be done knowing what you want the outcome to be. The outcome you should want is very strong community and regional banks. And certain actions are being taken, which are drastic; it could actually make them weaker. So that's all it is.

Speaker 4: This increase in guidance is primarily driven by lower rate paid assumptions across both consumer and wholesale in light of the expectation of FedCups later in the year as well as slightly higher card revolving balances.

Speaker 4: Note that, in line with my comments at the outset, recent deposit balance increases are not a meaningful contributor to the upward revision in the NI I outlook given that we expect a meaningful portion of the recent inflows to reverse later in the year.

Speaker 4: Note that in line with my comments at the outset, recent deposit balance increases are not a meaningful contributor to the upward revision in the NI I outlook given that we expect a meaningful portion of the recent inflows to reverse later in the year.

Speaker 4: We do expect higher capital from Basel IV effectively. And obviously, there's going to be an FDIC assessment; that will be what it is.

Speaker 4: I would point out that this outlook still embeds significant reprice lags.

Speaker 4: We think a more sustainable NII XMarkets run rate in the medium term is well below this quarter's $84 billion as well as below the $80 billion that is implied for the rest of the economy.

Speaker 4: I would point out that this outlook still embeds significant reprice lags. We think a more sustainable NII XMarkets run rate in the medium term is well below this quarter's $84 billion as well as below the $80 billion that is implied for the rest of the economy.

Speaker 4: We do expect higher capital from Basel IV effectively. And obviously, there's going to be an FDIC assessment; that will be what it is.

Speaker 4: And just in terms of appetite for the buyback, just given some of the elevated macro uncertainty. And just in terms of appetite for the buyback, just given some of the elevated macro uncertainty.

Speaker 4: year by our full year guidance.

Speaker 4: Well, we've told you -- I think we've told you that we're kind of penciled in for $12 billion for this year. Obviously, capital is more than that, but we did a little bit of buyback this quarter.

Speaker 4: And while we don't know exactly when this lower run rate will be reached, when it happens, we believe it will be around the mid-70s.

Speaker 4: year by our full year guidance.

Speaker 4: And while we don't know exactly when this lower run rate will be reached, when it happens, we believe it will be around the mid 70s.

Speaker 4: We're going to wait and see. We don't mind keeping our powder dry. And you've seen us do that with investment portfolios, and we're also willing to do it with capital.

Speaker 4: The next question comes from the line of Ken Usdin with Jefferies. Jeremy, I was just wondering if you could just give us a little bit more detail on those lower funding expectation points that you made. Just in terms of -- is it because of what you can offer the client that might allow you to kind of keep that beta lower? And maybe you can just kind of wrap it into what your overall beta expectations are in that revised update.

Speaker 4: Separately, it's worth noting that markets and inflation may start to trend slightly positive towards the end of the year as a function of mix and rate effects.

Speaker 4: Separately, it's worth noting that markets and II may start to trend slightly positive towards the end of the year as a function of mix and rate effects.

Speaker 4: Jeremy, I was just wondering if you could just give us a little bit more detail on the lower funding expectation point that you made. Just in terms of -- is it because of what you can offer the client that might allow you to kind of keep that beta lower? And maybe you can just kind of wrap it into what your overall beta expectations are in that revised update.

Speaker 4: Moving to expenses, our outlook for 2023 continues to be about $81 billion. However, important, this does not currently include the impact of the pending FDIC Special Assessment.

Speaker 4: Moving to expenses, our outlook for 2023 continues to be about $81 billion.

Speaker 4: And on credit, we continue to expect the 2023 card net charge-off rate to be approximately 2.6%.

Speaker 4: Importantly, this does not currently include the impact of the pending FDIC Special Assessment.

Speaker 4: The next question comes from the line of Ken Usdin with Jefferies.

Speaker 4: So let me just summarize the drivers of the change in the outlook. So the primary driver really is lower deposit rate paid expectations across both Consumer and Wholesale, which, as you mentioned, is driven by a couple of factors. So the change in the rate environment with cuts coming sooner in the outlook does take some pressure off the reprice.

Speaker 4: And on credit, we continue to expect the 2023 card net charge-off rate to be approximately 2.6%.

Speaker 4: So to wrap up, our strong results this quarter once again highlight the earnings power of this diversified franchise. We have benefited from our fortress principles and commitment to investing, which we will continue to do as we head into an increasingly uncertain environment.

Speaker 4: So to wrap up, our strong results this quarter once again highlight the earnings power of this diversified franchise. We have benefited from our fortress principles and commitment to invest, which we will continue to do as we head into an increasingly uncertain environment.

Speaker 4: So to wrap up, our strong results this quarter once again highlight the earnings power of this diversified franchise. We have benefited from our fortress principles and commitment to invest, which we will continue to do as we head into an increasingly uncertain environment. With that operator, please open the line for questions.

Speaker 4: Yes, sure. So, let me just summarize the drivers of the change in outlook. So the primary driver really is lower deposit rate paid expectations across both consumer and wholesale, which, as you mentioned, is driven by a couple of factors. So the change in the rate environment with cuts coming sooner in the outlook does take some pressure off the reprice.

Speaker 4: With that operator, please open the line for questions.

Speaker 4: And as you said, we're getting a lot of positive feedback from the field on our product offerings. The short-term CD, in particular, is really getting a lot of positive feedback from our folks in the branches. It's been very attractive to yield-seeking customers, so that's kind of working well.

Speaker 4: Yes, sure.

Speaker 3: From the line of Steve Chubach with Wolf Research.

Speaker 3: Now open.

Speaker 3: Still not established.

Speaker 3: Now open.

Speaker 3: Still not established.

Operator: The J.P. Morgan Chase & Co. Earnings Conference, again shortly.,,,,,,,,,,,, Please stand by, we are about to begin. Good morning, ladies and gentlemen. Welcome to the first quarter 2023 earnings call. This call is being recorded.

Speaker 3: And then on the asset side, we are seeing a little bit higher Card revolve, which is helping. And I'll just remind you that at a conference in February, I suggested that we were already starting to feel like some of the uncertainties we mentioned when giving the guidance had started all moving in the same direction. And that was one of the things that contributed to the upward revision, like all the uncertainty kind of went through the same way. But, as Jamie has pointed out, those uncertainties are all still there. We highlight them on this page, and as we look forward to this year and into next year in the medium term, we remain very focused on them.

Speaker 5: Hey, good morning. Good morning, James.

Speaker 3: From the line of Steve Chubach with Wolf Research. Now open. Still not established.

Speaker 5: Jamie, I was actually hoping to get your perspective on how you see the recent developments with SVB impacting the regulatory landscape for the big banks.

Speaker 5: Hey, good morning.

Speaker 5: Good morning, James. Jamie, I was actually hoping to get your perspective on how you see the recent developments with SVB impacting the regulatory landscape for the big banks. In your letter, you spent a fair amount of time highlighting the consequences of overly stringent capital requirements, the risk of steering more activities to the less regulated non-banks, and the lack of regulatory assistance to the most vulnerable.

Speaker 5: In your letter, you spent a fair amount of time highlighting the consequences of overly stringent capital requirements, the risk of steering more activities to less regulated non-banks, and the lack of regulatory assistance to the most vulnerable.

Speaker 3: And then on the asset side, we are seeing a little bit higher card revolve, which is helping. And I'll just remind you that at a conference in February, I suggested that we were already starting to feel like some of the uncertainties we mentioned when giving the guidance had started all moving in the same direction. And that was one of the things that contributed to the upward revision, like all the uncertainty kind of went through the same way. But, as Jamie has pointed out, those uncertainties are all still there. We highlight them on this page, and as we look forward to this year and into next year in the medium term, we remain very focused on them.

Speaker 5: What are some of the changes that you're scenario planning for, whether it's higher capital, an increase in FDIC assessment fees, and along those same lines, how you're thinking about the buyback given continued strong capital build but a lot of macro uncertainty at the moment?

Speaker 5: What are some of the changes that you're scenario planning for, whether it's higher capital, increase in FDIC assessment fees, and along those same lines, how you're thinking about the buyback given continued strong capital build, but a lot of macro uncertainty at the moment.

Speaker 6: I think you were already kind of complete with answering your own question there.

Speaker 6: Look, we're hoping that everyone just takes a deep breath and looks at what happened, and the breadth and depth of regulation are already in place. Obviously, when something happens like this, you should adjust and think about it.

Speaker 6: I think you were already kind of complete with answering your own question there. Look, we're hoping that everyone just takes a deep breath and looks at what happened, and the breadth and depth of regulation is already in place. Obviously, when something happens like this, you should adjust, think about it. I think down the road there may be some limitations.

Speaker 6: I think down the road, there may be some limitations.

Speaker 6: And as a follow-up on the point about rate expectations coming in now and potentially getting cut sooner, how do you take a look at what that might mean just for the broader economy? Is that -- do you think it's more just because inflation is coming down? Do you think it's because the Fed has just got to react to an even tougher economy and still some of those storm clouds that might be out there? Just kind of -- just your general thinking about the other read-throughs of what lower rates quicker will mean for the broader economy. Yes,

Speaker 6: health and maturity, maybe more TLAC for certain types of banks and more scrutiny on interest rate exposure and stuff like that. But it doesn't have to be a revamp of the whole system. It's just recalibrating things the right way. I think it should be done knowing what you want the outcome to be; the outcome you should want is very strong community and regional banks. And you know, certain actions are taken which are drastic; they could actually make them weaker. So that's all it is.

Speaker 6: health and maturity, maybe more TLAC for certain type size banks and more scrutiny on interest rate exposure and stuff like that. But it doesn't have to be a revamp of the whole system. It's just recalibrating things the right way. I think it should be done knowing what you want the outcome to be.

Speaker 6: We do expect higher capital from Basel 4 effectively, and obviously there's going to be an FDI assessment; that'll be what it is. And just in terms of appetite for the buyback, just giving some of the elevated..., the outcome you should want is very strong community and regional banks. And you know, certain actions are taken which are drastic; they could actually make them weaker. So that's all it is. We do expect higher capital from Basel 4 effectively, and obviously there's going to be an FDI assessment; that'll be what it is.

Operator: Your line will be muted for the duration of the call. We will now go live to the presentation. Please stand by. At this time, I would like to turn the call over to JPMorgan Chase's Chairman and CEO, Jamie Dimon, and Chief Financial Officer, Jeremy Barnum. Mr. Barnum, please go ahead. Thanks, and good morning, everyone.

Speaker 6: the outcome you should want is very strong community and regional banks. And you know, certain actions are taken which are drastic, it could actually make them weaker. So that's all it is. We do expect higher capital from Basel 4 effectively and obviously there's going to be an FDI assessment, that'll be what it is. And just in terms of appetite for the buyback, just giving some of the elevated...

Speaker 6: And just in terms of appetite for the buyback, just giving some of the elevated...

Speaker 6: Well, I would -- first of all, I don't quite believe it. So the rate curve -- the Fed has the rate curve -- forward short-term rate curve, almost 1% higher than what the market has. So one of the things you got to always prepare for is it could be anything. We don't know what the rate curve is going to be like in the year. And so we're quite cautious about that and quite thoughtful about it. Well, I would -- first of all, I don't quite believe it. So the rate curve -- the Fed has the rate curve -- forward short-term rate curve, almost 1% higher than what the market has. So one of the things you got to always prepare for is it could be anything. We don't know what the rate curve is going to be like in the year, and so we're quite cautious about that and quite thoughtful about it.

Jeremy Barnum: The presentation is available on our website, and please refer to the disclaimer at the back. Starting on page 1, the firm reported net income of $12.6 billion, EPS of $4.10 on revenue of $39.3 billion, and delivered an ROTC of 23%. These results included $868 million of net investment securities lost. Before reviewing our results for the quarter, let's talk about the recent bank. Jamie has addressed a number of the important themes in his shareholder letter and a recent televised interview, so I will go straight to the specific impacts on this. As you would expect, we saw significant new account opening activity and meaningful deposit and money market funding, most significantly in the commercial bank, business banking, and AWM. Regarding deposit inflows, at the firmwide level, average deposits were down 3% quarter-on-quarter, while end-of-period deposits were up 2% quarter-on-quarter, implying an intra-quarter reversal of the recent outflow trend as a consequence of the March events. We estimate that we have retained approximately $50 billion of these deposit inflows at quarter end.

Speaker 6: Obviously, the short-term read is higher recessionary risk, but then inflation comes down. So I think inflation will come down a little bit. It could be stickier than people think, and therefore, the rate curve will have to go up a little bit. Obviously, the short-term read is higher recessionary risk, but then inflation comes down. So I think inflation will come down a little bit. It could be stickier than people think, and therefore, the rate curve will have to go up a little bit.

Speaker 5: That's great!

Speaker 5: I'll hop back in the queue.

Speaker 5: Thanks so much for taking my questions.

Speaker 5: The next question comes from the line of John McDonald with Autonomous Research.

Speaker 6: Thank you.

Speaker 6: The next question comes from the line of Ken Easton with Jefferies. You may proceed. Hey, thanks. Good morning. Hey, Jeremy, I was just wondering if you could just give us a little bit more detail on those lower funding expectation points that you made just in terms of, you know, is it because of what you can offer the client that might allow you to cut?

Speaker 6: Thank you.

Speaker 5: That's great. I'll hop back in the queue. Thanks so much for taking my questions.

Speaker 6: Thank you. The next question comes from the line of Ken Easton with Jefferies. You may proceed. Hey, thanks. Good morning. Hey, Jeremy, I was just wondering if you can just give us a little bit more detail on those lower funding expectation points that you made just in terms of, you know, is it because of like what you can offer the client that might allow you to cut.

Speaker 6: The next question comes from the line of John McDonald with Autonomous Research. Jeremy, I wanted to follow up again on the drivers of the NII revision and the lower rates paid assumption. You mentioned the Fed cuts coming sooner and positive feedback on the customer offers. But what about the March events? Do the bank failures there that happened in March, in your view, do they slow the reprice intensity because folks are moving for other reasons than price? Or do they intensify it, industry-wide, because smaller banks have to reprice to keep their deposits? How do those events influence your view of the reprice?

Speaker 6: Jeremy, I wanted to follow up again on the drivers of the NII revision and the lower rates paid assumption. You mentioned the Fed cuts coming sooner and positive feedback on the customer offers. What about the March events? Do the bank failings there that happened in March, in your view, slow the reprice intensity because folks are moving for other reasons than price? Or do they intensify it, industry-wide, because smaller banks have to reprice to keep their deposits? How do those events influence your view of the reprice?

Speaker 6: Jeremy, I wanted to follow up again on the drivers of the NII revision and the lower rates paid assumption. You mentioned the Fed cuts coming sooner and positive feedback on the customer offers. What about the March events? Do the bank failings there that happened in March, in your view, slow the reprice intensity because folks are moving for other reasons? Or do they intensify it, industry-wide, because smaller banks have to reprice to keep their deposits? How do those events influence your view of the reprice?

Speaker 4: Which, as you mentioned, is driven by a couple of factors. So the change in the rate environment, you know, with cuts coming sooner in the outlook, all else equal, does take some pressure off the reprice.

Speaker 4: which as you mentioned is driven by a couple of factors. So the change in the rate environment, you know, with cuts coming sooner in the outlook, all else equal does take some pressure off the reprice. And as you said, we're getting a lot of positive feedback from the field on our product offerings. The short term CDA is...

Speaker 4: And, as you said, we're getting a lot of positive feedback from the field on our product offerings.

Jeremy Barnum: It's important to note that while the sequential period and depositing..., members of the board. We expect these outflows to be driven by the same factors as last quarter, as well as the expectation that we will not retain all of them. Now back to the quarter, touching on a few highlights. We grew our IBC wallet share. Consumer spending remains solid, with combined debit and credit card spend up 10% year-on-year.

Speaker 6: Yes. John, it's a really good question, and we've obviously thought about that. But as we sit here today, I guess I have two answers to that. One is, it doesn't -- it's not meaningfully affecting our current outlook. We don't see it as a major driver, and I think in terms of the larger dynamics that you lay out, it's just a little too early to tell. But from where we are right now, the base case has no real impact.

Speaker 4: The short term CDA is...

Speaker 4: Yes. John, it's a really good question, and we've obviously thought about that.

Speaker 4: But as we sit here today, I guess I have two answers to that. One is, it doesn't -- it's not meaningfully affecting our current outlook. We don't see it as a major driver, and I think in terms of the larger dynamics that you lay out, it's just a little too early to tell. But from where we are right now, the base case has no real impact.

Speaker 4: in particular is really getting a lot of positive feedback from our folks in the branches.

Speaker 4: It's been very attractive to yield-seeking customers.

Speaker 4: So that's kind of working well.

Speaker 4: And then on the asset side, we are seeing a little bit higher carbon footprint, which is helping.

Speaker 4: in particular is really getting a lot of positive feedback from our folks in the branches. It's been very attractive to yield-seeking customers. So that's kind of working well. And then on the asset side, we are seeing a little bit higher carbon revolve, which is helping. And I'll just remind you that at a conference in February , I suggested that we were already...

Speaker 4: And I'll just remind you that at a conference in February, I suggested that we were already...

Speaker 4: And then I wanted to ask Jamie, there's a narrative out there that the industry could see a credit crunch and banks are going to stop lending. Even Jay Powell mentioned that as a risk. Do you see that in terms of anything you look at in terms of lending that -- and is that a reaction that makes sense that banks might be retrenching a lot here? Do you worry about that for the economy in terms of the credit crunch? Okay.

Jeremy Barnum: And credit continues to normalize, but actual performance remains strong across the board. On page two, we have some more details. Revenue of $39.3 billion, up $7.7 billion or 25% year-on-year. NIIX markets was up 9.2 billion, or 78%, driven by higher rates partially offset by lower deposits. NIRX markets was down $1.1 billion or $10, prevented by the securities losses previously mentioned, as well as lower I.V. fees and lower auto lease income on lower volumes, and Markets revenue was down 371 million, or 4%. Expenses of $20.1 billion were up $916 million, or 5% year-on-year, driven by compensation-related costs reflecting the annualization of last year's headcount growth and wage. These results include the impact of the higher FDIC assessment I mentioned last quarter, which, of course, is unrelated to recent events. Some credit costs of $2.3 billion included net charge-offs of $1.1 billion, predominantly on cards.

Speaker 6: Those uncertainties are all still there, so we highlight them on the page. And as we look forward to this year and to next year in the medium term, we remain very focused on them.

Speaker 6: Yeah, and as a follow-up on the point about rate expectations coming in now and potentially getting cut sooner, how do you take a look at what that might mean just for the broader economy? Is that? I wouldn't use the word credit crunch if I were you. Obviously, there's going to be a little bit of tightening. And most of that will be around certain real estate things. You've heard that from real estate investors already. So I just look at that as a kind of a thumb on the scale. It just means that finance conditions will be a little bit tighter, increasing the odds of a recession. That's what that is.

Speaker 6: Those uncertainties are all still there. We highlight them on the page. And as we look forward to this year and to next year in the medium term, we remain very focused on those. Yeah, and as a follow up on the point about rate expectations coming now in and potentially getting cut sooner, how do you take a look at what that might mean just for the broader economy? Is that?

Speaker 6: It's not like a credit crunch. I wouldn't use the word credit crunch if I were you. Obviously, there's going to be a little bit of tightening, and most of that will be around certain real estate things. You've heard that from real estate investors already. So I just look at that as a kind of thumb on the scale. It just makes the finance conditions will be a little bit tighter, increasing the odds of a recession. That's what it is. It's not like there was a credit crunch.

Speaker 6: broader economy?

Speaker 6: Well, first of all, I don't quite believe it.

Speaker 6: So you know, the rate curve, the Fed has the rate curve, the forward short-term rate curve, almost 1% higher than what the market has. So one of the things you got to always prepare for is it could be anything; we don't know what the rate curve is going to be in a year. So we're quite cautious about that and quite thoughtful about it.

Speaker 6: broader economy? Well, I was first of all, I don't quite believe it. So you know, the rate curve, the Fed has the rate curve, the forward short term rate curve, you know, almost 1% higher than what the market has. So you know, one of the things you got to always prepare for is, it could be anything, we don't know what the rate curve is going to be in a year. So we're quite cautious in that and quite thoughtful about that.

Speaker 6: Our next question comes from Erika Najarian of UBS.

Speaker 6: My first question is you mentioned that your reserve build was driven mostly by worse economic assumptions. I'm wondering if you could update us on what unemployment rate you're assuming in your reserves.

Speaker 6: Our next question comes from Erika Najarian of UBS.

Speaker 6: Obviously, the short-term read is higher recessionary risk. You know, but, you know, and then inflation comes down.

Jeremy Barnum: The net reserve build of $1.1 billion was largely driven by deterioration in our weighted average economic outlook on the balance sheet and capital. We ended the quarter with a CET1 ratio of 13.8%, up about 60 bases, which was primarily driven by the benefit of net income, less distributions, and AOCI. And in line with what we previously said, we resumed stock buybacks this quarter and distributed a total of $1.9 billion in net repurchases back to shareholders. Now, let's go to our businesses, starting with CCB on page 4. Touching quickly on the health of U.S. consumers and small businesses based on our data. Both continue to show resilience and remain on the path to normalization, as expected, but we continue to monitor their activity. This bend remains solid, and we have not observed any notable pullbacks throughout the quarter.

Speaker 6: Yes. So Erika, as you know, we take -- I can't go into a lot of detail here. But we take the outlook from our economist. We run a bunch of different scenarios, and we probably weigh those. The central outlook from our research team hasn't actually changed, but we felt that in line with what Jamie just said in terms of a little bit of tightening as a result of the event in March, it made sense to add a little bit of weight to our relative adverse case. So we did that, which changed the weighted average expectation. And I think the weighted average peak unemployment that we're using now is something like 5.8%.

Speaker 6: So I think inflation will come down a little bit. It could easily be stickier than people think, and therefore, the rate curve will have to go up a little bit.

Speaker 6: Obviously the short-term read is higher recessionary risk.

Speaker 6: You know, but, you know, and then inflation coming down. So I think inflation will come down a little bit. It could easily be stickier than people think, and therefore the rate curve will have to go up a little bit.

Speaker 7: Okay, thank you very much.

Speaker 5: Thank you.

Speaker 5: The next question comes from the line of John McDonald with Autonomous Research. You may proceed.

Speaker 7: Okay, thank you very much.

Speaker 6: Yes. So Erika, as you know, we take -- I'm going to go into a lot of detail here. But we take the outlook from our economist. We run a bunch of different scenarios, and we probably weigh those. The central outlook from our research team hasn't actually changed, but we felt that in line with what Jamie just said in terms of a little bit of tightening as a result of the event in March, it made sense to add a little bit of weight to our relative adverse case. So we did that, which changed the weighted average expectation. And I think the weighted average peak unemployment that we're using now is something like 5.8%.

Speaker 5: Hi, thanks. Jeremy, I wanted to follow up again on the drivers of the NII revision and the lower rates paid assumption. You mentioned the Fed cuts coming sooner and positive feedback on the customer offers.

Speaker 5: Thank you. The next question comes from the line of John McDonald with Autonomous Research. You may proceed. Hi, thanks. Jeremy, I wanted to follow up again on the drivers of the NII revision and the lower rates paid assumption. You mentioned the Fed cuts coming sooner and positive feedback on the customer offers.

Speaker 6: What about the March events?

Speaker 6: Did the bank failures there that happened in March, in your view, did they slow the reprice intensity because folks are moving for other reasons, or did they intensify it industry-wide because smaller banks have to reprice to keep their deposits? How do those events influence your view of the reprice?

Speaker 6: What about the March events? Did the bank failures there that happened in March, in your view, did they slow the reprice intensity because folks are moving other than price reasons, or do they intensify it industry-wide because smaller banks have to reprice to keep their deposits? How do those events influence your view of the reprice?

Speaker 6: So as we think about all of what you've just told us, so $81 billion of NII this year, and who knows when the medium term is going to happen? The mid-70s, the clear strength of the franchise producing 23% ROTCE in a quarter where your CET1 was 13.8% and a reserve that already reflects 5.8% unemployment. So as we think about all of what you've just told us, so $81 billion of NII this year, and who knows when the medium term is going to happen? The mid-70s, the clear strength of the franchise producing 23% ROTCE in a quarter where your CET1 was 13.8% and a reserve that already reflects 5.8% unemployment.

Speaker 4: Yeah, John, it's a really good question, and we've obviously thought about that, but as we sit here today, I guess I have two answers to that. One is that it's not meaningfully affecting our current outlook. We don't see it as a major driver, and I think in terms of the larger dynamics that you lay out, it's just a little too early to tell. But from where we are right now, the base case is no longer a major driver.

Jeremy Barnum: Moving to financial results, CCB reported net income of $5.2 billion on revenue of $16.5 billion, which was up 35% year-on-year. In banking and wealth management, revenue was up 67% year-on-year, driven by higher NII and higher rates. However, average deposits were down 2% quarter-on-quarter in line with recent trends.

Speaker 4: Yeah, John , it's a really good question and we've obviously thought about that, but as we sit here today, I guess I have two answers to that. One is, it's not meaningfully affecting our current outlook. We don't see it as a major driver. And I think in terms of the larger dynamics that you lay out, it's just a little too early to tell. But from where we are right now, the base case is no longer a major driver.

Speaker 6: As we think about recessions and what JPMorgan can earn in a recession, do you think you can hit 17% ROTCE even in 2024, assuming we do have a recession in 2024 everybody is expecting, given all these revenue dynamics and how prepared you are on the reserve? As we think about recessions and what JPMorgan can earn in a recession, do you think you can hit 17% ROTCE even in 2024, assuming we do have a recession -- everybody is expecting, given all these revenue dynamics and how prepared you are on the reserve?

Speaker 4: I mean, that's an interesting question, Erika. I guess I'll say a couple of things. Yes,

Speaker 4: I mean, that's an interesting question, Erika. I guess I'll say a couple of things. It's a great question, so I hope so Jeremy answers it. Okay. Let's take a crack at it. Let's see what the boss thinks.

Jeremy Barnum: Throughout the quarter, we continue to see customer flows to higher-yielding products, as you would expect, but we're encouraged by what we are capturing in CDs and our wealth management offerings. Fine investment assets were down 1% year on year but up 7% quarter on quarter, driven by market performance as well as strong net income. In home lending, revenue was down 38% year-on-year, largely driven by lower net interest income from tighter loan spreads and lower production. Moving to card services and auto, revenue was up 14% year-on-year, largely driven by higher card services and AI on higher revolving balances, partially offset Credit card spend was up 13% year-on-year.

Speaker 4: I think, number one, we believe have said and continue to believe that this is fundamentally a 17% through the cycle ROTCE franchise. So, number one. Number two, as Jamie always says, we run this company for all different scenarios and to have it be as resilient as possible across all different scenarios. It's a great question. Jeremy answers it. Okay. Let's give it a crack. Let's see what the boss thinks. I think, number one, we believe have said and continue to believe that this is fundamentally a 17% through the cycle ROTC franchise. So, number one. Number two, as Jamie always says, we run this company for all different scenarios and to have it be as resilient as possible across all different scenarios.

Speaker 6: A reaction that makes sense that banks might be retrenching a lot here?

Speaker 6: Do you worry about that for the economy in terms of the credit crunch?

Speaker 6: Thanks. I wouldn't use the word credit crunch if I were you. Obviously, there's going to be a little bit of tightening, and most of that will be around certain real estate things. You've heard that from real estate investors already. So I just look at that as kind of a thumb on the scale. It just makes the fast conditions a little bit tighter. It increases the odds of a recession. That's what it is. It's not like a credit crunch.

Speaker 6: a reaction that makes sense that banks might be retrenching a lot here? Do you worry about that for the economy in terms of credit crunch? Thanks. I wouldn't use the word credit crunch if I were you. Obviously there's going to be a little bit of tightening.

Speaker 6: And most of that will be around certain real estate things. You've heard it from real estate investors already. So I just look at that as kind of a thumb on the scale. It just makes the fast conditions be a little bit tighter. It increases the odds of a recession. That's what that is. It's not like a credit crunch. Thank you. Our next question comes from Erica Najarian with UBS. You may.

Speaker 6: Thank you.

Speaker 6: Our next question comes from Erica Najarian of UBS. You may do it.

Speaker 6: Thank you.

Speaker 6: Our next question comes from Erica Najarian of UBS. You may do it.

Speaker 6: On the particular question of ROTCE expectations in 2024, contingent on the particular economic outlook, obviously, it depends a lot on the nature of the recession. I think we feel really good about how the company is positioned for a recession, but we're a bank. A very serious recession is, of course, going to be a headline -- a headwind for returns. But we think even in a fairly severe recession, we'll deliver very good returns. Whether that's 17% or not is too much detail for now.

Jeremy Barnum: Card outstandings were up 21%, driven by strong new account growth and revolve normalization. And in auto, originations were $9.2 billion, up 10% year on year. The expenses of $8.1 billion were up 5% year-on-year, reflecting the impact of wage inflation and higher hedging. In terms of credit performance this quarter, credit costs were $1.4 billion, reflecting reserve bills of $300 million in card and $50 million in home lending.

Speaker 6: On the particular question of ROTC expectations in 2024, contingent on the particular economic outlook, obviously, it depends a lot on the nature of the recession. I think we feel really good about how the company is positioned for a recession, but we're a bank. A very serious recession is, of course, going to be a headline -- a headwind for returns. But we think even in a fairly severe recession, we'll deliver very good returns. Whether that's 17% or not is too much detail for now.

Speaker 6: The next question comes from the line of Jim Mitchell with Seaport Global Securities. The next question comes from the line of James Mitchell with Seaport Global Securities.

Speaker 6: Maybe just a little bit on the deposit, your thought process there. You've seen some inflows. What's your -- why do you think you will lose them going forward? And just maybe talk a little bit about the dynamic in pricing. Do you feel that, given the inflows, do you see some pricing power for the larger banks?

Speaker 4: probability weighed those outcomes.

Speaker 4: The central case outlook from our research team hasn't actually changed, but we felt that, in line with what Jamie just said in terms of a little bit of tightening as a result of the events of March, it made sense to add a little bit of weight to our relative adverse case.

Speaker 4: probability weighed those outcomes.

Jeremy Barnum: And that charge-offs were $1.1 billion, up about $500 million year-on-year, in line with expectations as delinquency levels continue to normalize across portfolios. Next, on page 5, CIB reported net income of $4.4 billion on revenue of $13.6 billion.

Speaker 4: probability weighed those. The central case outlook from our research team hasn't actually changed, but we felt that in line with what Jamie just said in terms of a little bit of tightening as a result of the events of March, it made sense to add a little bit of weight to our relative adverse case. So we did that, which changed the weighted average expectation. And I think that weighted average peak unemployment that we're using now is something like 5.8%.

Speaker 4: So we did that, which changed the weighted average expectation. And I think that weighted average peak unemployment that we're using now is something like 5.8%. Yes,

Speaker 4: A couple of things there. First of all, we don't know, right? The deposits just came in. We don't know yet. We're just guessing.

Speaker 4: Number two, the deposits just came in. So, by definition, these are somewhat flighty deposits because they just came into us. So it's prudent and appropriate for us to assume that they won't be particularly stable.

Jeremy Barnum: Investment banking revenue of $1.6 billion was down 24% year-on-year. IV fees were down 19%. We ranked number one with a first quarter wallet share of 8.7%. And advisory fees were down 6% compared to the strong first quarter last year. Advisory fees continue to be affected by market conditions, with fees down 34% for debt and 6% for equity. In terms of the outlook, the dynamics remain the same.

Speaker 8: So as we think about all of what you've just told us,

Speaker 4: Number three, there's a natural amount of internal migration of deposits to money funds. So you have to overweigh that, and that's embedded in our assumptions. Yes,

Speaker 8: 81 billion of NII this year, and who knows when the medium term is going to happen in the mid-70s?

Speaker 8: So as we think about all of what you've just told us, so.

Speaker 4: A couple of things there. First of all, we don't know, right? The deposits just came in. We don't know yet. We're just guessing.

Speaker 8: The clear strength of the franchise producing 23% ROTC in a quarter where your CTP won 13.8% and a reserve that already reflects 5.8% unemployment.

Speaker 8: 81 billion of NII this year and who knows when medium term is going to happen in mid-70s.

Speaker 4: Number two, the deposits just came in. So, by definition, these are somewhat flighty deposits because they just came into us. So it's prudent and appropriate to assume that they won't be particularly stable.

Speaker 8: The clear strength of the franchise producing 23% ROTC in a quarter where your CTP won a 13.8% and a reserve that already reflects 5.8% unemployment. As we think about recession and what JP Morgan can earn in a recession.

Speaker 4: Number three, there's a natural amount of internal migration of deposits to money funds. So you have to overweigh that, and that's embedded in our assumptions.

Speaker 8: As we think about recessions and what JP Morgan can earn in a recession,

Jeremy Barnum: Our pipeline is relatively robust, but conversion is sensitive to market conditions and the economic outlook. We expect the second quarter and the rest of the year to remain challenging. Moving to markets, total revenue was $8.4 billion, down 4% year on year. However, income was flat.

Speaker 8: And number four, it's a competitive market, and it's entirely possible that people temporarily come to us and then, over time, decide to go elsewhere. So for all of those reasons, we're just being realistic about the stickiness of those. And number four, it's a competitive market.

Speaker 8: Do you think you can hit 17% ROTC even in 2024, assuming you do have a recession in 24 as everybody's expecting, given all these revenue dynamics and how prepared you are on the reserve? Do you think you can hit 17% ROTC even in 2024, assuming all these revenue dynamics and how prepared you are on the reserve?

Speaker 8: I would add, I wouldn't -- there is -- I would say, categorically, there's no pricing power that the bigger banks have. Because if you look at the pricing, and we look at pricing sheets all the time, every bank is in a slightly different position, and every bank is competing for 3 months, 6 months, 9 months savings rates. And then you have the online banks, you got treasury bills, you got money market funds. There's no pricing power for the bank, but obviously, we'll have different franchises. We're all in a slightly different position.

Speaker 8: And it's entirely possible that people temporarily come to us and then, over time, decide to go elsewhere. So for all of those reasons, we're just being realistic about the stickiness of that.

Speaker 4: Yeah, I mean, that's an interesting question, Erica. I guess I'll say a couple things. It's a great question. I want to see how Jeremy answers it. Okay, let's give it a crack. Let's see what the boss thinks.

Jeremy Barnum: Rates were strong during the rally early in the quarter, as well as through the elevated volatility in March. Credit was up on the back of higher clients. The current season of emerging markets was down relative to a very strong first quarter in the prior year. Equity markets were down 12% driven by lower revenues and derivatives relative to a strong first quarter in the prior year and lower client activity in cash.

Speaker 4: Yeah, I mean that's an interesting question, Erica. I guess I'll say a couple things. It's a great question. I want to see how Jeremy answers it. Okay, let's take a crack. Let's see what the boss thinks.

Speaker 4: I think number one, we believe, have said, and continue to believe that this is fundamentally a 17% of the cycle ROTC franchise. So number one. Number two, as Jamie always says, we run this company for all different scenarios and to have it be as resilient as possible across all different scenarios. On the particular question of ROTC expectations in 2024, All fair points.

Speaker 8: I would add, I wouldn't -- there is -- I would say, categorically, there's no pricing power that bigger banks have. Because if you look at the pricing, and we look at pricing sheets all the time, every bank is in a slightly different position, and every bank is competing for 3 months, 6 months, 9 months savings rates. And then you have the online banks, you got treasury bills, you got money market funds. There's no pricing power for the bank, but obviously, we'll have different franchises as well as slightly different positions.

Speaker 4: And maybe just a follow-up on John's question on the lending environment. You talked about the industry likely pulling back. Are you changing your underwriting standards in any way? Just trying to think through it. Is there a potential for some market share gains given your strength of capital and liquidity? Or how are you thinking about the loan environment? All fair points.

Jeremy Barnum: Payments revenue was $2.4 billion, up 26% year-on-year, excluding the net impact of equity investments, primarily a gain in the prior year. It was up 55%, with the growth driven by higher rates, partially offset by lower deposits. Security Services revenue of $1.1 billion was up 7% year-on-year, driven by higher rates, partially offset by lower deposit balances and market levels. Expenses of $7.5 billion were up 2% year-on-year, as higher headcount and wage inflation were largely offset by lower revenue. Moving to the commercial bank on page six, commercial banking reported a net income of $1.3 billion.

Speaker 4: And maybe just a follow-up on John's question on the lending environment. You talked about the industry likely pulling back. Are you changing your underwriting standards in any way? Just trying to think through it. Is there a potential for some market share gains given your strength of capital and liquidity? Or, how are you thinking about the loan environment? We say this very modestly, but we look at that all the time. We say it very modestly, but we look at that all the time.

Speaker 4: good returns. Whether that's 17% or not is, you know, too much detail for now. Yes. And we always say, right, we underwrite through the cycle. And I think notably, we didn't loosen our underwriting standards when all the numbers looked crazy good during the pandemic, and we're not going to overreact now and tighten unreasonably. Some of that correction happens naturally as credit metrics deteriorate for borrowers, whether in consumer or Wholesale, and that might make them leave our pre-existing risk appetite. But we're not running around aggressively tightening standards right now. And we always say, right, we underwrite through the cycle. And I think notably, we didn't loosen our underwriting standards when all the numbers looked crazy good during the pandemic. And we're not going to overreact now and tighten unreasonably. Some of that correction happens naturally. Credit metrics deteriorate for borrowers, whether in consumer or Wholesale, and that might make them leave our pre-existing risk appetite. But we're not running around aggressively tightening standards right now. Whether that's 17% or not is, you know, too much detail for now. Thank you. Yes. And we always say, right, we underwrite through the cycle. And I think notably, we didn't loosen our underwriting standards when all the numbers looked crazy good during the pandemic, and we're not going to overreact now and tighten unreasonably. Some of that correction happens naturally as credit metrics deteriorate for borrowers, whether in consumer or wholesale, and that might make them leave our pre-existing risk appetite. But we're not running around aggressively tightening standards right now.

Speaker 4: Whether that's 17% or not is, you know, too much detail for now. Thank you. Yes. And we always say, right, we underwrite through the cycle. And I think notably, we didn't loosen our underwriting standards when all the numbers looked crazy good during the pandemic, and we're not going to overreact now and tighten unreasonably. Some of that correction happens naturally as credit metrics deteriorate for borrowers, whether in consumer or wholesale, and that might make them leave our pre-existing risk appetite. But we're not running around aggressively tightening standards right now.

Speaker 4: Yes. And we always say, right, we underwrite through the cycle. And I think notably, we didn't loosen our underwriting standards when all the numbers looked crazy good during the pandemic, and we're not going to overreact now and tighten unreasonably. Some of that correction happens naturally as credit metrics deteriorate for borrowers, whether in consumer or wholesale, and that might make them leave our pre-existing risk appetite. But we're not running around aggressively tightening standards right now.

Speaker 4: good returns. Whether that's 17% or not is, you know, too much detail for now.

Speaker 4: The next question comes from the line of JIT from Cityport Global Securities. You may proceed. Hey, good morning. Maybe just a little bit on the deposit, your thought process there. You've seen some inflows. Why do you think you will lose them going forward? and just maybe talk a little bit about the dynamics and pricing. Do you feel that, given the inflows, do you see some pricing power for the larger banks? and just maybe talk a little bit about the dynamics and pricing. Do you feel that, given the inflows, do you see some pricing power for the larger banks?

Whether that's 17% or not is, you know, too much detail for now. Thank you.

The next question comes from the line of JIT, from the Cityport Global Securities. You may proceed. Hey, good morning. Maybe just a little bit on the deposit, your thought process there. You've seen some inflows. Why do you think you lose them going forward?

Jeremy Barnum: Revenue of $3.5 billion was up 46% year-on-year, driven by higher deposits. Payments revenue of $2 billion was up 98% year-on-year, driven by higher rates, and gross investment banking revenue of $881 million was up 21% year-on-year on increased M&A and bond underwriting from large deal activities, as well as higher volume. Average deposits were down 16% year-on-year and 5% quarter-on-quarter, predominantly driven by continued attrition and non-operating deposits, as well as a seasonally lower balance.

Speaker 4: The next question comes from the line of Gerard Cassidy with RBC Capital Markets. Jeremy, in your comments about your CET1 ratio, obviously, came in strong at 13.8%. You've got the G-SIB buffers obviously going up next year. And we have the stress test coming this summer or in June, the results of which maybe will lead to banks, including yours, having a higher stress capital buffer. Where should we think about that CET1 ratio being by the end of the year, do you think? The next question comes from the line of Gerard Cassidy with RBC Capital Markets. Jeremy, in your comments about your CET1 ratio, obviously, came in strong at 13.8%. You've got the G-SIB buffers obviously going up next year, and we have the stress test coming this summer or in June, the results of which maybe will lead to banks, including yours, having a higher stress capital buffer. Where should we think about that CET1 ratio being by the end of the year? Do you think?

and just maybe talk a little bit about the dynamic and pricing. Do you feel like, given the inflows, do you see some pricing power for the larger banks?

Speaker 4: Yeah, a couple things there. First of all, we don't know, right? The deposits just came in. We don't know. We're guessing. Number two, the deposits just came in. So, by definition, these are somewhat flighty deposits because they just came in to us, so it's prudent and appropriate for us to assume that they won't be particularly stable.

Speaker 4: Jeremy, in your comments about your CET1 ratio, obviously, came in strong at 13.8%. You've got the G-SIB buffers obviously going up next year. And we have the stress test coming this summer or in June, the results of which maybe will lead to banks, including yours, having a higher stress capital buffer. Where should we think about that CET1 ratio being by the end of the year, do you think? Number three, there's a natural amount of internal migration of deposits to money funds, so you have to overlay that, and that's embedded in our assumptions. A few things on that, Gerard. So we have previously said that we were targeting 13.5% in the first quarter of '24 as a function of assuming an unchanged SCB, the increased G-SIB step, and operating with a 50 basis point buffer. So the point that Jamie made a second ago, in light of the environment, Basel IV, dry powder, who knows how we'll tweak that going forward. But that's still our base case assumption. Yes. So there are a few things on there, Gerard. So we have previously said that we were targeting 13.5% in the first quarter of '24 as a function of assuming an unchanged SCB, the increased G-SIB step, and operating with a 50 basis point buffer. So the point that Jamie made a second ago, in light of the environment, Basel IV, dry powder, who knows how we'll tweak that going forward. But that's still our base case assumption. And number four, it's a competitive market. And, you know, it's entirely possible that people temporarily come to us and then, over time, decide to go elsewhere. So for all those reasons, you know, we're just being realistic about the stickiness of it. If I add, I wouldn't, there is, I would say categorically, there's no pricing power that the bigger banks have. Because if you look at the pricing, and we look at pricing sheets all the time. Every bank is in a slightly different position, and every bank is competing for three months, six months, nine months, savings rates. And then you have the online banks. You have treasury bills. You've got money market funds. There's no pricing power for the bank, but obviously, we all have different franchises. We're all in a slightly different position. Specifically, on the stress test, I'll -- contrary to what I've heard some people argue, our ability to predict the SCB ahead of time from running our own process is actually quite limited. And you'll remember last year that even though we did predict an increase, we were off by almost a factor of 2 in terms of how big it wound up being, and that was a big surprise for the whole industry. So we want to be quite humble about our ability to predict the SCB. Every bank is in a slightly different position, and every bank is competing for three months, six months, nine months, savings rates. And then you have the online banks. You have treasury bills. You've got money market funds. There's no pricing power for the bank, but obviously, we all have different franchises. We're all in a slightly different position. Specifically, on the stress test, I'll -- contrary to what I've heard some people argue, our ability to predict the SCB ahead of time from running our own process is actually quite limited. And you'll remember last year that even though we did predict an increase, we were off by almost a factor of 2 in terms of how big it wound up being, and that was a big surprise for the whole industry. So we want to be quite humble about our ability to predict the SCB.

Yeah a couple things there. So first of all we don't know right? The deposits just came in we don't know we're guessing. Number two the deposits just came in so by definition these are somewhat flighty deposits because they just came in to us so it's prudent and appropriate for us to assume that they won't be particularly stable.

Speaker 4: Number three, there's a natural amount of internal migration of deposits to money funds, so you have to overlay that, and that's embedded in our assumptions. A few things on that, Gerard. So we have previously said that we were targeting 13.5% in the first quarter of '24 as a function of assuming an unchanged SCB, the increased G-SIB step, and operating with a 50 basis point buffer. So the point that Jamie made a second ago, in light of the environment, Basel IV, dry powder, who knows how we'll tweak that going forward. But that's still our base case assumption. Yes. So there are a few things on there, Gerard. So we have previously said that we were targeting 13.5% in the first quarter of '24 as a function of assuming an unchanged SCB, the increased G-SIB step, and operating with a 50 basis point buffer. So the point that Jamie made a second ago, in light of the environment, Basel IV, dry powder, who knows how we'll tweak that going forward. But that's still our base case assumption. And number four, it's a competitive market. And, you know, it's entirely possible that people temporarily come to us and then, over time, decide to go elsewhere. So for all those reasons, you know, we're just being realistic about the stickiness of it. If I add, I wouldn't, there is, I would say categorically, there's no pricing power that the bigger banks have. Because if you look at the pricing, and we look at pricing sheets all the time. Every bank is in a slightly different position, and every bank is competing for three months, six months, nine months, savings rates. And then you have the online banks. You have treasury bills. You've got money market funds. There's no pricing power for the bank, but obviously, we all have different franchises. We're all in a slightly different position. Specifically, on the stress test, I'll -- contrary to what I've heard some people argue, our ability to predict the SCB ahead of time from running our own process is actually quite limited. And you'll remember last year that even though we did predict an increase, we were off by almost a factor of 2 in terms of how big it wound up being, and that was a big surprise for the whole industry. So we want to be quite humble about our ability to predict the SCB. Every bank is in a slightly different position, and every bank is competing for three months, six months, nine months, savings rates. And then you have the online banks. You have treasury bills. You've got money market funds. There's no pricing power for the bank, but obviously, we all have different franchises. We're all in a slightly different position. Specifically, on the stress test, I'll -- contrary to what I've heard some people argue, our ability to predict the SCB ahead of time from running our own process is actually quite limited. And you'll remember last year that even though we did predict an increase, we were off by almost a factor of 2 in terms of how big it wound up being, and that was a big surprise for the whole industry. So we want to be quite humble about our ability to predict the SCB.

Jeremy Barnum: Loans were up 13% year-on-year and 1% sequentially. C&I loans were up 1% quarter on quarter with somewhat different dynamics based on client size. The Middle Market Banking, Higher Rates and Recession Concerns, Decreased New Loan Demand and New Loan Debt, which is also leading to weakness in Keppak's... In corporate client banking, utilization rates increased modestly quarter-on-quarter as capital market conditions led more clients to opt for bank debt. CRE loans were also up 1% sequentially, with higher rates creating headwinds for both originations and prepayments.

Speaker 4: Yes. So there are a few things on there, Gerard. So we have previously said that we were targeting 13.5% in the first quarter of '24 as a function of assuming an unchanged SCB, the increased G-SIB step, and operating with a 50 basis point buffer. So the point that Jamie made a second ago, in light of the environment, Basel IV, dry powder, who knows how we'll tweak that going forward. But that's still our base case assumption. Yes. A few things on that, Gerard. So we have previously said that we were targeting 13.5% in the first quarter of '24 as a function of assuming an unchanged SCB, the increased G-SIB step, and operating with a 50 basis point buffer. So the point that Jamie made a second ago, in light of the environment, Basel IV, dry powder, who knows how we'll tweak that going forward. But that's still our base case assumption. And number four, it's a competitive market. And, you know, it's entirely possible that people temporarily come to us and then, over time, decide to go elsewhere. So for all those reasons, you know, we're just being realistic about the stickiness of it. If I add, I wouldn't, there is, I would say categorically, there's no pricing power that the bigger banks have. Because if you look at the pricing, and we look at pricing sheets all the time, every bank is in a slightly different position, and every bank is competing for three months, six months, nine months, savings rates. And then you have the online banks. You've got treasury bills. You've got money market funds. There's no pricing power for the bank, but obviously, we all have different franchises. We're all in a slightly different position. Specifically, on the stress test, I'll -- contrary to what I've heard some people argue, our ability to predict the SCB ahead of time from running our own process is actually quite limited. And you'll remember last year that even though we did predict an increase, we were off by almost a factor of 2 in terms of how big it wound up being, and that was a big surprise for the whole So we want to be quite humble about our ability to predict the SCB. Every bank is in a slightly different position, and every bank is competing for three months, six months, nine months, savings rates. And then you have the online banks. You've got treasury bills. You've got money market funds. There's no pricing power for the bank, but obviously, we all have different franchises. We're all in a slightly different position. Specifically, on the stress test, I'll -- contrary to what I've heard some people argue, our ability to predict the SCB ahead of time from running our own process is actually quite limited. And you'll remember last year that even though we did predict an increase, we were off by almost a factor of 2 in terms of how big it wound up being, and that was a big surprise for the whole So we want to be quite humble about our ability to predict the SCB.

Number three, there's a natural amount of internal migration of deposits to money funds, so you have to overlay that and that's embedded in our assumptions.

And number four, it's a competitive market. And, you know, it's entirely possible that people temporarily come to us and then over time decide to go elsewhere. So for all those reasons, you know, we're just being realistic about the stickiness of it. If I add, I wouldn't, there is, I would say categorically, there's no pricing power that the bigger banks have. Because if you look at the pricing, and we look at pricing sheets all the time.

Speaker 4: Specifically, on the stress test, I'll -- contrary to what I've heard some people argue, our ability to predict the SCB ahead of time from running our own process is actually quite limited. And you'll remember last year that even though we did predict an increase, we were off by almost a factor of 2 in terms of how big it wound up being, and that was a big surprise for the whole industry. So we want to be quite humble about our ability to predict the SCB.

Every bank is in a slightly different position and every bank is competing in three months, six months, nine months, savings rates And then you have the online banks. You got treasury bills. You got money market funds There's no pricing power for the bank, but obviously we all have different franchises. We're all in a slightly different position

Jeremy Barnum: And given the recent focus on commercial real estate, let me remind you that our office sector exposure is less than 10% of our portfolio and is focused on dense urban markets, and nearly two-thirds of our loans are multifamily, primarily in supply-constrained markets. Finally, our credit costs of $417 million included a net reserve bill of $379 million, predominantly driven by what I mentioned up front. And to complete our lines of business, AWM on page 7. Asset and wealth management reported a net income of $1.4 billion.

Speaker 4: Now, all fair points. Maybe just a follow-up on John's question about the lending environment. You talked about the industry likely pulling back. Are you changing your underwriting standards in any way? Just trying to think through it. Is there potential for some market share gains given your strengths in capital? But having said that, for right now, we are assuming it will be unchanged. There are some tailwinds in there through the OCI, but we believe there will likely be some offsets in harsher credit shocks in the numbers. So for planning purposes right now, we're assuming flat for SCB, and we'll know soon enough what the actual number is. But having said that, for right now, we are assuming it will be unchanged. There are some tailwinds through the OCI, but we believe there will likely be some offsets in harsher credit shocks in the numbers. So for planning purposes right now, we're assuming flat for SCB, and we'll know soon enough what the actual [ number is ] and liquidity or how are you thinking about the loan environment? I'd say very modestly, but you know we look at that all the time. Yeah, and we always say right away that we underwrite through the cycle, and I think notably we didn't loosen our underwriting standards when all the numbers looked crazy good during the pandemic, and so we're not going to, you know, overreact now and tighten unreasonably. Some of that correction happens naturally, you know, and liquidity or what are you thinking about the loan environment? I'd say very modestly, but you know we look at that all the time. Yeah, and we always say right, we underwrite through the cycle, and I think notably we didn't loosen our underwriting standards when all the numbers looked crazy good during the pandemic, and so we're not going to, like, overreact now and tighten unreasonably. Some of that correction happens naturally, you know.

Now, all fair points. Maybe just a follow-up on John's question on the lending environment. You talked about the industry likely pulling back. Are you changing your underwriting standards in any way? Just trying to think through, is there potential for some market share gains given your strengths of capital?

Speaker 4: But having said that, for right now, we are assuming it will be unchanged. There are some tailwinds through the OCI, but we believe there will likely be some offsets in harsher credit shocks in the numbers. So for planning purposes right now, we're assuming flat rates for SCB, and we'll know soon enough what the actual number is. But having said that, for right now, we are assuming it will be unchanged. There are some tailwinds in there through the OCI, but we believe there will likely be some offsets in harsher credit shocks in the numbers. So for planning purposes right now, we're assuming flat for SCB, and we'll know soon enough what the actual [ number is ] and liquidity, or how are you thinking about the loan environment? I'd say very modestly, but you know we look at that all the time. Yeah, and we always say right, we underwrite through the cycle, and I think notably we didn't loosen our underwriting standards when all the numbers looked crazy good during the pandemic, and so we're not going to, like, overreact now and tighten unreasonably. Some of that correction happens naturally, you know, and liquidity or how are you thinking about the loan environment? I'd say very modestly, but you know we look at that all the time. Yeah, and you know we always say right we underwrite through the cycle, and I think notably we didn't loosen our underwriting standards when all the numbers looked crazy good during the pandemic, and so we're not going to, you know, overreact now and tighten unreasonably. Some of that correction happens naturally, you know.

Speaker 4: But having said that, for right now, we are assuming it will be unchanged. There are some tailwinds through the OCI, but we believe there will likely be some offsets in harsher credit shocks in the numbers. So for planning purposes right now, we're assuming flat for SCB, and we'll know soon enough what the actual [ number is ] and liquidity or how are you thinking about the loan environment? I'd say very modestly, but you know we look at that all the time. Yeah, and we always say right away that we underwrite through the cycle, and I think notably we didn't loosen our underwriting standards when all the numbers looked crazy good during the pandemic, and so we're not going to, you know, overreact now and tighten unreasonably. Some of that correction happens naturally, you know, and liquidity or what are you thinking about the loan environment? I'd say very modestly, but you know we look at that all the time. Yeah, and we always say right, we underwrite through the cycle, and I think notably we didn't loosen our underwriting standards when all the numbers looked crazy good during the pandemic, and so we're not going to, like, overreact now and tighten unreasonably. Some of that correction happens naturally, you know.

and liquidity or how are you thinking about the loan environment? I'd say very modestly but you know we look at that all the time. Yeah and you know we always say right we underwrite through the cycle and I think notably we didn't loosen our underwriting standards when all the numbers looked crazy good during the pandemic and so we're not going to like you know overreact now and tighten unreasonably. Some of that correction happens naturally you know.

Jeremy Barnum: Pre-tax margin of 35%. Revenue of 4.8 billion was up 11% year on year driven by higher deposit margins on lower balances and an evaluation gain on our initial investment triggered by taking full ownership of our asset management joint venture in China, partially offset by the impact of lower average market levels on management fees and lower, and Sponsors of 3.1 billion ROP 8% year-on-year, predominantly driven by compensation, reflecting growth, and our private banking advisory team IR revenue-related compensation and the run rate impact of, For the quarter, net long-term inflows were $47 billion, led by fixed income.

Speaker 4: Sure. And then, just as a follow-up, if I heard you correctly, could you give us a little more color? I think you mentioned in building the loan loss reserve this quarter you identified some one-off credits. I don't know if that's how you said it. There are some larger credits. Were they commercial real estate oriented? Were they commercial? Was there any more color there? Sure. And then, just as a follow-up, if I heard you correctly, could you give us a little more color? I think you mentioned in building the loan loss reserve this quarter you identified some one-off credits. I don't know if that's how you said it. There are some larger credits. Were they commercial real estate oriented? Were they commercial? Was there any more color there? Credit metrics deteriorate for borrowers, whether they're in consumer or wholesale, and that might make them leave our pre-existing risk appetite. But we're not running around aggressively tightening standards right now. Credit metrics deteriorate for borrowers, whether they're in consumer or wholesale, and that might make them leave our pre-existing risk appetite. But we're not running around aggressively tightening standards right now. And then, just as a follow-up, if I heard you correctly, can you give us a little more color? I think you mentioned that in building the loan loss reserve this quarter, you identified some one-off credits. I don't know if that's how you said it, but there are some larger credits. Were they commercial real estate oriented? Or were they commercial? Any more color there? credit metrics deteriorate for borrowers, whether they're in consumer or wholesale, and that might make them leave our pre-existing risk appetite. But we're not running around aggressively tightening standards right now; credit metrics deteriorate for borrowers, whether they're in consumer or wholesale, and that might make them leave our pre-existing risk appetite.

credit metrics deteriorate for borrowers whether they're in consumer or wholesale and that might make them leave our pre-existing risk appetite. But we're not running around aggressively tightening standards right now.

Speaker 4: Okay, great. Thanks. The next question comes from the line of Gerard Cassidy with RBC Capital Markets. Please proceed. Thank you. Hi Jeremy, Thank you. Hi Jeremy,

Okay, great. Thanks. The next question comes from the line of Gerard Cassidy with RBC Capital Markets. You may proceed.

Speaker 4: No, it wasn't commercial real estate. It was just a couple of single-name items in the Corporate segment.

Speaker 4: In your comments about your CET1 ratio obviously coming in strong at 13.8%, you've got the G-SIP buffers obviously going up next year, and we have this stress test coming this summer or in June, the results of which maybe will lead to banks.

Speaker 4: No, it wasn't commercial real estate. It was just a couple of single-name items in the Corporate segment. Leveraged loan-type items or just regular corporate credits? Regular corporate credits. I'd rather not get into too much, as you know. [indiscernible]. Sorry. Thanks. Regular corporate credits. I'd rather not get into too many [indiscernible] bills. Sorry. Thanks. The next question comes from the line of Ebrahim Poonawala with Bank of America Merrill Lynch. The next question comes from the line of Ebrahim Poonawala with Bank of America Merrill Lynch, including yours having a higher stress capital buffer. Should we think about that? CET one ratio being by the end of the year, do you think? Leveraged loan-type items or just regular corporate credits? Regular corporate credits. I'd rather not get into too much, as you know. [indiscernible]. Sorry. Thanks. Regular corporate credits. I'd rather not get into too many [indiscernible] bills. Sorry. Thanks. The next question comes from the line of Ebrahim Poonawala with Bank of America Merrill Lynch.

Thank you. Hi Jeremy.

In your comments about your CET1 ratio obviously came in strong at 13.8% you've got the G-SIP buffers obviously going up next year and we have this the stress test coming this summer or in June the results which maybe will lead to banks.

Jeremy Barnum: On liquidity, we saw a net inflow of $93 billion, inclusive of our ongoing deposit migration. AUM of $3 trillion was up 2% year-on-year, and overall client assets of $4.3 trillion were up 6%, driven by continued net inflows into liquidity and long-term products. And finally, loans were down 1% quarter-on-quarter, driven by lower securities-based lending, while average deposits were down 5%.

Speaker 4: The next question comes from the line of Ebrahim Poonawala with Bank of America Merrill Lynch.

Speaker 4: Including yours having a higher stress capital buffer. Should we think about that? CET one ratio being by the end of the year, do you think?

Speaker 4: I guess maybe one question, Jeremy, you reminded us of relatively low office exposure for JPM, but obviously, you're big players in the CRE market. So give us a sense of when you look at the two pressure points on CRE, one, how much is oversupply, and that probably goes beyond office into apartments, how much of an issue is oversupply in the market as we think about the next few years going into a weakening And how much of a risk is higher for long-term gated properties in that if the central banks can't cut rates in the next year or 2, we will see a ton of more pain because of the refi wall that's coming up? I guess maybe one question, Jeremy, you reminded us of relatively low office exposure for JPM, but obviously, you're big players in the CRE market. So give us a sense of when you look at the two pressure points on CRE 1, how much is oversupply, and that probably goes beyond office into apartments, how much of an issue is oversupply in the market as we think about the next few years going into a weakening economy? And how much of a risk is higher for long gates in that if the central banks can't cut rates in the next year or 2, we will see a to Yeah, so a few things under Gerard. So, you know, we've previously said that we were targeting 13 and a half in the first quarter of 24 as a function of assuming an unchanged SCB, the increased G-SIB step, and operating with a 50 basis point buffer. So the point that Jamie made a second ago In light of the environment, fossil fuels for dry powder, you know, who knows how we'll tweak that, you know, going forward. But that's still our base case assumption. Specifically on the stress test, you know, contrary to what I've heard some people argue, our ability to predict the SCB ahead of time from running our own process is actually quite limited. And you'll remember last year that even though we did predict an increase, we were off by almost a factor of two in terms of how big it wound up being, and that was a big surprise for the whole industry. So we want to be quite humble about our ability to predict the SCB. But having said that, yeah, so a few things under Gerard. So you know we've previously said that we were targeting 13 and a half in the first quarter of 24 as a function of assuming an unchanged SCB, the increased G-SIB step, and operating with a 50 basis point buffer. So the point that Jamie made a second ago...

Including yours having a higher stress capital buffer. We should we think about that? CET one ratio being by the end of the year do you think?

Yeah so a few things under Gerard. So you know we've previously said that we were targeting 13 and a half in the first quarter of 24 as a function of assuming an unchanged SCB, the increased G-SIB step and operating with a 50 basis point buffer. So the point that Jamie made a second ago...

Jeremy Barnum: Learning to Corporate on page 8, corporate reported net income of $244 million, and revenue was $985 million compared to a net loss. Congratulations Class of 2021! Congratulations Class of 2021!

Speaker 4: In light of the environment, fossil fuels for dry powder, you know, who knows how we'll tweak that, you know, going forward. But that's still our base case assumption. Specifically on the stress test, you know, contrary to what I've heard some people argue, our ability to predict the SCB ahead of time from running our own process is actually quite limited. And you'll remember last year that even though we did predict an increase, we were off by almost a factor of two in terms of how big it wound up being, and that was a big surprise for the whole industry. So we want to be quite humble about our ability to predict the SCB. But having said that... Yes. So, Ebrahim, let me sort of respond narrowly in connection with our portfolio and our exposure, right? So really, the large majority of our commercial real estate exposure is multifamily lending in supply-constrained markets. And I think it's quite important to recognize the difference between that and sort of higher-end, higher price point, non-rent-controlled, not supply-constrained markets. Yes. Ebrahim, let me sort of respond narrowly in connection with our portfolio and our exposure, right? So really, the large majority of our commercial real estate exposure is multifamily lending in supply-constrained markets. And I think it's quite important to recognize the difference between that and sort of higher-end, higher price point, non-rent-controlled, not supply-constrained markets. For right now, we are assuming it will be unchanged. There are some tailwinds through the OCI, but we believe there will likely be some offsets and harsher credit shocks in the numbers. So for planning purposes right now, we're assuming flat for SCB, and we'll know soon enough what the actual number is. Sure. And then, just as a follow-up, if I heard you correctly, we'll be able to see the number of So our space is really quite different in that respect. And I think that's a big part of the reason the performance has been so good for so long. So, of course, we watch it very carefully, and we don't assume that past performance predicts future results here. But I think our multifamily lending portfolio is quite low risk in the scheme of things. For right now, we are assuming it will be unchanged. There are some tailwinds through the OCI, but we believe there will likely be some offsets and harsher credit shocks in the numbers. So for planning purposes right now, we're assuming flat for SCB, and we'll know soon enough what the actual number is. Sure. And then, just as a follow-up, if I heard you correctly, we'll be able to see the number of So our space is really quite different in that respect. And I think that's a big part of the reason the performance has been so good for so long. So, of course, we watch it very carefully, and we don't assume that past performance predicts future results here. But I think our multifamily lending portfolio is quite low risk in the scheme of things.

Jeremy Barnum: NII was $1.7 billion, up $2.3 billion year-on-year due to the impact of higher rates. NIR was a loss of $755 million, compared with a loss of $1.8 billion. I............, prior year, and included the net investment securities losses I mentioned. Expenses of $160 million were down $24 million year-on-year.

In light of the environment, fossil for dry powder, you know, who knows how we'll tweak that, you know, going forward. But that's still our base case assumption. Specifically on the stress test, you know, I'll, contrary to what I've heard some people argue, our ability to predict.

Speaker 4: Yes. So, Ebrahim, let me sort of respond narrowly in connection with our portfolio and our exposure, right? So really, the large majority of our commercial real estate exposure is multifamily lending in supply-constrained markets. And I think it's quite important to recognize the difference between that and sort of higher-end, higher price point, non-rent-controlled, not supply-constrained markets. Yes. Ebrahim, let me sort of respond narrowly in connection with our portfolio and our exposure, right? So really, the large majority of our commercial real estate exposure is multifamily lending in supply-constrained markets. And I think it's quite important to recognize the difference between that and sort of higher-end, higher price point, non-rent-controlled, not supply-constrained markets. For right now, we are assuming it will be unchanged. There are some tailwinds through the OCI, but we believe there will likely be some offsets and harsher credit shocks in the numbers. So for planning purposes right now, we're assuming flat for SCB, and we'll know soon enough what the actual number is. Sure. And then, just as a follow-up, if I heard you correctly, we'll be able to see the number of So our space is really quite different in that respect. And I think that's a big part of the reason the performance has been so good for so long. So, of course, we watch it very carefully, and we don't assume that past performance predicts future results here. But I think our multifamily lending portfolio is quite low risk in the scheme of things. For right now, we are assuming it will be unchanged. There are some tailwinds through the OCI, but we believe there will likely be some offsets and harsher credit shocks in the numbers. So for planning purposes right now, we're assuming flat for SCB, and we'll know soon enough what the actual number is. Sure. And then, just as a follow-up, if I heard you correctly, we'll be able to see the number of So our space is really quite different in that respect. And I think that's a big part of the reason the performance has been so good for so long. So, of course, we watch it very carefully, and we don't assume that past performance predicts future results here. But I think our multifamily lending portfolio is quite low risk in the scheme of things.

Speaker 4: Yes. Ebrahim, let me sort of respond narrowly in connection with our portfolio and our exposure, right? So really, the large majority of our commercial real estate exposure is multifamily lending in supply-constrained markets. And I think it's quite important to recognize the difference between that and sort of higher-end, higher price point, non-rent-controlled, not supply-constrained markets. For right now, we are assuming it will be unchanged. There are some tailwinds through the OCI, but we believe there will likely be some offsets and harsher credit shocks in the numbers. So for planning purposes right now, we're assuming flat for SCB, and we'll know soon enough what the actual number is. Sure. And then, just as a follow-up, if I heard you correctly, we'll be able to see the number of So our space is really quite different in that respect. And I think that's a big part of the reason the performance has been so good for so long. So, of course, we watch it very carefully, and we don't assume that past performance predicts future results here. But I think our multifamily lending portfolio is quite low risk in the scheme of things. For right now, we are assuming it will be unchanged. There are some tailwinds through the OCI, but we believe there will likely be some offsets and harsher credit shocks in the numbers. So for planning purposes right now, we're assuming flat for SCB, and we'll know soon enough what the actual number is. Sure. And then, just as a follow-up, if I heard you correctly, we'll be able to see the number of So our space is really quite different in that respect. And I think that's a big part of the reason the performance has been so good for so long. So, of course, we watch it very carefully, and we don't assume that past performance predicts future results here. But I think our multifamily lending portfolio is quite low risk in the scheme of things.

the SCB ahead of time from running our own process is actually quite limited. And you'll remember last year that even though we did predict an increase, we were off by almost a factor of two in terms of how big it wound up being and that was a big surprise for the whole industry. So we want to be quite humble about our ability to predict the SCB. But having said that...

Jeremy Barnum: The credit costs of $370 million were driven by reserve bills on a couple of Next, the outlook on page. OK. We now expect the 2023 NII and NII-X markets to be approximately $81 billion. This increase in guidance is primarily driven by lower rate paid assumptions across both consumer and wholesale in light of the expectation of Fed Cups later in the year as well as slightly higher card revolving balances. Note that, in line with my comments at the outset, recent deposit balances are not a meaningful contributor to the upward revision in the NII outlook, given that we expect a meaningful portion of the recent inflows to reverse later in the year. I would point out that this outlook still embeds significant reprice lags.

Speaker 4: So our space is really quite different in that respect, and I think that's a big part of the reason the performance has been so good for so long. So, of course, we watch it very carefully, and we don't assume that past performance predicts future results here. But I think our multifamily lending portfolio is quite low risk in the scheme of things.

For right now, we are assuming it will be unchanged. There are some tailwinds in there through the OCI, but we believe there will likely be some offsets and harsher credit shocks in the numbers. So for planning purposes right now, we're assuming flat for SCB and we'll know soon enough what the actual number is. Sure. And then just as a follow-up, if I heard you correctly, we'll be able to see the number of

Speaker 4: Can you give us a little more color? I think you mentioned in building the loan loss reserve this quarter that you identified some one-off credits. I don't know if that's how you said it, but there are some larger credits. Were they commercial real estate oriented with a commercial? Any more color there? Just to add also, housing is in short supply in America. So it's not massively oversupplied like you saw in 2008. Just add also that housing is in short supply in America, so it's not massively oversupplied like you saw in 2008. Yes. And then, in terms of office space, as you know, our exposure is quite small. Yes, Jamie has also mentioned all the refi dynamics that you mentioned too, are something that the office space is processing one way or the other. Our office exposure is quite modest, very concentrated in Class A buildings and sort of dense urban locations where the return to the office narrative is one of the drivers generally in favor of high occupancy. So again, launching it. There are obviously specific things here and there to pay attention to, but in the scheme of things, for us, not a big issue. Yes. And then, in terms of office space, as you know, our exposure is quite small. Yes, Jamie has also mentioned all the refi dynamics that you mentioned too, are something that the office space is processing one way or the other. Our office exposure is quite modest, very concentrated in Class A buildings and sort of dense urban locations where the return to the office narrative is one of the drivers generally in favor of high occupancy.

Speaker 4: Just to add also, housing is in short supply in America. So it's not massively oversupplied like you saw in 2008. Just add also that housing is in short supply in America, so it's not massively oversupplied like you saw in 2008. Yes. And then, in terms of office space, as you know, our exposure is quite small. Yes, Jamie has also mentioned all the refi dynamics that you mentioned too, are something that the office space is processing one way or the other. Our office exposure is quite modest, very concentrated in Class A buildings and sort of dense urban locations where the return to the office narrative is one of the drivers generally in favor of high occupancy. So again, launching it. There are obviously specific things here and there to pay attention to, but in the scheme of things, for us, not a big issue. Yes. And then, in terms of office space, as you know, our exposure is quite small. Yes, Jamie has also mentioned all the refi dynamics that you mentioned too, are something that the office space is processing one way or the other. Our office exposure is quite modest, very concentrated in Class A buildings and sort of dense urban locations where the return to the office narrative is one of the drivers generally in favor of high occupancy.

Speaker 4: Just add also that housing is in short supply in America, so it's not massively oversupplied like you saw in 2008. Yes. And then, in terms of office space, as you know, our exposure is quite small. Yes, Jamie has also mentioned all the refi dynamics that you mentioned too, are something that the office space is processing one way or the other. Our office exposure is quite modest, very concentrated in Class A buildings and sort of dense urban locations where the return to the office narrative is one of the drivers generally in favor of high occupancy. So again, launching it. There are obviously specific things here and there to pay attention to, but in the scheme of things, for us, not a big issue. Yes. And then, in terms of office space, as you know, our exposure is quite small. Yes, Jamie has also mentioned all the refi dynamics that you mentioned too, are something that the office space is processing one way or the other. Our office exposure is quite modest, very concentrated in Class A buildings and sort of dense urban locations where the return to the office narrative is one of the drivers generally in favor of high occupancy.

Can you give us a little more color? I think you mentioned in building the loan loss reserve this quarter you identified some One-off credits. I don't know if that's how you said it. There's some larger credits. Were they commercial real estate orientated with a commercial? Any more color there?

Speaker 4: No, it wasn't commercial real estate. It was just a couple of single-name items in the corporate segment. Leveraged loan-type items or just regular corporate credits? Probably regular corporate credits. I'd rather not get into too much detail. Okay. Very good. I'm sorry. Thanks.

Jeremy Barnum: We think a more sustainable NIIX market run rate in the medium term... well below this quarter's $84 billion, as well as below the $80 billion that is implied for the rest of the year by our full year guidance. And while we don't know exactly when this lower run rate will be reached, when it happens, we believe it will be around the mid-70s.

No, it wasn't commercial real estate. It was just a couple of single name items in the corporate segment. Leveraged loan type items or just regular corporate credits? Regular corporate credits. I'd rather not get into too much detail. Okay. Very good. I'm sorry. Thanks.

Speaker 4: Thank you. The next question comes from the line of Ibrahim Punawalo, with Bank of America Merrill Lynch. You may proceed. So again, I'm launching it. They're obviously specific things here and there to pay attention to, but in the scheme of things, for us, not a big issue. I guess maybe one question, Jeremy, you reminded us of the relatively low office exposure for JPM, but obviously, you're big players in the CRE market. Give us a sense of when you look at the two pressure points on CRE, one how much is oversupply, and that probably goes beyond office space into apartments. How much of an issue is oversupply in the market as we think about the next few years going into a weakening economy, and how much of a risk is higher for longer rates in that. Jeremy, you reminded us of the relatively low office exposure for JPM, but obviously, Give us a sense of when you look at the two pressure points on CRE, one how much is oversupply, and that probably goes beyond office space into apartments. How much of an issue is oversupply in the market as we think about the next few years going into a weakening economy, and how much of a risk is higher for longer rates in that.

Speaker 4: So again, launching it. There are obviously specific things here and there to pay attention to, but in the scheme of things, for us, not a big issue. I guess maybe one question, Jeremy, you reminded us of the relatively low office exposure for JPM, but obviously, you're big players in the CRE market. Give us a sense of when you look at the two pressure points on CRE, one how much is oversupply, and that probably goes beyond office into apartments, how much of an issue is oversupply in the market as we think about the next few years going into a weakening economy Like what are the other areas you're watching, if duration mismatch and bank balance sheet are one. CRE market being one. Are you worried -- worried about nonbanks that have grown exponentially over the last decade in terms of risks at the nonbanks if rates don't get cut? And if you can talk about the transmission mechanism of that coming back and hitting banks given the leverage that banks provide to the nonbanks?

Thank you. The next question comes from the line of Ibrahim Punawalo with Bank of America Merrill Lynch. You may proceed.

Jeremy Barnum: And of course, as we mentioned last quarter, this NII outlook remains highly sensitive to the uncertainty associated with the timing and the extent of deposit reprice, investment portfolio decisions, the dynamics of QT and RRP, the trajectory of Fed funds, as well as the broader macroeconomic environment, including its impact on loans. Separately, it's worth noting that markets on II may start to trend slightly positive, year as a function of mix and ratification Moving to expenses, and our outlook for 2023. Importantly, this is not currently the impact of the pending FDIC special assessment.

I guess maybe one question, Jeremy, you reminded us of the...

Speaker 4: And just as a follow-up, I think the other risk from higher for longer rates is just the ability of the economy and the financial markets to sustain a 5% plus Fed fund rate for a long period of time. Like what are the other areas you're watching, if duration mismatch and bank balance sheet are one. CRE market being one. Are you worried -- worried about nonbanks that have grown exponentially over the last decade in terms of risks at the nonbanks if rates don't get cut? And can you talk about the transmission mechanism of that coming back and hitting banks given the leverage that banks provide to nonbanks? And just as a follow-up, I think the other risk from higher for longer rates is just the ability of the economy and the financial markets to sustain a 5% plus Fed fund for a long period of time. Like what are the other areas you're watching, if duration mismatch and bank balance sheet are one. CRE market being one. Are you worried -- worried about nonbanks that have grown exponentially over the last decade in terms of risks at the nonbanks if rates don't get cut? And if you can talk about the transmission mechanism of that coming back and hitting banks given the leverage that banks provide to the nonbanks?

relatively low office exposure for JPM but obviously you're big players in the CRE market. Give us a sense of when you look at the two pressure points on CRE one how much is oversupply and that probably goes beyond office into apartments how much of an issue is oversupply in the market as we think about the next few years going into a weakening economy and how much of a risk is higher for longer rates in that

Speaker 4: If the central banks can't cut rates in the next year or two, we will see a ton of more pain because of the DeFi wall that's coming up.

If the central banks can't cut rates in the next year or two, we will see a ton of more pain because of the DeFi wall that's coming up.

Speaker 4: Yes, so let me respond narrowly in connection with our portfolio and our exposure. So really, the large majority of our commercial real estate is in the market, and state exposure is multifamily lending in supply-constrained markets. And I think it's quite important to recognize the difference between that and sort of higher end, higher price point, non-rent controlled, not supply constrained markets. So our space is really quite different in that respect, and I think that's a big part of the reason state exposure is multifamily lending in supply constrained markets. And I think it's quite important to recognize the difference between that and sort of higher end, higher price point, non-rent controlled, not supply constrained markets. So our space is really quite different in that respect, and I think that's a big part of the reason.

Operator: And on credit, we continue to expect the 2023 card to net charge off rate to be approximately 2.6%. So to wrap up, our strong results this quarter once again highlight the earnings power of this diversified franchise. We have benefited from our fortress principles and commitment to invest, which we will continue to do as we head into an increasingly uncertain environment. With that, operator, please open the line, from the line of Steve Chubak with Wolf Research. The restaurant is now open.

Yes, so let me respond narrowly in connection with our portfolio and our exposure. So really the large majority of our commercial real estate is in the market.

Speaker 4: Yes. So I'd like to answer that. So there is a risk of higher rates for longer. And don't just think of just the Fed funds rate because I think you should -- for our planning, I'd be thinking more about it could be 6 and don't -- and then think about the 5- and 10-year rates, which could be 5. And I think if those things happen. I'm not saying they're going to happen. I just think people should prepare for them. They saw what had just happened when rates went up beyond people's expectations. You had the guilt problem in London. You had some of the banks here. People need to be prepared for the potential of higher rates for longer.

state exposure is multifamily lending in supply constrained markets. And I think it's quite important to recognize the difference between that and sort of higher end, higher price point, non-ren controlled, not supply constrained markets. So our space is really quite different in that respect and I think that's a big part of the reason.

Speaker 4: So it's not massively oversupplied like you saw in 2008. Yeah, and then in terms of office space, as you note, our exposure is quite small. Yes, you know, Jamie has also mentioned all the refi dynamics that you mentioned too, which are something that the office space is processing one way or the other. Our office exposure is quite modest, very concentrated in Class A. Yeah, and then in terms of the office space, as you note, our exposure is quite small. Yes, you know, Jamie has also mentioned all the refi dynamics that you mentioned too, which is something that the office space is processing one way or the other. Our office exposure is quite modest, very concentrated in Class A.

is in short supply in America.

So it's not massively oversupplied like you saw in 2008.

Speaker 4: If and when that happens, it will address problems in the economy for those who are too exposed to floating rates or those who are too exposed to refi risk. That -- those exposures will be in multiple parts of the economy. So now, as I say to all of our clients, now would be the time to fix it. Do not put yourself in a position where that risk is excessive for your company, your business, your investment pools, et cetera. That's answer number one, buildings in sort of dense urban locations where, you know, the return to the office narrative is one of the drivers generally in favor of high occupancy. So again, watching it, there are obviously specific things here and there to pay attention to, but in the scheme of things for us, not a big issue. And just as a follow-up, I think the other risk from higher for longer rates is buildings in sort of dense urban locations where, you know, the return to the office narrative is one of the drivers is generally in favor of high occupancy. So again, watching it, there are obviously specific things here and there to pay attention to, but in the scheme of things for us, not a big issue. And just as a follow up, I think the other risk is from higher for longer rates.

Jamie Dimon: Hey, good morning. Jamie, I was actually hoping to get your perspective on how you see the recent developments with SVB impacting the regulatory landscape for the big banks. In your letter, you spent a fair amount of time highlighting the consequences of overly stringent capital requirements, the risk of steering more activities to the less regulated non-banks. What are some of the changes that you're scenario planning for, whether it's higher capital, an increase in FDIC assessment fees, and along those same lines, how you're thinking about the buyback given continued strong capital build, but a lot of macro uncertainty at the, Look, we're hoping that everyone just takes a deep breath and looks at what happened and the breadth and depth of regulations already in place. Obviously, when something happens like this, you should adjust and think about it.

Yeah, and then in terms of the office space, as you note, our exposure is quite small. Yes, you know, Jamie has also mentioned all the refi dynamics that you mentioned too are something that the office space is processing one way or the other. Our office exposure is quite modest, very concentrated in Class A.

buildings in sort of dense urban locations where, you know, the return to the office narrative is one of the drivers is generally.

Speaker 4: Number two is, it will not come back to JPMorgan, okay? While we do provide credit to what you call shadow banks, it is very -- we think it's very, very secure. That does not mean it won't come back to other credit providers. Number two is that it will not come back to JPMorgan, okay? While we do provide credit to what you call shadow banks, it is very -- we think it's very, very secure. That does not mean it won't come back to other credit providers. Number two is that it will not come back to JPMorgan, okay? While we do provide credit to what you call shadow banks, it is very -- we think it's very, very secure. That does not mean it won't come back to other credit providers.

in favor of high occupancy. So again, watching it, there are obviously specific things here and there to pay attention to, but in the scheme of things for us, not a big issue. And just as a follow up, I think the other risk from higher for longer rates.

Speaker 4: I think the ability of the economy and the financial markets to sustain a 5% plus Fed Fund for a long period of time. What are the other areas you're watching, duration mismatch on bank balance sheets being one, and the CRE market being another? Are you worried about non-banks that have grown exponentially over the last decade in terms of risks at these non-banks if rates don't get cut?

Speaker 4: The next question comes from the line of Mike Mayo with Wells Fargo Securities. Jeremy, you mentioned a degree of reintermediation into the lending markets. You said capital markets activity has gone into bank lending. And I'm just wondering, as part of your $7 billion increased NII guide, are you assuming better loan spreads? And on the topic of loan pricing, why aren't your credit card yields going higher than where they are today? Jeremy, you mentioned a degree of reintermediation into the lending markets. You said capital markets activity has gone into bank lending. And I'm just wondering, as part of your $7 billion increased NII guide, are you assuming better loan spreads? And on the topic of loan pricing, why aren't your credit card yields going higher than where they are today? Yes, Mike. So on the -- I think, yes, you're referring to my comments that I made in the Commercial Bank about the fact that the larger corporate segment within the Commercial Bank that would generally have access to capital markets but also access to bank lending that the margin is choosing to draw down on revolvers right now rather than access to capital markets.

I think is the ability of the economy, the financial markets to sustain a 5% plus Fed fund for a long period of time. What are the other areas you're watching, duration mismatch on bank balance sheets being one, CRE market being one? Are you worried about non-banks that have grown exponentially over the last decade in terms of risks at the non-banks if rates don't get cut?

Speaker 4: The next question comes from the line of Mike Mayo with Wells Fargo Securities. Jeremy, you mentioned a degree of reintermediation into the lending markets. You said capital markets activity has gone to bank lending. And I'm just wondering, as part of your $7 billion increased NII guide, are you assuming better loan spreads? And on the topic of loan pricing, why aren't your credit card yields going higher than where they are today? Jeremy, you mentioned a degree of reintermediation into the lending markets. You said capital markets activity has gone to bank lending. And I'm just wondering, as part of your $7 billion increased NII guide, are you assuming better loan spreads? And on the topic of loan pricing, why aren't your credit card yields going higher than where they are today? Yes, Mike. So on the -- I think, yes, you're referring to my comments that I made in the Commercial Bank about the fact that the larger corporate segment within the Commercial Bank that would generally have access to capital markets but also access to bank lending that the margin is choosing to draw down on revolvers right now rather than access to capital markets.

Jamie Dimon: So, I think down the road, there may be some limitations on health and maturity, maybe more TLAC for certain types of banks and more scrutiny on interest rate exposure and stuff like that. But it doesn't have to be a revamp of the whole system. It's just recalibrating things the right way. I think it should be done knowing what you want the outcome to be.

Jamie Dimon: The outcome you should want is very strong community and regional banks. And certain actions are taken which are drastic, it could actually make them weaker. So, that's all it is. We do expect higher capital from Basel IV. And obviously, there's going to be an FDI assessment. That'll be what it is.

Speaker 4: Yes, Mike. So on the -- I think, yes, you're referring to my comments that I made in the Commercial Bank about the fact that the larger corporate segment within the Commercial Bank that would generally have access to capital markets but also access to bank lending that the margin is choosing to draw down on revolvers right now rather than access to capital markets.

Speaker 4: I think you should, you know, for our planning, I'd be thinking more about it could be six and don't and then think about the five and ten-year rate, which could be five. And I think if those things happen, I'm not saying they're going to happen; I just think people should prepare for them. They saw what just happened when rates went up beyond people's expectations. You had the gilt problem in London; you had some of the banks here. People need to be prepared for the potential of higher rates for longer. If and when that happens, it will undo problems in the economy. And I think if those things happen, I'm not saying they're going to happen; I just think people should prepare for them. They saw what just happened when rates went up beyond people's expectations. You had the gilt problem in London; you had some banks here. People need to be prepared for the potential of higher rates for longer. If and when that happens, it will undo problems in the economy.

I think you should, you know, for our planning, I'd be thinking more about it could be six and don't and then think about the five and ten year rate which could be five.

And I think if those things happen, I'm not saying they're going to happen, I just think people should prepare for them. They saw what just happened when rates went up beyond people's expectations. You had the gilt problem in London, you had some of the banks here. People need to be prepared for the potential of higher rates for longer. If and when that happens, it will undress problems in the economy.

Jamie Dimon: And just in terms of appetite for the buyback, just given some of the elevated macro uncertainty. Well, we've told you, I think we've told you that we're kind of pensing in $12 billion for this year. But obviously, capital is more than that.

Speaker 4: That is not a particularly meaningful driver of the increase in NII guidance. There are a lot of other odds and ends in there, but the major drivers are the ones that I called out. And to be honest, I haven't actually, specifically, checked what's happening with card yields. I would imagine that they've gone up a little bit in line with rates. But I don't know. We should follow up with those who are too exposed to floating rates or those who are too exposed to refi risk. Those exposures will be in multiple parts of the economy, for those who are too exposed to floating rates or those who are too exposed to refi risk. So now that I say to all of our clients, now would be the time to fix it. Do not put yourself in a position where that risk is excessive for your company, your business, your investment pools, etc.

Jamie Dimon: But, And we did a little bit of buyback this quarter. You know, we're going to wait and see. You know, we don't mind keeping our powder dry. And you've seen us do that with investment portfolios, and we're also willing to do it with capital. That's great. I'll hop back in the queue.

for those who are too exposed to floating rates, or those who are too exposed to refi risk. Those exposures will be in multiple parts of the economy.

Operator: Thanks so much for taking my question. Thank you. The next question comes from the line of Ken Usdin with Jeffrey. You may proceed. Hey, thanks. Good morning.

Speaker 4: All right. And then I have one for you, Jamie. I guess taking the 10,000-foot level, I guess, when you look at asset liability management or AUM, you could call this nightmare on Elm Street, and you've seen some big problems at banks. And I guess, how would you evaluate yourself, I guess, with this $7 billion higher NII guide, which is probably good? But to what degree are you willing to sacrifice JPM shareholder money to help rescue problem banks that do not get their asset liability management correctly? All right. And then one for you, Jamie. I guess, taking the 10,000-foot level, when you look at asset liability management or AUM, you could call this nightmare on Elm Street, and you've seen some big problems at banks. And I guess, how would you evaluate yourself, I guess, with this $7 billion NII guide? Probably not very well. But to what degree are you willing to sacrifice JPM shareholder money to help rescue problem banks that do not get their asset liability management correctly? All right. And then one for you, Jamie. I guess, taking the 10,000-foot level, when you look at asset liability management or AUM, you could call this nightmare on Elm Street, and you've seen some big problems at banks. And I guess how would you evaluate yourself, I guess, with this $7 billion NII guide? Probably not very good. But to what degree are you willing to sacrifice JPM shareholder money to help rescue problem banks that do not get their asset liability management correctly?

So now that I say to all of our clients now would be the time to fix it Do not put yourself in a position where that risk is excessive for your company, your business, your investment pools, etc.

Jeremy Barnum: Hey, Jeremy, I was just wondering if you could give us a little bit more detail on those lower funding expectation points that you made, just in terms of, you know, is it because of what you can offer the client that might allow you to kind of keep that beta lower? And maybe you can just kind of wrap it into what your overall beta expectations are in that revised update. Thank you.

Speaker 4: That's answer number one. Number two is that it will not come back to JP Morgan.

Speaker 4: While we do provide credit to what you call shadow banks, we think it's very, very secure. That does not mean it won't come back to other credit providers, but providing credit to what you call shadow banks is very, we think it's very, very secure. That does not mean it won't come back to other credit providers. Got it, very helpful, thank you, provide credit to what you call shadow banks. It is very, we think it's very, very secure. That does not mean it won't come back to other credit providers. Got it. Very helpful. Thank you.

That's answer number one. Number two is it will not come back to JP Morgan.

While we do provide credit to what you call shadow banks, we think it's very, very secure. That does not mean it won't come back to other credit providers.

provide credit to what you call shadow banks, it is very, we think it's very, very secure. That does not mean it won't come back to other credit providers. Got it, very helpful, thank you.

Speaker 4: The next question comes from the line of Mike Mayo with Wells Fargo Securities. You may proceed. Well, there are 2 really different questions. So we've been quite cautious on interest rates for quite a while and how we invest in our portfolio, what our expectations are, and our stress testing. The stress test -- the CCAR stress test, as you know, had rates going down. I always looked at rates going up and prepared to whether or not anything was going to happen. So we've been quite conservative ourselves, and we don't mind continuing to do that because I remind people that having excess capital isn't losing it. It's kind of earnings in store. You get to deploy it later and maybe at a more opportune time when the time comes. Well, there are two really different questions. So we've been quite cautious on interest rates for quite a while and how we invest in our portfolio, what our expectations are, and our stress testing. The stress test -- the CCAR stress test, as you know, had rates going down. I always looked at rates going up and prepared to whether or not anything was going to happen. So we've been quite conservative ourselves, and we don't mind continuing to do that because I remind people that having excess capital isn't losing it. It's kind of earnings in store. You get to deploy it later and maybe at a more opportune time when the time comes. Hey Jeremy, you mentioned a degree of reintermediation into the lending markets. She said capital markets, activity has gone to bank lending, and I'm just wondering, as part of your seven billion dollar increase, and I I guide, are you assuming better loan spreads, and on the topic of loan pricing, why aren't your credit card yields going higher than where they are today? Thanks.

Jeremy Barnum: Yeah, sure. So let me just summarize the drivers of the change in outlook. So the primary driver really is lower deposit rate paid expectations across both consumer and wholesale, which, as you mentioned, is driven by a couple of factors. So the change in the rate environment, you know, with cuts coming sooner in the outlook, does take some pressure off the reprice. And as you said, we're getting a lot of positive feedback from the field on our product offerings; the short-term CD, in particular, is really getting a lot of positive feedback from our folks in the branches; it's been very attractive to yield-seeking customers. So that's kind of working well.

Speaker 4: Well, there are 2 really different questions. So we've been quite cautious on interest rates for quite a while and how we invest in our portfolio, what our expectations are, and our stress testing. The stress test -- the CCAR stress test, as you know, had rates going down. I always looked at rates going up and prepared to whether or not anything was going to happen. So we've been quite conservative ourselves, and we don't mind continuing to do that because I remind people that having excess capital isn't losing it. It's kind of earnings in store. You get to deploy it later and maybe at a more opportune time when the time comes.

Speaker 4: Well, there are two really different questions. So we've been quite cautious on interest rates for quite a while and how we invest in our portfolio, what our expectations are, and our stress testing. The stress test -- the CCAR stress test, as you know, had rates going down. I always looked at rates going up and prepared to whether or not anything was going to happen. So we've been quite conservative ourselves, and we don't mind continuing to do that because I remind people that having excess capital isn't losing it. It's kind of earnings in store. You get to deploy it later and maybe at a more opportune time when the time comes. Hey Jeremy, you mentioned a degree of reintermediation into the lending markets. She said capital markets, activity has gone to bank lending, and I'm just wondering, as part of your seven billion dollar increase, and I I guide, are you assuming better loan spreads, and on the topic of loan pricing, why aren't your credit card yields going higher than where they are today? Thanks.

The next question comes from the line of Mike Mayo with Wells Fargo Securities. You may proceed.

Speaker 4: Hey Jeremy, you mentioned a degree of reintermediation to the lending markets. She said capital markets, activity has gone to bank lending and I'm just wondering as part of your seven billion dollar increase and I I guide are you assuming better loan spreads and on the topic of loan pricing why aren't your credit card yields going higher than where they are today thanks Yeah, Mike, so on the, and so I think you're referring to my comments that I made in the commercial bank about the fact that the larger corporate segment within the commercial bank that would generally have access to capital markets but also access to bank lending.

Hey Jeremy, you mentioned a degree of reintermediation to the lending markets. She said capital markets.

activity has gone to bank lending and I'm just wondering as part of your seven billion dollar increase and I I guide are you assuming better loan spreads and on the topic of loan pricing why aren't your credit card yields going higher than where they are today thanks

Speaker 4: Yeah, Mike, so on the, and so I think you're referring to my comments that I made in the commercial bank about the fact that the larger corporate segment within the commercial bank would generally have access to capital markets but also access to bank lending.

Jeremy Barnum: And then on the asset side, we are seeing a little bit higher car turnover, which is helping. And I'll just remind you that at a conference in February, I suggested that we were already starting to feel like some of the uncertainties we mentioned when giving the guidance had started all moving in the same direction. And that was one of the things that contributed to the higher vision, like all the uncertainty kind of went the same way. But as Jamie has pointed out, like, you know, those uncertainties are all still there. We highlight them on this page and as we look forward to this year and into next year in the medium term.

Yeah, Mike, so on the, and so I think you're referring to my comments that I made in the commercial bank about the fact that the larger corporate segment within the commercial bank that would generally have access to capital markets but also access to bank lending.

Speaker 4: And we're not -- look, we're -- we'd like to help the system when it needs help if we can reasonably do so. And we're not the only ones. You saw a lot of banks do that, and I was proud of them. I was proud of them. I think all of us did the right thing, whether, ultimately, it works out or not; you could second guess that when it happens. But the fact is, I think people want to help the system, and this whole banking theme is bad for banks, at the margin, are choosing to draw down on revolvers right now rather than access the capital markets. That is not a particularly meaningful driver of the increase in NII guidance. There are a lot of other odds and ends in there, but the major drivers are the ones that I called out. To be honest, I haven't actually specified the actual checked what's happening with card yields. I would imagine that they've gone up a little bit in line with rates, but I don't know. We should follow up. One for you, Jamie, at the margin is choosing to draw down on revolvers right now rather than access the capital markets. That is not a particularly meaningful driver of the increase in NII guidance. There are a lot of other odds and ends in there, but the major drivers are the ones that I called out. To be honest, I haven't actually specified the actual checked what's happening with card yields. I would imagine that they've gone up a little bit in line with rates, but I don't know. We should follow up. One for you, Jamie.

at the margin is choosing to draw down on revolvers right now rather than access the capital markets. That is not a particularly meaningful driver of the increase in NII guidance. There's a lot of odds and ends in there, but the major drivers are the ones that I called out. To be honest, I haven't actually specified the actual

Speaker 4: I would imagine that they've gone up a little bit in line with inflation, but I don't know. We should follow up. Alright, and then one for you, Jamie. I guess. Taking the 10,000 foot level, I guess when you look at asset liability management or ALM, you could call this nightmare on Alms Street, and you've seen some big problems at banks. How would you evaluate yourself with this $7 billion higher NIAID guide? And I knew that the second I saw the headline. And then there is Credit Suisse. We want healthy community banks. We want healthy regional banks. We want to help them get through this. We have -- remember, Mike, as you pointed out, we have the best financial system the world has ever seen. That does not mean it won't have problems. It doesn't mean there shouldn't be changes made, but I think it's reasonable for people to help each other in times of need. And we all did that during -- all of us did that during COVID. All of us did that -- if you could, those you could did it during the great financial crisis, and I would expect people to do that going forward. And I knew that the second I saw the headline. And then you have Credit Suisse. We want healthy community banks. We want healthy regional banks. We want to help them get through this. We have -- remember, Mike, as you pointed out, we have the best financial system the world has ever seen. That does not mean it won't have problems. It doesn't mean there shouldn't be changes made, but I think it's reasonable for people to help each other in times of need. And we all did that during -- all of us did that during COVID. If you could, those you could did it during the great financial crisis, and I would expect people to do that going forward. It probably is good, but to what degree are you willing to sacrifice JPM shareholder money to help rescue problem banks that did not get their asset liability management correctly? There are two really different questions, so we've been quite cautious on interest rates for quite a while, how we invest our portfolio, what our expectations are, our stress testing. You know, the stress is the the stress test, the seed car stress test, as you know, had rates going down. I always looked at rates going up and prepared for whether or not you think it's going to happen. So we've been quite conservative ourselves. And we don't mind continuing to do that because I remind people it probably is good, but to what degree are you willing to sacrifice JPM shareholder money to help rescue problem banks that did not get their asset liability management correctly? There are two really different questions, so we've been quite cautious on interest rates for quite a while, how we invest our portfolio, what our expectations are, and our stress testing. You know, the stress is the stress test; the seed car stress test, as you know, had rates going down. I always looked at rates going up and being prepared for whether or not you think it's going to happen. So we've been quite conservative ourselves, and we don't mind continuing to do that because I remind people...

Jamie Dimon: Yeah. And as a follow-up on the point about rate expectations coming in now and potentially getting cut sooner, how do you take a look at what that might mean just for the broader economy? Is that, do you think it's more just because inflation is coming down? Do you think it's because the Fed's just got to react to an even tougher economy and still some of those storm clouds that might be out there? Just kind of, you know, just your general thinking about the other readthroughs of what, you know, lower rates quicker, you know, will mean for the broader economy. Well, first of all, I don't quite believe it.

checked what's happening with card yields. I would imagine that they've gone up a little bit in line with rates but I don't know. We should follow up. One for you Jamie.

I would imagine that they've gone up a little bit in line with rates, but I don't know. We should follow up. Alright, and then one for you, Jamie. I guess.

Speaker 4: Taking the 10,000 foot level, I guess when you look at asset liability management or ALM, you could call this nightmare on Alms Street, and you've seen some big problems at banks. How would you evaluate yourself with this $7 billion higher NIAID guide? And I knew that the second I saw the headline. And then there is Credit Suisse. We want healthy community banks. We want healthy regional banks. We want to help them get through this. We have -- remember, Mike, as you pointed out, we have the best financial system the world has ever seen. That does not mean it won't have problems. It doesn't mean there shouldn't be changes made, but I think it's reasonable for people to help each other in times of need. And we all did that during -- all of us did that during COVID. All of us did that -- if you could, those you could did it during the great financial crisis, and I would expect people to do that going forward. And I knew that the second I saw the headline. And then you have Credit Suisse. We want healthy community banks. We want healthy regional banks. We want to help them get through this. We have -- remember, Mike, as you pointed out, we have the best financial system the world has ever seen. That does not mean it won't have problems. It doesn't mean there shouldn't be changes made, but I think it's reasonable for people to help each other in times of need. And we all did that during -- all of us did that during COVID. If you could, those you could did it during the great financial crisis, and I would expect people to do that going forward. It probably is good, but to what degree are you willing to sacrifice JPM shareholder money to help rescue problem banks that did not get their asset liability management correctly? There are two really different questions, so we've been quite cautious on interest rates for quite a while, how we invest our portfolio, what our expectations are, our stress testing. You know, the stress is the the stress test, the seed car stress test, as you know, had rates going down. I always looked at rates going up and prepared for whether or not you think it's going to happen. So we've been quite conservative ourselves. And we don't mind continuing to do that because I remind people it probably is good, but to what degree are you willing to sacrifice JPM shareholder money to help rescue problem banks that did not get their asset liability management correctly? There are two really different questions, so we've been quite cautious on interest rates for quite a while, how we invest our portfolio, what our expectations are, and our stress testing. You know, the stress is the stress test; the seed car stress test, as you know, had rates going down. I always looked at rates going up and being prepared for whether or not you think it's going to happen. So we've been quite conservative ourselves, and we don't mind continuing to do that because I remind people...

Speaker 4: And I knew that the second I saw the headline. And then you have Credit Suisse. We want healthy community banks. We want healthy regional banks. We want to help them get through this. We have -- remember, Mike, as you pointed out, we have the best financial system the world has ever seen. That does not mean it won't have problems. It doesn't mean there shouldn't be changes made, but I think it's reasonable for people to help each other in times of need. And we all did that during -- all of us did that during COVID. If you could, those you could did it during the great financial crisis, and I would expect people to do that going forward. It probably is good, but to what degree are you willing to sacrifice JPM shareholder money to help rescue problem banks that did not get their asset liability management correctly? There are two really different questions, so we've been quite cautious on interest rates for quite a while, how we invest our portfolio, what our expectations are, our stress testing. You know, the stress is the the stress test, the seed car stress test, as you know, had rates going down. I always looked at rates going up and prepared for whether or not you think it's going to happen. So we've been quite conservative ourselves. And we don't mind continuing to do that because I remind people...

Speaker 4: And I knew that the second I saw the headline. And then there is Credit Suisse. We want healthy community banks. We want healthy regional banks. We want to help them get through this. We have -- remember, Mike, as you pointed out, we have the best financial system the world has ever seen. That does not mean it won't have problems. It doesn't mean there shouldn't be changes made, but I think it's reasonable for people to help each other in times of need. And we all did that during -- all of us did that during COVID. All of us did that -- if you could, those you could did it during the great financial crisis, and I would expect people to do that going forward. And I knew that the second I saw the headline. And then you have Credit Suisse. We want healthy community banks. We want healthy regional banks. We want to help them get through this. We have -- remember, Mike, as you pointed out, we have the best financial system the world has ever seen. That does not mean it won't have problems. It doesn't mean there shouldn't be changes made, but I think it's reasonable for people to help each other in times of need. And we all did that during -- all of us did that during COVID. If you could, those you could did it during the great financial crisis, and I would expect people to do that going forward. It probably is good, but to what degree are you willing to sacrifice JPM shareholder money to help rescue problem banks that did not get their asset liability management correctly? There are two really different questions, so we've been quite cautious on interest rates for quite a while, how we invest our portfolio, what our expectations are, our stress testing. You know, the stress is the the stress test, the seed car stress test, as you know, had rates going down. I always looked at rates going up and prepared for whether or not you think it's going to happen. So we've been quite conservative ourselves. And we don't mind continuing to do that because I remind people it probably is good, but to what degree are you willing to sacrifice JPM shareholder money to help rescue problem banks that did not get their asset liability management correctly? There are two really different questions, so we've been quite cautious on interest rates for quite a while, how we invest our portfolio, what our expectations are, and our stress testing. You know, the stress is the stress test; the seed car stress test, as you know, had rates going down. I always looked at rates going up and being prepared for whether or not you think it's going to happen. So we've been quite conservative ourselves, and we don't mind continuing to do that because I remind people...

Taking the 10,000 foot level, I guess when you look at asset liability management or ALM, you could call this nightmare on Alms Street and you've seen some big problems at banks. How would you evaluate yourself with this $7 billion higher NIAID guide?

Jamie Dimon: So, you know, the rate curve, the Fed has the rate curve, the forward short-term rate curve, almost 1% higher than what the market has. So, you know, one of the things you got to always prepare for is it could be anything; we don't know what the rate curve is going to be in a year. And so we're quite cautious about that and quite thoughtful about that. You know, obviously, the short-term read is higher recessionary risk, but you know, and inflation is coming down. So I think inflation will come down a little bit. It could easily be stickier than people think, and therefore the rate curve will have to go up a little bit. Okay, thank you very much. Thank you. The next question comes from the line of John McDonald with Autonomous Research.

probably is good but to what degree are you willing to sacrifice JPM shareholder money to help rescue problem banks that did not get their asset liability management correctly? There's two really different questions so we've been quite cautious on interest rates.

for quite a while, how we invest our portfolio, what our expectations are, our stress testing. You know, the stress is the the stress test, the seed car stress test, as you know, had rates going down. I always looked at rates going up and being prepared to whether or not you think it's going to happen. So we've been quite conservative ourselves. And we don't mind continuing to do that because I remind people...

Speaker 4: Jamie, your CEO letter said the banking crisis isn't over. So what do you mean by that? Or was that dated 2 weeks later, or are you talking contagion or what? Jamie, your CEO letter said the banking crisis isn't over. So what do you mean by that? Or was that dated 2 weeks later? Or are you talking contagion or what? that having excess capital doesn't mean you haven't lost it. It's a kind of earnings in store. You get to deploy it later and maybe at a more opportune time when the time comes. And we're not, you know, look at us. We have excess capital; you haven't lost it. It's kind of earnings in store. You get to deploy it later and maybe at a more opportune time when the time comes. And we're not, you know, look we... Jamie, your CEO letter said the banking crisis isn't over. So what do you mean by that? Or was that dated 2 weeks later or talking about contagion or what? By having excess capital, you haven't lost it. It's kind of earnings in store. You get to deploy it later and maybe at a more opportune time when the time comes. And we're not, you know, look we...

Speaker 4: So it's just -- the number of banks off-site, you can count in your hands in terms of like too much intra exposure, too much ATM, too much uninsured deposits. And so there may be additional bank deposits -- I mean, bank failure, something like that, which we don't know. But you'll see next week, regional banks have pretty good numbers. A lot of people are going to have to -- can take actions to remediate some of the issues they may have going forward. So it's just -- the number of banks off-site, you can count in your hands in terms of like too much intra exposure, too much ATM, too much uninsured deposits. And so there may be additional bank deposits -- I mean, bank failure, something like that, which we don't know. But you'll see next week, regional banks have pretty good numbers. A lot of people are going to have to -- can take actions to remediate some of the issues they may have going forward. So it's just -- the number of banks off-site, you can count in your hands in terms of like too much intra exposure, too much ATM, too much uninsured deposits. And so there may be additional bank deposits -- I mean, bank failure, something like that, which we don't know. But you'll see next week, regional banks have pretty good numbers. A lot of people are going to have to -- can take actions to remediate some of the issues they may have going forward.

Jeremy Barnum: You may proceed. Jeremy, wanted to follow up again on the drivers of the NAI revision and the lower rates paid assumption. You mentioned the Fed cuts coming sooner and positive feedback on the customer offers. What about the March events?

that having excess capital, you haven't lost it. It's kind of earnings in store. You get to deploy it later and maybe at a more opportune time when the time comes. And we're not, you know, look we...

Speaker 4: We like to help the system when it needs help if we can reasonably help it. And we're not the only ones. You saw a lot of banks do that, and I was proud of them. I was proud of all of them. I think all of us did the right thing, whether it ultimately works out or not. Well, you can second guess that when it happens, but the fact is, I think people want to help the system. And this whole banking thing was bad for banks, and I knew that the second I saw the headline. And you have Credit Suisse. You've already seen things calm down quite a bit, particularly in deposit flows. [ Warren Buff ] was on TV talking about that he would bet $1 million, I don't know if you saw that, that no depositor will lose money in America. It's really the bits on modern is a very bright man. So this crisis is not 2008; it will pass. And the one thing I pointed out is that when I answered the question just before about interest rates, people need to be prepared. They shouldn't pray that they won't go up. They should prepare for them going up. And if it doesn't happen, serendipity.

We like to help the system when it needs help if we can reasonably. And we're not the only ones. You saw a lot of banks do that. And I was proud of them. I was proud of all of them. I think all of us did the right thing, whether ultimately it works out or not. Well, you can second guess that when it happens. But the fact is, I think people want to help the system. And this whole banking thing was bad for banks. And I knew that the second I saw the headline. And you have Credit Suisse.

Jeremy Barnum: Did the bank failures there that happened in March, in your view, did they slow the reprice intensity because folks are moving for other reasons, or did they intensify it industry-wide because smaller banks have to reprice to keep their deposits? How do those events influence your view of the reprice? Yeah, John, it's a really good question.

Speaker 4: You've already seen things calm down quite a bit, particularly in deposit flows. [ Warren Buff ] was on TV talking about that he would bet $1 million, I don't know if you saw that, that no depositor would lose money in America. It's really the bits on modern is a very bright man. So this crisis is not 2008. It will pass. And the one thing I pointed out is that when I answered the question just before about interest rates, people need to be prepared. They shouldn't pray that they don't go up; they should prepare for them to go up. And if it doesn't happen, serendipity.

Speaker 4: You've already seen things calm down quite a bit, particularly in deposit flows. Warren Buffett was on TV talking about how he would bet $1 million, I don't know if you saw that, that no depositor would lose money in America. That he's going to bid all money, of course, is a very bright man. So this crisis is not 2008. It will pass. And the one thing I pointed out is that when I answered the question just before about interest rates, people need to be prepared. They shouldn't pray that they don't go up; they should prepare for them to go up. And if it doesn't happen, serendipity. We want healthy community banks. We want healthy regional banks, and we want to help them get through this. We have, you know, remember, Mike, as you pointed out, we have the best financial system the world's ever seen. That does not mean it won't have problems. It doesn't mean there shouldn't be changes made, but I think it's reasonable for people to help each other in times of need, and we all did that during COVID. All of us did that during COVID. All of us did that, if we could, those who could did it during the great financial crisis. And I would expect people to do that going forward. Hey Jamie, your CEO letter said the banking crisis isn't over. So what do you mean by that, or was that dated two weeks later? Or are you talking contagion or what? So it's just The next question comes from the line between Betsy Graseck and Morgan Stanley. We want healthy community banks. We want healthy regional banks. We want to help them get through this. We have, you know, remember, Mike, as you pointed out, we have the best financial system the world's ever seen. That does not mean it won't have problems. It doesn't mean there shouldn't be changes made, but I think it's reasonable for people to help each other in times of need. And we all did that during COVID. We all did that during COVID. All of us did that, if you could, those who could did it during the great financial crisis. And I would expect people to do that going forward. Hey Jamie, your CEO letter said the banking crisis isn't over. So what do you mean by that, or was that dated two weeks later? or talking contagion or what, so it's just The next question comes from the line of Betsy Graseck with Morgan Stanley.

Jamie Dimon: And we've obviously thought about that. But as we sit here today, I guess I have two answers. One is, it doesn't, it's not meaningfully affecting our current outlook; we don't see it as a major driver. And I think in terms of the larger dynamics that you lay out, it's just a little too early to tell. But from where we are right now, the base case is no. Okay.

We want healthy community banks. We want healthy regional banks. We want to help them get through this. We have, you know, remember, Mike, as you pointed out, we have the best financial system the world's ever seen. That does not mean it won't have problems. It doesn't mean there shouldn't be changes made, but I think it's reasonable for...

Jamie Dimon: And then I wanted to ask Jamie, there's a narrative out there that the industry could see a credit crunch, banks are going to stop lending, even Jay Powell mentioned that as a risk. Do you see that in terms of anything you look at in terms of lending? And is that a reaction that makes sense that banks might be retrenching a lot here? Do you worry about that for the economy in terms of the credit crunch? Thanks.

people to help each other in times of need. And we all did that during COVID. All of us did that during COVID. All of us did that, if you could, those who could did it during the great financial crisis. And I would expect people do that going forward.

Hey Jamie, your CEO letter said the banking crisis isn't over. So what do you mean by that or was that dated two weeks later? or talking contagion or what so it's just

Speaker 4: The next question comes from the line of Betsy Graseck with Morgan Stanley. So the number of banks' offsides you can count on your hands in terms of like too much insured exposure, too much ATM, too much uninsured deposits. And so there may be additional bank deposits, I mean bank failures, something like that, which we don't know. But you're going to see next week that regional banks have pretty good numbers. A lot of people are gonna, you know, can take actions to, you know, alleviate some of the issues they may have going forward. I do want to unpack the question here on the possibility of higher for longer rates and how that impacts you in your nonmarkets NII. I do want to unpack the question here on the possibility of higher for longer rates and how that impacts you in your nonmarkets NII... I do want to unpack the question here on the possibility of higher for longer rates and how that impacts you in your nonmarkets NII Betsy, did we just lose you? I feel like you just dropped.

Speaker 4: So the number of banks' offsides you can count on your hands in terms of like too much insured exposure, too much ATM, too much uninsured deposits. And so there may be additional bank deposits, I mean bank failures, something like that, which we don't know. But you're gonna see next week, regional banks have pretty good numbers. A lot of people are gonna, you know, can take actions to, you know, alleviate some of the issues they may have going forward. I do want to unpack the question here on the possibility of higher for longer rates and how that impacts you in your nonmarkets NII.

Jamie Dimon: I wouldn't use the word credit crunch if I were you. Obviously, there's going to be a little bit of tightening. And most of that will be around certain real estate things. You've heard that from, you know, real estate investors already. So, you know, I just look at that as a kind of a thumb on the scale; it just makes the finance conditions a little bit tighter, you know, increases the odds of a recession. That's what it is.

So the number of banks offsides you can count on your hands in terms of like too much insured exposure, too much ATM, too much uninsured deposits. And so there may be additional bank deposits, I mean bank failures, something like that, which we don't know. But you're gonna see next week, regional banks have pretty good numbers. A lot of people are gonna, you know, can take actions to, you know, alleviate some of the issues they may have going forward.

Speaker 4: Betsy, did we just lose you? I feel like you just dropped. Betsy, did we just lose you? I feel like you just dropped. Can you hear me? Hello? Can you hear me now? Hello? Yes, you're back now. You're back. Yes, you're back now. You're back.

Speaker 4: Betsy, did we just lose you? I feel like you just dropped. Can you hear me? Hello? Can you hear me now? Hello? Yes, you're back now. You're back. Yes, you're back now. You're back.

Speaker 4: Okay. So I just wanted to unpack the higher for longer rate possibility as to how it impacts your NII because your NII guide is assuming the forward curve, if I understand correctly. So in the event that you get that higher for longer, just how much does that impact the NII ex-markets? Because I'm trying to triangulate here about maybe you lose some deposits, but if we have higher for longer, shouldn't we expect the trajectory to go up from this quarter as opposed to down? Is that -- that's the question? Okay. So I just wanted to unpack the higher for longer rate possibility as to how it impacts your NII because your NII guide is assuming the forward curve, if I understand correctly. So in the event that you get that higher for longer, just how much does that impact the NII ex-markets? Because I'm trying to triangulate here about maybe you lose some deposits, but if we have higher rates for longer, shouldn't we expect the trajectory to go up from this quarter as opposed to down? Is that -- that's the question. You know, you've already seen things calm down quite a bit, particularly in deposit flows. Warren Buffett was on TV talking about that he would bet a million dollars, I don't know if you saw that, that no depositor would lose money in America. He's willing to bet his own money, and of course, you know he's a very bright man. So this crisis is not OA. It will pass. And the one thing I pointed out is that when I answered the question just before about interest rates, people need to be prepared. They shouldn't pray that they won't go up. They should prepare for them going up. You can go ahead, Jeremy. And I'll You can go ahead, Jeremy. And I'll You know, you've already seen things calm down quite a bit, particularly in deposit flows. Warren Buffett was on TV talking about how he would bet a million dollars, I don't know if you saw that, that no depositor will lose money in America. He's willing to bet his own money, of course, you know he's a very bright man. So this crisis is not OA; it will pass. And the one thing I pointed out is that when I answered the question just before about interest rates,

Jamie Dimon: It's not like a credit crunch. Thank you. Our next question comes from Erika Najarian with UBS. You may proceed. Good morning.

You know, you've already seen things calm down quite a bit, particularly in deposit flows. Warren Buffett was on TV talking about that he would bet a million dollars, I don't know if you saw that, that no depositor will lose money in America. He's willing to bet his own money, of course you know he's a very bright man. So this crisis is not OA, it will pass. And the one thing I pointed out is that when I answered the question just before about interest rates,

Jeremy Barnum: My first question is you mentioned that your reserve bill was driven mostly by worse economic assumptions. I'm wondering if you could update us on what unemployment rate you're assuming in your reserve. Yeah, Erika, as you know, we take, I'm not going to go into a lot of detail here, but we take the outlook from our economists, we run a bunch of different scenarios, and we probably weight those. The central case outlook from our research team hasn't actually changed, but we felt that in line with what Jamie just said in terms of a little bit of tightening as a result of the events of March, it So we did that, which changed the weighted average expectation, and I think that the weighted average peak unemployment that we're using now is something like 5.8%.

Speaker 4: People need to be prepared. They shouldn't pray that they won't go up. They should prepare for them going up. You can go ahead, Jeremy. And I'll You can go ahead, Jeremy. And I'll...

People need to be prepared. They shouldn't pray that they don't go up. They should prepare for them going up.

Speaker 4: And if it doesn't happen, serendipity. All right, thank you. Yep. The next question comes from the line of Betsy Grassick with Morgan Stanley. You may proceed. Hi, good morning. Sure. So Betsy, your question is very good. And I would say that as the -- if you look at the evolution of our outlook last year, it was pretty clear that we were very asset-sensitive, certainly in terms of sort of a 1-year forward ARR-type measure. You also obviously know that our current ARR actually shows a slight negative number, so it's a tiny bit liability sensitive, and I won't get into all the nuances about why that may or may not be a great predictor in the short term. Sure. So Betsy, your question is very good. And I would say that as the -- like if you look at the evolution of our outlook last year, it was pretty clear that we were very asset-sensitive, certainly in terms of sort of a 1-year forward EIR-type measure. You also obviously know that our current EIR actually shows a slight negative number, so it is a tiny bit liability sensitive, and I won't get into all the nuances about why that may or may not be a great predictor in the short term.

Speaker 4: Sure. So Betsy, your question is very good. And I would say that as the -- if you look at the evolution of our outlook last year, it was pretty clear that we were very asset-sensitive, certainly in terms of sort of a 1-year forward ARR-type measure. You also obviously know that our current ARR actually shows a slight negative number, so it's a tiny bit liability sensitive, and I won't get into all the nuances about why that may or may not be a great predictor in the short term.

Speaker 4: Sure. So Betsy, your question is very good. And I would say that as the -- like if you look at the evolution of our outlook last year, it was pretty clear that we were very asset-sensitive, certainly in terms of sort of a 1-year forward EIR-type measure. You also obviously know that our current EIR actually shows a slight negative number, so it's a tiny bit liability sensitive, and I won't get into all the nuances about why that may or may not be a Hey Betsy, I do want to unpack the question here on the possibility of hire for longer rates and how that impacts you in your non-markets and IR. Let's see, did we just lose you? I feel like you just dropped. Can you not hear me? Hello? Yeah, you're back now. Okay. So, I just wanted to unpack the higher-for-longer rate possibility as to how it impacts your NII, because your NII guide is assuming the forward curve, if I understand correctly. So, in the event that you get that higher-for-longer, But the point is that the level of rates now is, of course, very different from what it was last year. And at this level of rates, the relationship between our short-term NII evolution and the curve is not always going to be clear at any given moment. It's quite tricky, and it can behave in somewhat wonky ways as a function of, again, what I've alluded to a couple of times on this call, the competitive environment for deposits, which is not, in fact, a sort of mathematically predictable thing as a function of the So that's why we're emphasizing all the different drivers of uncertainty in the NII outlook. Can you not hear me? Hello? Yeah, you're back now. Okay. So, I just wanted to unpack the higher-for-longer-rate possibility as to how it impacts your NII, because your NII guide is assuming the forward curve, if I understand correctly. So, in the event that you get that higher-for-longer, But the point is that the level of rates now is, of course, very different from what it was last year. And at this level of rates, the relationship between our short-term NII evolution and the curve is not always going to be clear at any given moment. It's quite tricky, and it can behave in somewhat wonky ways. This is a function of, again, what I've alluded to a couple of times on this call, the competitive environment for deposits, which is not, in fact, a sort of mathematically predictable thing as a function of the rate curve. So that's why we're emphasizing all the different drivers of uncertainty in the NII outlook. But the point is that the level of rates now is, of course, very different from what it was last year. And at this level of rates, the relationship between our short-term NII evolution and the curve is not always going to be clear at any given moment. It's quite tricky, and it can behave in somewhat wonky ways as a function of, again, what I've alluded to a couple of times on this call, the competitive environment for deposits, which is not, in fact, a sort of mathematically predictable thing as a function of the rate curve. So that's why we're emphasizing all the different drivers of uncertainty in the NII outlook. Yes, you know, just how much does that impact the NIIX markets? Because, you know, I'm trying to triangle it here about maybe you lose some deposits, but if we have higher rates for longer, shouldn't we expect the trajectory to go up from this corridor as opposed to down? Is that, that's the question. Go ahead, Jeremy, and then I'll... Sure. So, Betsy, your question is very good, and I would say that, you know, as the, like if you look at the evolution of our outlook last year, two discs in Ohio, which is staying withracted by P, you know, just how much does that impact the NIIX markets? Because, you know, I'm trying to triangle it here about maybe you lose some deposits, but if we have higher rates for longer, shouldn Is that, that's the question. Go ahead, Jeremy, and then I'll... Sure. So, Betsy, your question is very good, and I would say that, you know, as the, like if you look at the evolution of our outlook last year, two discs in Ohio, which is staying withracted by P

And if it doesn't happen, serendipity. All right, thank you. Yep. The next question comes from the line of Betsy Grassick with Morgan Stanley . You may proceed. Hi, good morning.

Speaker 4: Hey Betsy, I do want to unpack the question here on the possibility of hire for longer rates and how that impacts you in your non-markets and IR. Let's see, did we just lose you? I feel like you just dropped. Can you not hear me? Hello? Yeah, you're back now. Okay. So, I just wanted to unpack the higher-for-longer rate possibility as to how it impacts your NII, because your NII guide is assuming the forward curve, if I understand correctly. So, in the event that you get that higher-for-longer, But the point is that the level of rates now is, of course, very different from what it was last year. And at this level of rates, the relationship between our short-term NII evolution and the curve is not always going to be clear at any given moment. It's quite tricky, and it can behave in somewhat wonky ways as a function of, again, what I've alluded to a couple of times on this call, the competitive environment for deposits, which is not, in fact, a sort of mathematically predictable thing as a function of the So that's why we're emphasizing all the different drivers of uncertainty in the NII outlook. Can you not hear me? Hello? Yeah, you're back now. Okay. So, I just wanted to unpack the higher-for-longer-rate possibility as to how it impacts your NII, because your NII guide is assuming the forward curve, if I understand correctly. So, in the event that you get that higher-for-longer, But the point is that the level of rates now is, of course, very different from what it was last year. And at this level of rates, the relationship between our short-term NII evolution and the curve is not always going to be clear at any given moment. It's quite tricky, and it can behave in somewhat wonky ways. This is a function of, again, what I've alluded to a couple of times on this call, the competitive environment for deposits, which is not, in fact, a sort of mathematically predictable thing as a function of the rate curve. So that's why we're emphasizing all the different drivers of uncertainty in the NII outlook. But the point is that the level of rates now is, of course, very different from what it was last year. And at this level of rates, the relationship between our short-term NII evolution and the curve is not always going to be clear at any given moment. It's quite tricky, and it can behave in somewhat wonky ways as a function of, again, what I've alluded to a couple of times on this call, the competitive environment for deposits, which is not, in fact, a sort of mathematically predictable thing as a function of the rate curve. So that's why we're emphasizing all the different drivers of uncertainty in the NII outlook. Yes, you know, just how much does that impact the NIIX markets? Because, you know, I'm trying to triangle it here about maybe you lose some deposits, but if we have higher rates for longer, shouldn't we expect the trajectory to go up from this corridor as opposed to down? Is that, that's the question. Go ahead, Jeremy, and then I'll... Sure. So, Betsy, your question is very good, and I would say that, you know, as the, like if you look at the evolution of our outlook last year, two discs in Ohio, which is staying withracted by P, you know, just how much does that impact the NIIX markets? Because, you know, I'm trying to triangle it here about maybe you lose some deposits, but if we have higher rates for longer, shouldn Is that, that's the question. Go ahead, Jeremy, and then I'll... Sure. So, Betsy, your question is very good, and I would say that, you know, as the, like if you look at the evolution of our outlook last year, two discs in Ohio, which is staying withracted by P

Hey Betsy. I do want to unpack the question here on the possibility of hire for longer rates and how that impacts you in your non-markets and IR.

Speaker 4: Let's see, did we just lose you? I feel like you just dropped. Can you not hear me? Hello? Yeah, you're back now. Okay. So, I just wanted to unpack the higher-for-longer rate possibility as to how it impacts your NII, because your NII guide is assuming the forward curve, if I understand correctly. So, in the event that you get that higher-for-longer, But the point is that the level of rates now is, of course, very different from what it was last year. And at this level of rates, the relationship between our short-term NII evolution and the curve is not always going to be clear at any given moment. It's quite tricky, and it can behave in somewhat wonky ways as a function of, again, what I've alluded to a couple of times on this call, the competitive environment for deposits, which is not, in fact, a sort of mathematically predictable thing as a function of the So that's why we're emphasizing all the different drivers of uncertainty in the NII outlook. Can you not hear me? Hello? Yeah, you're back now. Okay. So, I just wanted to unpack the higher-for-longer-rate possibility as to how it impacts your NII, because your NII guide is assuming the forward curve, if I understand correctly. So, in the event that you get that higher-for-longer, But the point is that the level of rates now is, of course, very different from what it was last year. And at this level of rates, the relationship between our short-term NII evolution and the curve is not always going to be clear at any given moment. It's quite tricky, and it can behave in somewhat wonky ways. This is a function of, again, what I've alluded to a couple of times on this call, the competitive environment for deposits, which is not, in fact, a sort of mathematically predictable thing as a function of the rate curve. So that's why we're emphasizing all the different drivers of uncertainty in the NII outlook. But the point is that the level of rates now is, of course, very different from what it was last year. And at this level of rates, the relationship between our short-term NII evolution and the curve is not always going to be clear at any given moment. It's quite tricky, and it can behave in somewhat wonky ways as a function of, again, what I've alluded to a couple of times on this call, the competitive environment for deposits, which is not, in fact, a sort of mathematically predictable thing as a function of the rate curve. So that's why we're emphasizing all the different drivers of uncertainty in the NII outlook. Yes, you know, just how much does that impact the NIIX markets? Because, you know, I'm trying to triangle it here about maybe you lose some deposits, but if we have higher rates for longer, shouldn't we expect the trajectory to go up from this corridor as opposed to down? Is that, that's the question. Go ahead, Jeremy, and then I'll... Sure. So, Betsy, your question is very good, and I would say that, you know, as the, like if you look at the evolution of our outlook last year, two discs in Ohio, which is staying withracted by P, you know, just how much does that impact the NIIX markets? Because, you know, I'm trying to triangle it here about maybe you lose some deposits, but if we have higher rates for longer, shouldn Is that, that's the question. Go ahead, Jeremy, and then I'll... Sure. So, Betsy, your question is very good, and I would say that, you know, as the, like if you look at the evolution of our outlook last year, two discs in Ohio, which is staying withracted by P

Jeremy Barnum: So as we think about all of what you've just told us, so. 81 billion of NII this year, and who knows when the medium-term is going to happen in the mid-70s. The clear strength of the franchise, producing 23% ROTC in a quarter where your CT1 is 13.8% and a reserve that already reflects 5.8% unemployment. As we think about recession and what JPMorgan can earn in a recession, do you think you can hit 17% ROTC even in 2024, assuming we do have a recession, you know, in the 24th, everybody's expecting, given all these revenue dynamics and how prepared you are on Yeah, I mean, that's an interesting question, Erika.

Let's see, did we just lose you? I feel like you just dropped.

Speaker 4: But the point is that the level of rates now is, of course, very different from what it was last year. And at this level of rates, the relationship between our short-term NII evolution and the curve is not always going to be clear at any given moment. It's quite tricky, and it can behave in somewhat wonky ways as a function of, again, what I've alluded to a couple of times on this call, the competitive environment for deposits, which is not, in fact, a sort of mathematically predictable thing as a function of the rate curve. So that's why we're emphasizing all the different drivers of uncertainty in the NII outlook. Yes, you know, just how much does that impact the NIIX markets? Because, you know, I'm trying to triangle it here about maybe you lose some deposits, but if we have higher rates for longer, shouldn't we expect the trajectory to go up from this corridor as opposed to down? Is that, that's the question. Go ahead, Jeremy, and then I'll... Sure. So, Betsy, your question is very good, and I would say that, you know, as the, like if you look at the evolution of our outlook last year, two discs in Ohio, which is staying withracted by P

Can you not hear me? Hello? Yeah, you're back now. Okay. So, I just wanted to unpack the higher-for-longer-rate possibility as to how it impacts your NII, because your NII guide is assuming the forward curve, if I understand correctly. So, in the event that you get that higher-for-longer,

you know, just how much does that impact the NIIX markets? Because, you know, I'm trying to triangle it here about maybe you lose some deposits, but if we have higher for longer, shouldn't we expect the trajectory goes up from this corridor as opposed to down? Is that, that's the question. Go ahead, Jeremy, and then I'll... Sure. So, Betsy, your question is very good, and I would say that, you know, as the, like if you look at the evolution of our outlook last year, two discs in Ohio, which is staying withracted by P

Jeremy Barnum: I guess I'll say a couple of things. It's a great question. I want to see how Jeremy answers it. Okay, let's take a crack.

Speaker 4: Yes. So I would just add, so next quarter, we kind of know already. 2 quarters out, we know a little bit less. 3 quarters out, we know a little bit less. And in '24, we know very little. That number, you can imagine, this is a little inside baseball now. The number that we're talking about for 2024 is not based upon an implied curve. It's based upon us looking at multiple potential scenarios, leveling them kind of out, and saying this is kind of a range. So I would just add, so next quarter, we kind of know already. 2 quarters out, we know a little bit less. 3 quarters out, we know a little bit less. And in '24, we know very little. That number, you can imagine, this is a little inside baseball now. The number that we're talking about for 2024 is not based upon an implied curve. It's based upon us looking at multiple potential scenarios, leveling them kind of out, and saying this is kind of a range. It was pretty clear that we were very asset sensitive, certainly in terms of the sort of one-year forward EAR type measure. You also obviously know that our current EAR actually shows us negative numbers that are a tiny bit liability sensitive, and I won't get into all the nuances about why that may or may not be But the point is that the level of rates now is, of course, very different from what it was last year. And at this level of rates, the relationship between our short-term and AI evolution and the curve is not always going to be clear in any given moment. It's quite tricky, and it can behave in somewhat wonky ways as a function of, again, what I've said. You're absolutely correct, you could have an environment of higher rates for longer that might be better than that. But remember, higher for longer comes with a lot of other things attached to it, like maybe a recession, taxation, lower vibes. So I wouldn't look at that as higher flows as positive. It might be a slight positive in that line, but it probably would be negative in other lines. It was pretty clear that we were very asset sensitive, certainly in terms of the sort of one-year forward EAR type measure. You also obviously know that our current EAR actually shows us negative numbers that are a tiny bit liability sensitive, and I won't get into all the nuances about why that may or may not be a great predictor in the short term. But the point is that... The level of rates now is, of course, very different from what it was last year. And at this level of rates, the relationship between our short-term and AI evolution and the curve is not always going to be clear at any given moment. It's quite tricky, and it can behave in somewhat wonky ways as a function of, again, what I've And you're absolutely correct; you could have an environment of higher prices for longer that might be better than that. But remember, higher prices for longer come with a lot of other things attached to them, like maybe a recession, taxation, and lower vibes. So I wouldn't look at that as higher flows being positive. It might be a slight positive in that line. It will probably be negative in other lines.

Speaker 4: So I would just add, so next quarter, we kind of know already. 2 quarters out, we know a little bit less. 3 quarters out, we know a little bit less, and in '24, we know very little. That number, you can imagine, this is a little inside baseball now, the number that we're talking about for 2024 is not based upon an implied curve. It's based upon us looking at multiple potential scenarios, leveling them kind of out, and saying this is kind of a range. It was pretty clear that we were very asset sensitive, certainly in terms of the sort of one-year forward EAR type measure. You also obviously know that our current EAR actually shows us negative numbers that are a tiny bit liability sensitive, and I won't get into all the nuances about why that may or may not be a great predictor in the short term. But the point is that... The level of rates now is, of course, very different from what it was last year. And at this level of rates, the relationship between our short-term and AI evolution and the curve is not always going to be clear at any given moment. It's quite tricky, and it can behave in somewhat wonky ways as a function of, again, what I've And you're absolutely correct; you could have an environment of higher prices for longer that might be better than that. But remember, higher prices for longer come with a lot of other things attached to them, like maybe a recession, taxation, and lower vibes. So I wouldn't look at that as higher flows being positive. It might be a slight positive in that line. It probably would be negative in other lines, it was pretty clear that we were very asset sensitive, certainly in terms of the sort of one year forward EAR type measure. You also obviously know that our current EAR actually shows us negative numbers that are a tiny bit liability sensitive, and I won't get into all the nuances about why that may or may not be a great predictor in the short term. But the point is that the level of rates now is, of course, very different from what it was last year. And at this level of rates, the relationship between our short-term and AI evolution and the curve is not always going to be clear in any given moment. It's quite tricky, and it can behave in somewhat wonky ways as a function of, again, what I've said. You're absolutely correct, you could have an environment of higher rates for longer that might be better than that. But remember, higher for longer comes with a lot of other things attached to it, like maybe a recession, taxation, lower vibes. So I wouldn't look at that as higher flows as positive. It might be a slight positive in that line, but it probably will be negative in other lines.

Jeremy Barnum: Let's see what's possible. Number one, we believe, have said, and continue to believe that this is fundamentally a 17% of the cycle ROTC franchise. So, number one.

it was pretty clear that we were very asset sensitive, certainly in terms of the sort of one year forward EAR type measure. You also obviously know that our current EAR actually shows us like negative numbers of a tiny bit liability sensitive and I won't get into all the nuances about why that may or may not be a great predictor in the short term. But the point is that...

Jeremy Barnum: Number two, as Jamie always says, we run this company for all different scenarios and to have it be as resilient as possible across all different scenarios. On the particular question of ROTC expectations in 2024 contingent on the particular economic outlook, obviously, it depends a lot on the nature of the recession. I think we feel really good about how the company is positioned for a recession, but we're a bank. A very serious recession is, of course, going to be a headline, a headwind for returns, but we think even in a fairly severe recession, we'll deliver very good returns, whether that's 17% or not. Too much detail. Thank you. The next question comes from the line of Jim from Seaport Global Securities; you may proceed. Hey, good morning.

The level of rates now is of course very different from what it was last year. And at this level of rates, the relationship between our short-term and AI evolution and the curve is not always going to be clear in any given moment. It's quite tricky and it can behave in somewhat wonky ways as a function of, again, what I've...

Speaker 4: And you're absolutely correct; you could have an environment of higher prices for longer that might be better than that. But remember, higher prices for longer come with a lot of other things attached to them, like maybe a recession, [taxation], and lower vibes. So I wouldn't look at that as higher flows being positive. It might be a slight positive in that line. It would probably be negative in other lines, a couple of times on this call, the competitive environment for deposits, which is not, in fact, a sort of mathematically predictable thing as a function of the rate curve. So that's why we're emphasizing all the different drivers of uncertainty in the NII outlook. Yeah. I just had, so next quarter we kind of know already a couple times on this call about the competitive environment for deposits, which is not, in fact, a sort of mathematically predictable thing as a function of the rate curve. So that's why we're emphasizing all the different drivers of uncertainty in the NII outlook. I just had it, so next quarter we kind of know already.

a couple times on this call, the competitive environment for deposits, which is not, in fact, a sort of mathematically predictable thing as a function of the rate curve. So that's why we're emphasizing all the different drivers of uncertainty in the NII outlook. Yeah. I just had, so next quarter we kind of know already.

Speaker 4: Yes. I've got it. Okay. It's super helpful to understand how you think through that. And then the follow-up is just on the buybacks. So do I take your comments to mean that you're on pause now? And if that's the case, what would be the driver of restarting? Yes. Got it. Okay. That's super helpful to understand how you think through that. And then the follow-up is just on the buybacks. So do I take your comments to mean that you're on pause now? And if that's the case, what would be the driver for restarting? Yes. I've got it. Okay. It's super helpful to understand how you think through that. And then the follow-up is just on the buybacks. So do I take your comments to mean that you're on pause now? And if that's the case, what would be the driver of restarting?

Speaker 4: Two quarters out, we know a little bit less. Three quarters out, we know a little bit less. And 24 we know very little about. That number, you can imagine, this is a little inside baseball now. The number that we're talking about for 2024 is not based upon an implied curve. It's based upon us looking at multiple potential scenarios, leveling them kind of out, and saying this is kind of a range. And you're absolutely correct; you could have an environment of higher for longer that might be better than that. That number, you can imagine, this is a little inside baseball now; the number that we're talking about for 2024 is not based upon an implied curve. It's based upon us looking at multiple potential scenarios, leveling them kind of out, and saying this is kind of a range. And you're absolutely correct; you could have an environment of higher for longer that might be better than that. Yes. No, we're not on pause now. We're doing a little bit now. We obviously have a lot of excess capital. We also like to buy our stock when it's cheap, not just when it's available. And we're also peering ahead, looking at those little bit of storm clouds, so we're going to be kind of cautious. So we're going to make this decision every day. We also don't like to tell the market what we're doing, just so you know. Yes. No, we're not on pause now. We're doing a little bit now. We obviously have a lot of excess capital. We also like to buy our stock when it's cheap, not just when it's available. And we're also peering ahead, looking at those little bit of storm clouds, so we're going to be kind of cautious. So we're going to make this decision every day. We also don't like to tell the market what we're doing, just so you know. But remember, higher for longer comes with a lot of other things attached to it. You know, like, maybe a recession, stagflation, lower vibes. So I wouldn't look at that as higher for longer as a positive. It might be a slight positive in that line, but it probably would be a negative in other lines.

Two quarters out we know a little bit less. Three quarters out we know a little bit less. And 24 we know very little.

Jeremy Barnum: Maybe just a little bit on the deposit, your thought process there, you've seen some inflows. Why do you think you will lose them going forward? And maybe just maybe talk a little bit about the dynamics and pricing. Do you feel that, given the inflows, you see some pricing power for the larger bank? Yeah, a couple things there.

That number, you can imagine, this is a little inside baseball now, the number that we're talking about for 2024 is not based upon an implied curve. It's based upon us looking at multiple potential scenarios, leveling them kind of out and saying this is kind of a range. And you're absolutely correct, you could have an environment of higher for longer that might be better than that.

Speaker 4: Yes, but No, we're not on pause now. We're doing a little bit now. We obviously have a lot of excess capital. We also like to buy our stock when it's cheap, not just when it's available. And we're also peering ahead, looking at those little bit of storm clouds, so we're going to be kind of cautious. So we're going to make this decision every day. We also don't like to tell the market what we do, just so you know. Yes, but No, we're not on pause now. We're doing a little bit now. We obviously have a lot of excess capital. We also like to buy our stock when it's cheap, not just when it's available. And we're also peering ahead, looking at those little bit of storm clouds, so we're going to be kind of cautious. So we're going to make this decision every day. We also don't like to tell the market what we do, just so you know. But remember, higher for longer comes with a lot of other things attached to it. You know, like, maybe a recession, stagflation, and lower vibes. So I wouldn't look at that as higher for longer as a positive. It might be a slight positive on that line. It probably would be a negative on other lines.

Speaker 4: Yes, but No, we're not on pause now. We're doing a little bit now. We obviously have a lot of excess capital. We also like to buy our stock when it's cheap, not just when it's available. And we're also peering ahead, looking at those little bit of storm clouds, so we're going to be kind of cautious. So we're going to make this decision every day. We also don't like to tell the market what we do, just so you know. But remember, higher for longer comes with a lot of other things attached to it. You know, like, maybe a recession, stagflation, and lower vibes. So I wouldn't look at that as higher for longer as a positive. It might be a slight positive on that line. It probably would be a negative on other lines. Yep, got it. Okay, that's super helpful to understand how you think through that. And then the follow-up is just on the buybacks. So do I take your comments to mean that you're on pause now, and if that's the case, what would be the driver for restarting? Yeah, no; we're not on pause now. We're doing a little bit now. We obviously have a lot of excess capital.

Jeremy Barnum: So first of all, we don't know, right? The deposits just came in. We don't know; we're guessing. Number two, the deposits just came in. So, by definition, these are somewhat flighty deposits because they just came into us. So it's prudent and appropriate for us to assume that they won't be particularly stable. Number three, there is a natural amount of internal migration of deposits to money funds. So you have to overlay that, and that's embedded in our. And number four, it's a competitive market. And, you know, it's entirely possible that people temporarily come to us and then, over time, decide to go elsewhere. So for all of those reasons, you know, we're just being realistic about the stickiness. If I added, I wouldn't say there is, I would say categorically, there's no pricing power that the bigger banks have. Because if you look at the pricing, and we look at pricing sheets all the time, every bank is in a slightly different position, and every bank is competing in three months, six months, nine months, savings rates.

But remember, higher for longer comes with a lot of other things attached to it. You know, like, you know, maybe a recession, stagflation, lower vibes. So I wouldn't look at that as higher for longer as a positive. It might be a slight positive in that line. It probably would be a negative in other lines.

Speaker 4: Yep, got it. Okay, that's super helpful to understand how you think through that. And then the follow-up is just on the buybacks. So do I take your comments to mean that you're on pause now, and if that's the case, what would be the driver for restarting? Yeah, no, we're not on pause now. We're doing a little bit now. We obviously have a lot of excess capital.

Speaker 4: Yes. And then can you give us any sense of what Basel IV's endgame means to you in your RWAs? How much should we be baking in for this? Yes. And then, can you give us any sense of what Basel IV's endgame means to you in your RWAs? How much should we be baking in for this? Yes. And then can you give us any sense of what Basel IV's endgame means to you in your RWAs? How much should we be baking in for this?

Yep, got it. Okay, that's super helpful to understand how you think through that. And then the follow-up is just on the buybacks. So do I take your comments to mean that you're on pause now, and if that's the case, what would be the driver of restarting? Yeah, no, we're not on pause now. We're doing a little bit now. We obviously have a lot of excess capital.

Speaker 4: Yes, Betsy, we really don't have any new information here, right? I mean, clearly, if you go back like a year, we were maybe a little bit more optimistic that it might be across all the different levers and all the different pieces of it closer to capital neutral. I think now that it feels like it's likely to be worse than that. Hopefully, it's not too much worse than that. Yes, Betsy, we really don't have any new information here, right? I mean, clearly, if you go back like a year, we were maybe a little bit more optimistic that it might be across all the different levers and all the different pieces of it closer to capital neutral. I think now that it feels like it's likely to be worse than that. Hopefully, it's not too much worse than that. Yes, Betsy, we really don't have any new information here, right? I mean, clearly, if you go back like a year, we were maybe a little bit more optimistic that it might be across all the different levers and all the different pieces of it closer to capital neutral. I think now that it feels like it's likely to be worse than that. Hopefully, it's not too much worse than that.

Speaker 4: We also like to buy our stock when it's cheap, not just when it's available. And we're also peering ahead, looking at those little bit of storm clouds, so we're going to be kind of cautious. So we're going to make this decision every day. We also don't like to tell the market what we're doing, just so you know. And then can you give us any sense of what Basel IV Endgame means to you and your RWAs? It's cheap, not just when it's available. And we're also peering ahead looking at those little bit of storm clouds, so we're gonna be kind of cautious. So we we're gonna make this decision every day. We also don't like to tell the market what we're doing, just so you know. Yeah, and then can you give us any sense of what Basel for Endgame means to you and your RWAs? How much should we be baking in for this? It's cheap, not just when it's available. And we're also peering ahead looking at those little bit of storm clouds, so we're gonna be kind of cautious. So we we're gonna make this decision every day. We also don't like to tell the market what we're doing, just so you know. Yeah, and then can you give us any sense of what Basel for Endgame means to you and your RWAs? How much should we be baking in for this?

We also like to buy our stock when it's cheap, not just when it's available. And we're also peering ahead, looking at those little bit of storm clouds, so we're going to be kind of cautious. So we're going to make this decision every day. We also don't like to tell the market what we're doing, just so you know. And then can you give us any sense of what Basel IV Endgame means to you and your RWAs?

is cheap, not just when it's available. And we're also peering ahead looking at those little bit of storm clouds so we're gonna be kind of cautious. So we we're gonna make this decision every day. We also don't like to tell the market we're doing just so you know. Yeah and then can you give us any sense of what Basel for endgame means to you and your RWAs? How much should we be baking in for this?

Speaker 4: And I would just remind you that there are a lot of different levers. So when the NPR comes, that's only going to be part of it. There's going to be other pieces, the holistic review, and it's going to take a lot of time to phase in, and we're going to have time to adjust. So we'll know when we know. Yeah, we really don't have any new information there, right? I mean, I think clearly if you go back like a year, we were maybe a little bit more optimistic that it might be across all the different levers and all the different pieces of it closer to capital neutral. I think now that it feels like it's likely to be worse than that. Hopefully, it's not too much worse than that. And I would just remind you that there are a lot of different levers. So when NPR comes, that's only going to be part of it. I just remember that they were supposed to be positive in there about how they looked at banks relative to the global economy, which is getting smaller, and G-SIB is supposed to be adjusted for that. So it may vary. We're expecting it to go up, but there are a lot of reasons why it shouldn't go up. And JPMorgan, it's not -- there's so much capital. I mean, you can't look at JPMorgan and say, well it's a capital issue. I just remember that they were supposed to be positive in there about how they looked at banks relative to the global economy, which is getting smaller, and G-SIFI is supposed to be adjusted for that. So it may vary. We're expecting it to go up, but there are a lot of reasons why it shouldn't go up. And JPMorgan, it's not -- there's so much capital. I mean, you can't look at JPMorgan and say, well, it's a capital issue. There's going to be other pieces, the holistic review, and it's going to take a lot of time to phase in, and we're going to have time to adjust. So we'll know when we know. And they were supposed to be positive about how they looked at banks relative to the global economy, which is getting smaller, and G CIFI was supposed to be adjusted for that. So it may vary. We're expecting it to go up, but there are a lot of reasons why it shouldn't go up. And J.P. Morgan, it's not; there's so much capital.

Jamie Dimon: And then you have the online banks, you got treasury bills, you got money market funds. There's no pricing power for the banks, but obviously, we all have different franchises, and we're all in a slightly different positions. Now, fair, all fair points.

Yeah, we really don't have any new information there, right? I mean, I think clearly if you go back like a year, we were maybe a little bit more optimistic that it might be across all the different levers and all the different pieces of it closer to capital neutral. I think now it feels like it's likely to be worse than that. Hopefully it's not too much worse than that. And I would just remind you that there are a lot of different levers. So when the NPR comes, that's only going to be part of it.

Jamie Dimon: And maybe just to follow up on John's question on the lending environment. You talked about the industry likely pulling back. Are you changing your underwriting standards in any way? Just trying to think through whether there is potential for some market share gains given your strength of capital and liquidity? Or how are you thinking about the loan environment? I'd say very modestly, but you know, we look at that all the time.

Speaker 4: I just remember that they were supposed to be positive in there about how they looked at banks relative to the global economy, which is getting smaller, and G-SIB is supposed to be adjusted for that. So it may vary. We're expecting it to go up, but there are a lot of reasons why it shouldn't go up. And JPMorgan, it's not -- there's so much capital. I mean, you can't look at JPMorgan and say, well it's a capital issue. I just remember that they were supposed to be positive in there about how they looked at banks relative to the global economy, which is getting smaller, and G-SIFI is supposed to be adjusted for that. So it may vary. We're expecting it to go up, but there are a lot of reasons why it shouldn't go up. And JPMorgan, it's not -- there's so much capital. I mean, you can't look at JPMorgan and say, well, it's a capital issue. There's going to be other pieces, the holistic review, and it's going to take a lot of time to phase in, and we're going to have time to adjust. So we'll know when we know. And they were supposed to be positive about how they looked at banks relative to the global economy, which is getting smaller, and G CIFI was supposed to be adjusted for that. So it may vary. We're expecting it to go up, but there are a lot of reasons why it shouldn't go up. And J.P. Morgan, it's not; there's so much capital.

Speaker 4: I just remember -- they were supposed to be positive in there about how they looked at banks relative to the global economy, which is getting smaller, and G-SIFI is supposed to be adjusted for that. So it may vary. We're expecting it to go up, but there are a lot of reasons why it shouldn't go up. And JPMorgan, it's not -- there's so much capital. I mean, you can't look at JPMorgan and say, well, it's a capital issue. There are other pieces to the holistic review, and it's going to take a lot of time to phase in, and we're going to have time to adjust. So we'll know when we know. And there were supposed to be positive comments there about how they looked at banks relative to the global economy, which is getting smaller. And G CIFI was supposed to be adjusted for that, but it may vary. We're expecting it to go up, but there are a lot of reasons why it shouldn't go up. And J.P. Morgan, it's not. There's so much capital. And even the banks, by the way, when you look at it -- even though some of the banks who have plenty of capital. The issue wasn't capital. It was other things, too. And so I'm just hoping regulators are very thoughtful. And the other thing is they should APR decide what they want in banking at this point because I made it clear. I can look at the banking system today and say that no bank should keep a loan, if possible. That's how much capital is now being required for loans. And even the banks, by the way, when you look at it -- even though some of the banks who have plenty of capital. The issue wasn't capital. It was other things, too. And so I'm just hoping regulators are very thoughtful. And the other thing is they should [ APR ] decide what they want on banking at this point because I made it clear. I can look at the banking system today and say that no bank should keep a loan, if possible. That's how much capital is now being required for loans. The loans I mean, so you can't look at James Wendell. It's a capital issue. And even the banks, by the way, are looking at it. And even the banks, by the way, when you look at it -- even though some of the banks who have plenty of capital. The issue wasn't capital. It was other things, too. And so I'm just hoping regulators are very thoughtful. And the other thing is they should [ APR ] decide what they want on banking at this point because I made it clear. I can look at the banking system today and say that no bank should keep a loan, if possible. That's how much capital is now being required for loans. The loans I mean, so you can't look at James Wendell. It's a capital issue. And even the banks, by the way, are looking at it.

There's going to be other pieces, the holistic review, and it's going to take a lot of time to phase in and we're going to have time to adjust. So we'll know when we know. And there were supposed to be positive there about how they looked at banks relative to the global economy, which are getting smaller. And G CIFI was supposed to be adjusted for that. So it may vary. We're expecting it to go up, but there are a lot of reasons why it shouldn't go up. And J.P. Morgan, it's not, there's so much capital.

Jeremy Barnum: Yeah, and you know, we always say, right, we underwrite through the cycle. And I think notably, we didn't loosen our underwriting standards when all the numbers looked crazy good during the pandemic, and we're not going to write media products. Okay, great, thanks. The next question comes from the line of Gerard Cassidy with RBC Capital Markets. You may proceed. Thank you. Hi, Jeremy.

Speaker 4: And even the banks, by the way, when you look at it -- even though some of the banks who have plenty of capital. The issue wasn't capital. It was other things, too. And so I'm just hoping regulators are very thoughtful. And the other thing is they should APR decide what they want on banking at this point because I made it clear. I can look at the banking system today and say that no bank should keep a loan, if possible. That's how much capital is now being required for loans. And even the banks, by the way, when you look at it -- even though some of the banks who have plenty of capital. The issue wasn't capital. It was other things, too. And so I'm just hoping regulators are very thoughtful. And the other thing is they should [ APR ] decide what they want on banking at this point because I made it clear. I can look at the banking system today and say that no bank should keep a loan, if possible. That's how much capital is now being required for loans. The loans I mean, so you can't look at James Wendell. It's a capital issue. And even the banks, by the way, are looking at it. And even the banks, by the way, when you look at it -- even though some of the banks who have plenty of capital. The issue wasn't capital. It was other things, too. And so I'm just hoping regulators are very thoughtful. And the other thing is they should [ APR ] decide what they want on banking at this point because I made it clear. I can look at the banking system today and say that no bank should keep a loan, if possible. That's how much capital is now being required for loans. The loans I mean, so you can't look at James Wendell. It's a capital issue. And even the banks, by the way, are looking at it.

Speaker 4: Even though some of the banks are in trouble, they have plenty of capital. Their issue wasn't capital, It was other things. And so, you know, I'm just hoping regulators are very thoughtful. And the other thing is that they should a priori decide what they want in the banking suit at this point.

I mean, so you can't look at James Wendell, it's a capital issue. And even the banks, by the way, you look at it.

Even though some of the banks are in trouble, they have plenty of capital. Their issue wasn't capital. It was other things. And so, you know, I'm just hoping regulators are very thoughtful. And the other thing is they should a priori decide what they want in the banking suit at this point.

Speaker 4: Because I've made it clear, I can look at the banking system today and say that no bank should keep a loan, if possible. That's how much capital is now being required for loans. The loans... On the current rule set. Yeah, because the market is pricing it, you know, it holds... The market would take loans at much lower capital ratios than banks are being forced to hold for them. I'm talking about just loans only, you know, and... That's why you're seeing a lot of capital go to... A lot of credit go to non-banks. That's how much capital is now being required for loans. The loans... under the current rule set. Yeah, because the market is pricing, you know, it holds... The market would take loans at much lower capital ratios than banks are being forced to hold for them. I'm talking about just loans only, you know, and... That's why you're seeing a lot of capital go to... A lot of credit go to non-banks, received on the rule set. Yes, because the market is pricing -- it holds -- the market would take loans at much lower capital ratios than banks are being forced to hold for them. I'm talking about just loans only. And so that's why you're seeing a lot of capital go to -- I mean, a lot of credit go to nonbanks and dramatically, by the way, rapidly and dramatically. And so if you're a regulator, we look at it and say, do I want that? Is that a good thing for the system? Just based on the current rule set.

Jeremy Barnum: In your comments about your CET-1 ratio, obviously, it came in strong at 13.8%. You've got the G-CIT buffers obviously going up next year. And we have the stress test coming this summer or in June, the results of which maybe will lead to banks, including yours, having a higher stress capital buffer. Where should we think about that CET-1 ratio being by the end of the year, do you think? Yeah, so there are a few things on there, Gerard.

Because I've made it clear, I can look at the banking system today and say that no bank should keep a loan, if possible.

Speaker 4: Received on the rule set. Yes, because the market is pricing -- it holds -- the market would take loans at much lower capital ratios than banks are being forced to hold for them. I'm talking about just loans only. And so that's why you're seeing a lot of capital go to -- I mean, a lot of credit go to nonbanks and dramatically, by the way, rapidly and dramatically. And so if you're a regulator, we look at it and say, do I want that? Is that a good thing for the system? Just based on the current rule set.

That's how much capital is now being required for loans. The loans... On the current rule set. Yeah, because the market is pricing, you know, it holds... The market would take loans at much lower capital ratios than banks are being forced to hold for them. I'm talking about just loans only, you know, and... That's why you're seeing a lot of capital go to... A lot of credit go to non-banks.

Speaker 4: Yes, because the market is pricing -- it holds -- the market would take loans at much lower capital ratios than banks are being forced to hold for them. I'm talking about just loans only. And so that's why you're seeing a lot of capital go to -- I mean, a lot of credit go to nonbanks and dramatically, by the way, rapidly and dramatically. And so if you're a regulator, we look at it and say, do I want that? Is that a good thing for the system? If you believe it's a good thing for the system, raise the capital; more credit will go out of the system. That's fine. If that's what they want, that's fine. But they should do it with forethought, not accidentally, and dramatically, by the way, rapidly and dramatically. And so if you're a regulator, you should be looking at it and saying, do I want that? Is that a good thing for the system? If you believe it's a good thing for the system, raise the capital, and more credit will go out of the system. That's fine. If that's what they want, that's fine. But they should do it with forethought, and dramatically, by the way. Rapidly and dramatically. And so if you're a regulator, you should be looking at it and saying, do I want that? Is that a good thing for the system? If you believe it's a good thing for the system, raise capital, and more credit will go out of the system. That's fine. If that's what they want, that's fine. But they should do it with forethought, not accidentally, and dramatically, by the way, rapidly and dramatically. And so if you're a regulator, you should be looking at it and saying, do I want that? Is that a good thing for the system? If you believe it's a good thing for the system, raise the capital, and more credit will go out of the system. That's fine. If that's what they want, that's fine. But they should do it with forethought, and dramatically, by the way. And so if you're a regulator, you should be looking at it and saying, do I want that? Is that a good thing for the system? If you believe it's a good thing for the system, raise the capital, and more credit will go out of the system. That's fine. If that's what they want, that's fine. But they should do it with forethought, not accidentally.

Jeremy Barnum: So, you know, we've previously said that we were targeting 13 and a half in the first quarter of 24 as a function of assuming an unchanged SCB, the increased G-sub step, and operating with a 50 basis point buffer. So the point that Jamie made a second ago, in light of the environment, Fossil 4, dry powder, you know, who knows how we'll tweak that, you know, going forward, but that's still our base. Specifically on the stress test, you know, I'll...

and dramatically, by the way, rapidly and dramatically. And so if you're a regulator, you should be looking at it saying, do I want that? Is that a good thing for the system? If you believe it's a good thing for the system, raise the capital, and more credit will go out of the system. That's fine. If that's what they want, that's fine. But they should do it with a forethought.

and dramatically, by the way. Rapidly and dramatically. And so if you're a regulator, you should be looking at it saying, do I want that? Is that a good thing for the system? If you believe it's a good thing for the system, raise the capital and more credit will go out of the system. That's fine. If that's what they want, that's fine. But they should do it with a forethought, not accidentally.

Speaker 4: If you believe it's a good thing for the system, raise the capital; more credit will go out of the system. That's fine. If that's what they want, that's fine. But they should do it with forethought, not accidentally.

Speaker 4: I like the NII from loans better than the gain on sale, so I'll prefer the former, not the latter, but thanks. I appreciate it. Thank you, the NII from loans is better than the gain on sale. So I'll prefer the former, not the latter, but thanks appreciate it. So I'll prefer the former, not the latter, but thanks, I appreciate it.

Jeremy Barnum: Contrary to what I've heard some people argue, our ability to predict the SCB ahead of time from running our own process is actually quite limited, and you'll remember last year that even though we did predict an increase, we were off by almost a factor of two in terms of how big it wound up being, and that was a big surprise for the whole industry. So we want to be quite humble about our ability to predict the SCB. But having said that, for right now, we are assuming it will be unchanged. There are some tailwinds in there through the OCI, but we believe there will likely be some offsets and harsher credit shocks in the numbers. So for planning purposes right now, we're assuming flat for SCB, and we'll know soon enough what the actual number is.

I like the NII from loans better than the gain on sale, so I'll prefer the former, not the latter, but thanks. Appreciate it. Thank you.

the NII from loans better than the gain on sale. So I'll prefer the former, not the latter, but thanks appreciate it.

Speaker 4: I like the NII from loans better than the gain on sale, so I'll prefer the former, not the latter. I appreciate it. Thank you. The next question comes from Glen Shore on behalf of Evercore ISI. Your line is now open. Thank you. You talked in your letter about regulators avoiding the knee-jerk reaction, which you addressed earlier. I'm curious about your thoughts around how customers have reacted and should react. And my question is, how do you deal with the I like the NII from loans better than the gain on sale. So I'll prefer the former, not the latter. I appreciate it. Thank you. The next question comes from the line of Glen Shore with Evercore ISI. Your line is now open. Thank you. So you talked about in your letter about regulators avoiding the knee-jerk reaction, which you addressed earlier. I'm curious about your thoughts around how customers have reacted and should react. And my question is, how do you deal with the I like the NII from loans better than the gain on sale. So I'll prefer the former, not the latter. I appreciate it. The next question comes from the line of Glenn Schorr with Evercore ISI.

Speaker 4: The next question comes from the line of Glenn Schorr with Evercore ISI. The next question comes from the line of Glenn Schorr with Evercore ISI.

Thank you. The next question comes from the line of Glen Shore with Evercore ISI. Your line is now open. Thank you. So you talked about in your letter about regulators avoiding the knee-jerk reaction, which you addressed earlier. I'm curious on your thoughts around how customers have reacted and should react. And my question is, how do you deal with the

Speaker 4: The next question comes from the line of Glenn Schorr with Evercore ISI.

Speaker 4: So you talked about in your letter about the regulators avoiding the knee-jerk reaction, which you addressed earlier. I'm curious about your thoughts around how customers have reacted and should react. Now -- and my point -- my question is, consumers can move excess cash balances if they want more insurance. They can do that in a lot of different ways. Move it, treasuries, money market, extra accounts, whatever. So you talked about in your letter about the regulators avoiding the knee-jerk reaction, which you addressed earlier. I'm curious about your thoughts around how customers have reacted and should react. Now -- and my point -- my question is, consumers can move excess cash balances if they want more insurance. They can do that in a lot of different ways. Move it, treasuries, money market, extra accounts, whatever. So you talked about in your letter about the regulators avoiding the knee-jerk reaction, which you addressed earlier. I'm curious about your thoughts around how customers have reacted and should react. Now -- and my point -- my question is, consumers can move excess cash balances if they want more insurance. They can do that in a lot of different ways. Move it, treasuries, money market, extra accounts, whatever.

Speaker 4: The issue -- the question I have for you is on the corporate side. Have you seen big changes in how corporate treasurers or CFOs are managing their cash balances and working capital? And should they need to? I'll say your Warren Buffet comments. The issue -- the question I have for you is on the corporate side. Have you seen big changes in how corporate treasurers or CFOs are managing their cash balances and working capital? And should they need to? I appreciate your Warren Buffet comments. But should they need to? I appreciate your Warren Buffett comments. Yeah, Glenn and Shor, we really haven't seen any big changes to speak of. And I do think it's worth saying, I think you're sort of hinting at this a little bit when you talk about the behavior of corporates, that when we talk about responses to the recent events through the lens of uninsured deposits, that's obviously very different if you're talking about large balances of Stuff that banks would infer, should they need to? I appreciate your Warren Buffett comments. Yeah, Glenn and Shor, we really haven't seen big changes to speak of. And I do think it's worth saying, I think you're sort of hinting at this a little bit when you talk about the behavior of corporates, that when we talk about responses to the recent events through the lens of uninsured deposits, that's obviously very different if you're talking about large balances of Stuff that infers.

Speaker 4: The issue -- the question I have for you is on the corporate side. Have you seen big changes in how corporate treasurers or CFOs are managing their cash balances and working capital? And should they need to? I appreciate your Warren Buffet comments. But should they need to? I appreciate your Warren Buffett comments. Yeah, Glenn and Shor, we really haven't seen any big changes to speak of. And I do think it's worth saying, I think you're sort of hinting at this a little bit when you talk about the behavior of corporates, that when we talk about responses to the recent events through the lens of uninsured deposits, that's obviously very different if you're talking about large balances of Stuff that banks would infer, should they need to? I appreciate your Warren Buffett comments. Yeah, Glenn and Shor, we really haven't seen big changes to speak of. And I do think it's worth saying, I think you're sort of hinting at this a little bit when you talk about the behavior of corporates, that when we talk about responses to the recent events through the lens of uninsured deposits, that's obviously very different if you're talking about large balances of Stuff that infers.

Jeremy Barnum: Sure. And then just as a follow-up, if I heard you correctly, can you give us a little more color? I think you mentioned in building the loan loss reserve this quarter, you identified some one-off credits. I don't know if that's how you said it. There were some larger credits. Were they commercial real estate-oriented? Were they commercial? Any more color there?

should they need to? I appreciate your Warren Buffett comments. Yeah, Glenn and Shor, we really haven't seen big changes to speak of. And I do think it's just worth saying, I think you're sort of hinting at this a little bit when you talk about the behavior of corporates, that when we talk about responses to the recent events through the lens of uninsured deposits, that's obviously very different if you're talking about large balances of Stuff that infer.

Speaker 4: Yes, Glenn, and sure, we really haven't seen any big changes to speak of. And I do think it's just worth saying, I think you're sort of hinting at this a little bit when you talk about the behavior of corporations. But when we talk about responses to the recent events through the lens of uninsured deposits, that's obviously very different if you're talking about large balances of nonoperating uninsured deposits from financial institutions or de facto financial institutions versus normal large corporate operating balances, which is, of course, like the core banking business for all of us. Yes, Glenn, and sure, we really haven't seen big changes to speak of. And I do think it's just worth saying, I think you're sort of hinting at this a little bit when you talk about the behavior of corporates. But when we talk about responses to the recent events through the lens of uninsured deposits, that's obviously very different if you're talking about large balances of non-operating uninsured deposits from financial institutions or de facto financial institutions versus normal large corporate operating balances, You know, Glen, we saw it in commercial banking payments, investment banking, and custody. You did see non-operating uninsured deposits from financial institutions or de facto financial institutions versus, you know, normal, large corporate operating balances, which is, of course, the core banking business for all of us. You know, Glen, we saw it in commercial banking payments, investment banking, and custody. You did see...

Speaker 4: Yes, Glenn, and sure, we really haven't seen any big changes to speak of. And I do think it's just worth saying, I think you're sort of hinting at this a little bit when you talk about the behavior of corporations. But when we talk about responses to the recent events through the lens of uninsured deposits, that's obviously very different if you're talking about large balances of non-operating uninsured deposits from financial institutions or de facto financial institutions versus normal large corporate operating balances, which is, of course, like core banking business for all of us. Non-operating uninsured deposits from financial institutions or de facto financial institutions versus, You did see... When you saw it in Commercial Banking, Payments, Investment Banking, and custody, you did see money move -- what I would call excess cash has moved out. So they have options, which I would call more like operational cash. I think even if small companies, middle market companies, et cetera, that tend to be fairly sticky because you have your loans there, you have your money there. You get more and more competitive in rates. And that's why I think you see a lot of regional banks. They've got sticky middle market deposits, money has moved, and what I would call excess cash has moved out. But they have options. What I would call more like operational cash, I think even of small retail, small companies, middle market companies, et cetera, that tends to be fairly sticky because you have your loans there, you have your money there, you get more and more competitive in rates, money moves, and what I would call excess cash has moved out. But they have options. What I would call more like operational cash, I think even small retail, small companies, middle market companies, et cetera, that tends to be fairly sticky because you have your loans there, you have your money there, and you get more and more competitive in rates.

Jeremy Barnum: Um, no, it wasn't commercial real estate. It was just a couple of single-name items in the corporate. Leverage loan type items, or just regular corporate credit? Regular corporate credits. I'd rather not get into too much detail. Thank you. The next question comes from the line of Ibrahim Poonawalla with Bank of America Merrill Lynch. You may proceed. Good morning.

non-operating uninsured deposits from financial institutions or de facto financial institutions versus, you know, normal, large corporate operating balances, which is, of course, like core banking business for all of us. You know, Glen, we saw it in commercial banking payments, investment banking, and custody. You did see...

Jeremy Barnum: I guess maybe one question, Jeremy, you reminded us of the... Relatively low office exposure for JPM, but obviously, you're big players in the CRE market. So give us a sense of when you look at the two pressure points on CRE, one, how much is the oversupply, and that probably goes beyond office space into apartments. How much of an issue is oversupply in the market as we think about the next few years going into a weakening economy, and how much of a risk is higher for longer rates, in that if the central banks can't cut rates in the next year or two, we will see a ton of more pain because of the defi wall that's coming up.

Speaker 4: When you saw it in Commercial Banking, Payments, Investment Banking, and custody, you did see money move -- what I would call excess cash has moved out. So they have options. What I would call more like operational cash. I think even small companies, middle market companies, et cetera, that tends to be fairly sticky because you have your loans there, you have your money there. You get more and more competitive in rates, and that's why I think you see a lot of regional banks. They've got sticky middle market deposits, money moved, and what I would call excess cash has moved out. But they have options. What I would call more like operational cash, I think even of small retail, small companies, middle market companies, et cetera, that tends to be fairly sticky because you have your loans there, you have your money there, you get more and more competitive in rates, money moves, and what I would call excess cash has moved out. But they have options. What I would call more like operational cash, I think even of small retail, small companies, middle market companies, et cetera, that tends to be fairly sticky because you have your loans there, you have your money there, and you get more and more competitive in rates.

Speaker 4: When you saw it in Commercial Banking, Payments, Investment Banking, and custody, you did see money move -- what I would call excess cash has moved out. So they have options. What I would call more like operational cash. I think even small companies, middle market companies, et cetera, that tends to be fairly sticky because you have your loans there, you have your money there. You get more and more competitive in rates, and that's why I think you see a lot of regional banks. They've got sticky middle market deposits. And that's why I think you see a lot of regional banks; they've got sticky middle market deposits. If I've lent you $30 million, and you have $10 million, you're probably gonna be leaving it at my bank. And they are also more competitive on the interest rate for that. So I think you shouldn't be looking at deposits like one class. There are a whole bunch of different types, and analytically, you go through each one and try to figure out what the stickiness is and what the stickiness is, et cetera, etc. But I think they've already, as the Fed has raised rates, you've already seen, that's the reason we expected outflows.

money moved, what I would call excess cash has moved out. But they have options. What I would call more like operational cash, I think even of small retail, small companies, middle market companies, et cetera, that tends to be fairly sticky because you have your loans there, you have your money there, you get more and more competitive in rates.

Speaker 4: And that's why I think you see a lot of regional banks; they've got sticky middle market deposits. If I've lent you $30 million, and you have $10 million, you're probably gonna be leaving it at my bank. And they are also more competitive on the rate for that. So I think you shouldn't be looking at deposits like this as one class. There's a whole bunch of different types, and analytically, you go through each one and try to figure out what the stickiness is and what the stickiness is, et cetera, and so. But I think they've already, as the Fed has raised rates, you've already seen, that's the reason we expected outflows. If I lend you $30 million, and you have $10 million, you're probably going to be leaving it in my bank. And they are also more competitive on the rate for that. So I think you shouldn't be looking at deposits like one class. They just -- there's a whole bunch of different types, and analytically, you go through each one and try to figure out what the stickiness is and what the stickiness is, et cetera. And so -- but I think they've already -- as the Fed has raised rates, you've already seen -- that's the reason we expected outflows, both from consumers and corporate customers.

And that's why I think you see a lot of regional banks, they've got sticky middle market deposits. If I've lent you $30 million and you have $10 million, you're probably gonna be leaving it at my bank. And they also are more competitive on the rate for that. So I think you shouldn't be looking at deposits like one class. There's a whole bunch of different types and analytically you go through each one and try to figure out what the stickiness is and what the stickiness is and et cetera and so. But I think they've already, as the Fed has raised rates, you've already seen, that's the reason we expected outflows.

Jeremy Barnum: Yeah, so Ibrahim, let me sort of respond narrowly in connection with our portfolio and our exposure, right? So really, the large majority of our commercial, our final piece of exposure is multifamily lending in supply-constrained markets, and I think it's quite important to recognize the difference between that and higher-end, higher price point, non-rent controlled, not supply-constrained markets. And I think that's a big part of the reason why the performance has been so good for so long.

Speaker 4: If I lend you $30 million, and you have $10 million, you're probably going to be leaving it in my bank. And they are also more competitive on the rate for that. So I think you shouldn't be looking at deposits like one class. They just -- there's a whole bunch of different types, and analytically, you go through each one and try to figure out what the stickiness is and what the stickiness is, et cetera. And so -- but I think they've already -- as the Fed has raised rates, you've already seen -- that's the reason we expected outflows, both from consumers and corporate customers, both from consumers and corporate customers. Interesting, just to follow up, the other thing that caught my eye in the letter is that you mentioned that you're exploring new capital optimization strategies, including partnerships and securitizations. What's different than what you've already been doing for the last 30 years? We've got our smartest people figuring out every angle to reduce capital requirements for JP Morgan and corporate customers. Interesting, just to follow up. The other thing that caught my eye in the letter is that you mentioned that you're exploring new capital optimization strategies, including partnerships and securitizations. What's different about what you've already been doing for the last 30 years? We've got our smartest people figuring out every angle to reduce capital requirements for JP Morgan. That's the difference, both for consumers and corporate customers. Interesting, just to follow up. The other thing that caught my eye in the letter is that you mentioned that you're exploring new capital optimization strategies, including partnerships and securitizations. What's different about what you've already been doing for the last 30 years? We've got our smartest people figuring out every angle to reduce capital requirements for JP Morgan and corporate customers. Interesting, just to follow up, the other thing that caught my eye in the letter is that you mentioned that you're exploring new capital optimization strategies, including partnerships and securitizations. What's different than what you've already been doing for the last 30 years? We've got our smartest people figuring out every angle to reduce capital requirements for JP Morgan. That's the difference between them.

both from consumers and corporate customers. Interesting, just to follow up, the other thing that caught my eye in the letter is you mentioned that you're exploring new capital optimization strategies, including partnerships and securitizations. What's different than what you've already been doing for the last 30 years? We've got our smartest people figure out every angle to reduce capital requirements for JP Morgan.

and corporate customers. Interesting, just to follow up, the other thing that caught my eye in the letter is you mentioned that you're exploring new capital optimization strategies, including partnerships and securitizations. What's different than what you've already been doing for the last 30 years? We've got our smartest people figure out every angle to reduce capital requirements for JP Morgan. That's the difference.

Jeremy Barnum: So of course, we watch it very carefully, and we don't assume that past performance predicts future results here, but I think our multifamily lending portfolio is, you know, quite low risk in the scheme of things. It's not massively oversupplied like you saw in 2008. Yeah, and then in terms of office space, as you know, our exposure is quite small.

Speaker 4: Interesting. Just a follow-up. The other thing that caught my eye in the letter is that you mentioned that you're exploring new capital optimization strategies, including partnerships and securitizations. What's different about what you've already been doing for the last 30 years? Interesting. Just a follow-up. The other thing that caught my eye in the letter is that you mentioned that you're exploring new capital optimization strategies, including partnerships and securitizations. What's different about what you've already been doing for the last 30 years? And we've been doing it, but there are securitizations, there are partnerships. You've seen a lot of private equity in the life insurance companies, and I expect that we're gonna come up with a whole bunch of different things over time. And we'll shed certain assets, too. Yeah. Thanks, Jamie. Our final question comes from the line of Matt O'Connor with Deutsche Bank. You may proceed, but you know, there's securitizations, there are partnerships. You've seen a lot of private equity in the life insurance companies, and you know, I expect that we're going to come up with a whole bunch of different things over time. And we'll shed certain assets, too. Yeah. Thanks, Jamie. Our final question comes from the line of Matt O'Connor with Deutsche Bank. You may proceed. Good morning, but you know, there's securitization, there's partnerships. You've seen a lot of private equity do the life insurance companies, and you know, I expect that we're going to come up with a whole bunch of different things over time. And we'll shed certain assets too. Yeah. Thanks, Jamie. Our final question comes from the line of Matt O'Connor with Deutsche Bank. You may proceed. Good morning.

Speaker 4: Interesting. Just a follow-up. The other thing that caught my eye in the letter is that you mentioned that you're exploring new capital optimization strategies, including partnerships and securitizations. What's different about what you've already been doing for the last 30 years? And we've been doing it, but there are securitizations, there are partnerships. You've seen a lot of private equity in the life insurance companies, and I expect that we're gonna come up with a whole bunch of different things over time. And we'll shed certain assets, too. Yeah. Thanks, Jamie. Our final question comes from the line of Matt O'Connor with Deutsche Bank. You may proceed, but you know, there's securitizations, there are partnerships. You've seen a lot of private equity in the life insurance companies, and you know, I expect that we're going to come up with a whole bunch of different things over time. And we'll shed certain assets, too. Yeah. Thanks, Jamie. Our final question comes from the line of Matt O'Connor with Deutsche Bank. You may proceed. Good morning, but you know, there's securitization, there's partnerships. You've seen a lot of private equity do the life insurance companies, and you know, I expect that we're going to come up with a whole bunch of different things over time. And we'll shed certain assets too. Yeah. Thanks, Jamie. Our final question comes from the line of Matt O'Connor with Deutsche Bank. You may proceed. Good morning.

Operator: From the line of Steve Chubak with Wolf Research, now open. Hey, good morning.

And we've been doing it, but there's securitizations, there are partnerships. You've seen a lot of the private equity do the life insurance companies, and I expect that we're gonna come up with a whole bunch of different things over time. And we'll shed certain assets too. Yeah. Thanks, Jamie. Our final question comes from the line of Matt O'Connor with Deutsche Bank. You may proceed.

Speaker 4: We've got our smartest people figuring out every angle to reduce capital requirements for JPMorgan. That's the difference. And we've been doing it, but there are securitizations, there are partnerships. You've seen a lot of private equity in the life insurance companies. And I expect that we're going to come up with a whole bunch of different things over time. And we'll shed certain assets, too.

but you know, there's securitizations, there are partnerships. You've seen a lot of the private equity do the life insurance companies, and you know, I expect that we're going to come up with a whole bunch of different things over time. And we'll shed certain assets too. Yeah. Thanks, Jamie. Our final question comes from the line of Matt O'Connor with Deutsche Bank. You may proceed. Good morning.

Speaker 4: We've got our smartest people figuring out every angle to reduce capital requirements for JPMorgan. That's the difference between them. And we've been doing it, but there are securitizations, there are partnerships. You've seen a lot of private equity done by life insurance companies. And I expect that we're going to come up with a whole bunch of different things over time. And we'll shed certain assets, too. You guys talked about one of the drivers of the higher net interest income guide this year is due to likely higher credit card balances. And I was just wondering if you could flush out, you know, what changed there on the outlook, say versus three months ago? And I guess is it a good or bad thing that those balances will be higher than you thought? Yeah, so the story there is kind of the same story we've been talking about for a while. It's just a matter of degree. So, you know, we had revolving balances obviously drop a lot during the pandemic period, and then we talked about having them recover in absolute dollar terms to the same extent. Our final question comes from Matt O'Connor with Deutsche Bank. You guys talked about one of the drivers of the higher net interest income guide this year is due to likely higher credit card balances. And I was just wondering if you could flush out, you know, what changed there on the outlook, say versus three months ago? And I guess is it a good or bad thing that those balances will be higher than you thought? Yeah, so the story there is kind of the same story we've been talking about for a while. It's just a matter of degree. So, you know, we had revolving balances obviously drop a lot during the pandemic period, and then we talked about having them recover in absolute dollar terms to the same extent. Our final question comes from Matt O'Connor with Deutsche Bank.

Jamie, I was actually hoping to get your perspective on how you see the recent developments with SVB impacting the regulatory landscape for the big banks. In your letter, you spent a fair amount of time highlighting the consequences of overly stringent capital requirements and the risk of steering more activities to the less regulated non-banks. What are some of the changes that you're scenario planning for, whether it's higher capital, an increase in FDIC assessment fees, and along those same lines, how you're thinking about the buyback given continued strong capital build but a lot of macro uncertainty at the, I think you were already kind of finished with answering your own question there. Look, we're hoping that everyone just takes a deep breath and looks at what happened and the breadth and depth of Obviously, when something happens like this, you should adjust and think about it.

Jeremy Barnum: Yes, you know, Jamie's also mentioned all the refi dynamics that you mentioned, too, are something that the office space is processing one way or the other. Our office exposure is quite modest, very concentrated in Class A buildings in sort of dense urban locations where, you know, the return to the office narrative as one of the drivers is generally in favor of high occupancy. So again, watching it, they're obviously.

You guys talked about one of the drivers of the higher net interest income guide this year is due to likely higher credit card balances And I was just wondering if you could flush out, you know What changed there on the outlook say versus three months ago? And I guess is there a good or bad thing that those balances will be higher than you thought? Yeah, so the story there is kind of the same story we've been talking about for a while It's just a matter of degree So, you know we had revolving balances obviously drop a lot during the pandemic period and then we talked about having them recover in absolute dollar terms to the same

Speaker 4: Our final question comes from Matt O'Connor with Deutsche Bank. You guys talked about one of the drivers of the higher net interest income guide this year is due to likely higher credit card balances. And I was just wondering what changed there on the outlook, say, versus 3 months ago? And, I guess, is that a good or bad thing that those balances will be higher than you thought? You guys talked about one of the drivers of the higher net interest income guide this year being due to likely higher credit card balances. And I was just wondering if you could flesh out what changed there on the outlook, say, versus 3 months ago? And I guess, is that a good or bad thing that those balances will be higher than you thought? As we'd had pre-pandemics, I think happened last quarter. And then the remaining narrative is just the further normalization of the revolver per account because we also have seen some account growth, and that continues to happen. And so, as we'd had pre-pandemics, I think that happened last quarter. And then the remaining narrative is just the further normalization of the revolver per account because we have also seen some account growth, and that continues to happen. And so...

Speaker 4: You guys talked about one of the drivers of the higher net interest income guide this year is due to likely higher credit card balances. And I was just wondering if you could flesh out what changed there on the outlook, say, versus 3 months ago? And I guess, is that a good or bad thing that those balances will be higher than you thought? You guys talked about one of the drivers of the higher net interest income guide this year being due to higher credit card balances. And I was just wondering if you could flesh out what changed there on the outlook, say, versus 3 months ago? And, I guess, is that a good or bad thing that those balances will be higher than you thought? as we'd had pre-pandemics, I think happened last quarter. And then the remaining narrative is just the further normalization of the revolver per account because we also have seen some account growth, and that continues to happen. And so, as we had with pre-pandemics, I think that happened last quarter. And then the remaining narrative is just the further normalization of the revolver per account because we also have seen some account growth, and that continues to happen. And so...

Jamie Dimon: Specific things here and there to pay attention to, but in the scheme of things for us, not a big issue. And just as a follow up, I think the other risk from higher for longer rates, I think is this the ability of the economy, the financial markets to sustain a 5% plus Fed fund for a long period of time, like one of the other areas you're watching if duration mismatch on bank balance sheet being one, CRE market being one, are you worried about non-banks that have grown exponentially over the last decade in terms of risks at the non-banks if rates don't get cut, and if you can talk to the transmission mechanism of that coming back and hitting banks given the leverage that banks provide to the non-banks.

Speaker 4: You guys talked about one of the drivers of the higher net interest income guide this year being due to likely higher credit card balances. And I was just wondering if you could flesh out what changed there on the outlook, say, versus 3 months ago? And I guess, is that a good or bad thing that those balances will be higher than you thought? As we'd had pre-pandemics, I think happened last quarter. And then the remaining narrative is just the further normalization of the revolver per account because we have also seen some account growth, and that continues to happen. And so... Yes. So the story there is kind of the same story we've been talking about for a while. It's just a matter of degree. So we had revolving balances obviously drop a lot during the pandemic period, and then we talked about having them recover in absolute dollar terms to the same level as they had pre-pandemic. So I think that happened last quarter. And then the remaining narrative is just the further normalization of the revolver per account because we also have seen some account growth, and that continues to happen. And so -- and yes, also to Mike's question earlier, we're seeing higher yield there as well. So the story there is kind of the same story we've been talking about for a while. It's just a matter of degree. So we had revolving balances obviously drop a lot during the pandemic period, and then we talked about having them recover in absolute dollar terms to the same level as we had pre-pandemic. And that, I think, happened last quarter. And then the remaining narrative is just the further normalization of the revolver per account because we also have seen some account growth, and that continues to happen. And so -- and yes, to Mike's question earlier, we're also seeing higher yield there as well. And yeah, we all said to Mike's question earlier, we're seeing a higher yield there as well. So on your question of whether it's good or bad, you know, obviously, there is a point at which the consumers have too much leverage. We don't see that yet. So, normalization is a good thing for us. Okay, and then just separately to squeeze in, you guys took some security losses again this quarter, and in the past, we've talked about And yeah, we all said to Mike's question earlier, we're seeing a higher yield there as well. So And on your question of whether it's good or bad, you know, obviously, there is a point at which the consumers have too much leverage. We don't see that yet. So, normalization is a good thing for us. Okay, and then just separately to squeeze in, you guys took some security losses again this quarter, and in the past, we've talked about

Speaker 4: Yes. So the story there is kind of the same story we've been talking about for a while. It's just a matter of degree. So we had revolving balances obviously drop a lot during the pandemic period, and then we talked about having them recover in absolute dollar terms to the same level as they had pre-pandemic. So I think that happened last quarter. And then the remaining narrative is just the further normalization of the revolver per account because we also have seen some account growth, and that continues to happen. And so -- and yes, also to Mike's question earlier, we're seeing higher yield there as well. So the story there is kind of the same story we've been talking about for a while. It's just a matter of degree. So we had revolving balances obviously drop a lot during the pandemic period, and then we talked about having them recover in absolute dollar terms to the same level as we had pre-pandemic. And that, I think, happened last quarter. And then the remaining narrative is just the further normalization of the revolver per account because we also have seen some account growth, and that continues to happen. And so -- and yes, to Mike's question earlier, we're also seeing higher yield there as well. And yeah, we all said to Mike's question earlier, we're seeing a higher yield there as well. So on your question of whether it's good or bad, you know, obviously, there is a point at which the consumers have too much leverage. We don't see that yet. So, normalization is a good thing for us. Okay, and then just separately to squeeze in, you guys took some security losses again this quarter, and in the past, we've talked about And yeah, we all said to Mike's question earlier, we're seeing a higher yield there as well. So And on your question of whether it's good or bad, you know, obviously, there is a point at which the consumers have too much leverage. We don't see that yet. So, normalization is a good thing for us. Okay, and then just separately to squeeze in, you guys took some security losses again this quarter, and in the past, we've talked about

Jamie Dimon: I think down the road, there may be some limitations on health and maturity, maybe more TLAC for certain types of banks and more scrutiny on interest rate exposure and stuff like that. But it doesn't have to be a revamp of the whole system. It's just recalibrating things the right way. I think it should be done knowing what you want the outcome to be.

as we'd had pre-pandemics, I think happened last quarter. And then the remaining narrative is just the further normalization of the revolve per account because we also have seen some account growth and that continues to happen. And so...

Jamie Dimon: Yeah, so this, I'd like to answer that though, there is a risk of higher rates for longer. And don't just think of just the Fed funds rate, because I think you should, I, you know, for our planning, I'd be thinking more about, it could be, and then think about the 5 in 10 year rate, which could be 5. And I think if those things happen. I'm not saying they're going to happen. I just think people should prepare for them.

Jamie Dimon: The outcome you should want is very strong community and regional banks. However, certain actions are taken which are drastic, and it could actually make them weaker.

And yeah, we know we all said to Mike's question earlier, we're seeing a higher yield there as well. So And on your question of whether it's good or bad

Jamie Dimon: That's all it is. We do expect higher capital from Basel IV. Obviously, there's going to be an FDI assessment. That'll be what it is.

you know, obviously there is a point at which the consumers have too much leverage. We don't see that yet. So, normalization, that's a good thing for us. Okay, and then just separately to squeeze in, you guys took some security losses again this quarter, and in the past we've talked about

Speaker 4: So -- and on your question of whether it's good or bad, obviously, there is a point at which the consumers have too much leverage. But we don't see that yet. So -- and on your question of whether it's good or bad, obviously, there is a point at which the consumers have too much leverage. But we don't see that yet. So you know, really just going security by security, looking for kind of pricing opportunities. Is that kind of what drove it again this quarter, or is there some kind of broader overarching? And that'll be every quarter for the rest of our lives. So -- on your question of whether it's good or bad, obviously, there is a point at which the consumers have too much leverage. We don't see that yet. So you know, really just going security by security, looking for some kind of pricing opportunities. Is that kind of what drove it again this quarter, or is there some kind of broader overarching theme? And that'll be every quarter for the rest of our lives. It's normalization, and that's a good thing for us. Okay. And then just separately to squeeze in. You guys took some security losses again this quarter. And in the past, you've talked about really just going security by security, looking for some kind of pricing opportunities. Is that kind of what drove it again this quarter? Or is there some kind of broader launch? It's normalization, and that's a good thing for us. Okay. And then just separately to squeeze in. You guys took some security losses again this quarter. And in the past, you've talked about really just going security by security, looking for some kind of pricing opportunities. Is that kind of what drove it again this quarter? Or is there some kind of broader launch? We sell what we find rich, and we buy what we think is dear. Alright, thank you. Okay. And then just separately to squeeze in. You guys took some security losses again this quarter. And in the past, you've talked about really just going security by security, looking for some kind of pricing opportunities. Is that kind of what drove it again this quarter? Or is there some kind of broader launch? It's normalization, and that's a good thing for us. Okay. And then just separately to squeeze in. You guys took some security losses again this quarter. And in the past, you've talked about really just going security by security, looking for some kind of pricing opportunities. Is that kind of what drove it again this quarter? Or is there some kind of broader launch? We sell what we find rich, and we buy what we think is dear. Alright, thank you.

Jamie Dimon: They saw what just happened when rates went up beyond people's expectations. The guilt problem in London; you had some of the banks here. People need to be prepared for the potential of higher rates for longer. If and when that happens, it will exacerbate problems in the economy for those who are too exposed to floating rates or those who are too exposed to refi risk. Those exposures will be in multiple parts of the economy. I say to all of our clients, Now would be the time to fix it. Do not put yourself in a position where that risk is excessive for your company, your business, your investment pools, et cetera. That's answer number one.

Speaker 4: It's normalization, and that's a good thing for us. Okay. And then just separately to squeeze in. You guys took some security losses again this quarter. And in the past, you've talked about really just going security by security, looking for some kind of pricing opportunities. Is that kind of what drove it again this quarter? Or is there some kind of broader launch? It's normalization, and that's a good thing for us. Okay. And then just separately to squeeze in. You guys took some security losses again this quarter. And in the past, you've talked about really just going security by security, looking for some kind of pricing opportunities. Is that kind of what drove it again this quarter? Or is there some kind of broader launch? We sell what we find rich, and we buy what we think is dear. Alright, thank you. Okay. And then just separately to squeeze in. You guys took some security losses again this quarter. And in the past, you've talked about really just going security by security, looking for some kind of pricing opportunities. Is that kind of what drove it again this quarter? Or is there some kind of broader launch? It's normalization, and that's a good thing for us. Okay. And then just separately to squeeze in. You guys took some security losses again this quarter. And in the past, you've talked about really just going security by security, looking for some kind of pricing opportunities. Is that kind of what drove it again this quarter? Or is there some kind of broader launch? We sell what we find rich, and we buy what we think is dear. Alright, thank you.

you know, really just going security by security, looking for kind of pricing opportunities. Is that kind of what drove it again this quarter, or is there some kind of broader overarching? And that'll be every quarter for the rest of our lives.

Jamie Dimon: And we did a little bit of buyback this quarter. You know, we're going to wait and see. You know, we don't mind keeping our powder dry.

Jamie Dimon: And you've seen us do that with investment portfolios, and we're also willing to do it with capital. That's great. I'll hop back in the queue.

We sell what we find rich and we buy what we think is dear. Alright, thank you.

Operator: Thanks so much for taking my question. Thank you. The next question comes from the line of Ken Usdin with Jeffrey. You may proceed. Hey, thanks. Good morning.

Speaker 4: We have no further questions. Excellent. Thank you very much.

Speaker 4: That will be every quarter for the rest of our lives. So we become rich, and we buy what we think is dear.

Speaker 4: That concludes today's conference. Thank you all for your participation. You may disconnect at this time.

We have no further questions. Excellent. Thank you very much.

Ken Usdin: Hey, Jeremy, I was just wondering if you could give us a little bit more detail on those lower funding expectation points that you made just in terms of, you know, is it because of what you can offer the client that might allow you to kind of keep that beta lower? And maybe you can just kind of wrap it into what your overall beta expectations are in that revised update. Thank you.

That concludes today's conference. Thank you all for your participation. You may disconnect at this time.

Jamie Dimon: Number two is that it will not come back to J.P. Morgan. And while we do provide credit to what you call shadow banks, it is very, we think it's very, very secure. That does not mean it won't come back to other credit providers.

Jeremy: Yeah, sure. So let me just summarize the drivers of the change in outlook. So the primary driver really is lower deposit rate paid expectations across both consumer and wholesale, which, as you mentioned, is driven by a couple of factors. So the change in the rate environment, you know, with cuts coming sooner in the outlook, does take some pressure off the reprice. And as you said, we're getting a lot of positive feedback from the field on our product offerings in the short term. Thank you very much. I think the goal of our conference, in particular, is really to get a lot of positive feedback from our folks in the branches.

Jeremy Barnum: The next question comes from the line of Mike Mayo with Wells Fargo Securities. You may proceed. Hey, Jeremy, you mentioned a degree of re-intermediation into the lending markets; you said capital markets. Thank you.

Jeremy: It's been very attractive to yield-seeking customers, so that's kind of working well. And then on the asset side, we are seeing a little bit higher car turnover, which is helping. And I'll just remind you that at a conference in February, I suggested that we were already starting to feel like some of the uncertainties we mentioned when giving the guidance had started all moving in the same direction. And that was one of the things that contributed to that.

Jamie Dimon: Yeah, Mike, so on the, and so I think, yeah, you're referring to my comments that I made in the commercial bank about the fact that the larger corporate segment within the commercial bank, which would generally have access to capital markets but also access to bank lending, at the margin is choosing to draw down on revolvers right now rather than access the capital markets. That is not a particularly meaningful driver of the increase in NII guidance. There are a lot of odds and ends in there, but the major drivers are the ones that I call out. And to be honest, I haven't actually specifically checked what's happening with card yields. I would imagine that they've gone up a little bit in line with rates, but I don't know. Follow-up. All right, and then one for you, Jamie.

Jeremy: So I think it's important to keep that in mind. You know, I think we're at a really good point. I think we're at a good point where we can afford to do everything in a way that's fair and fair, and just going forward is just a good adaptation. So hopefully, Mr. Miller, yes.

Operator: Thank you. Thank you, Robert. MR. MILLER You're moderated very well, the same way. But as Jamie has pointed out, like, you know, those uncertainties are all still there. We highlight them on the page and as we look forward to this year and into next year in the medium term.

Ken Usdin: Yeah. And as a follow-up on the point about rate expectations coming in now and potentially getting cut sooner, how do you take a look at what that might mean just for the broader economy? Is that, do you think it's more just because inflation is coming down? Do you think it's because the Fed's just got to react to an even tougher economy and still some of those storm clouds that might be out there? Just kind of, you know, just your general thinking about the other readthroughs of what, you know, lower rates quicker, you know, will mean for the broader economy. Well, first of all, I don't quite believe it.

Jamie Dimon: I guess. Taking the 10,000 foot level, I guess when you look at asset liability management, or AOM, you could call this nightmare on Amstreet. And you've seen some big problems at banks. And I guess how would you evaluate yourself, I guess, with this $7 billion hire and fire guy? It is probably good, but to what degree are you willing to sacrifice JPM shareholder money to help rescue problem banks that did not get their asset liability management correct? There are two really different questions.

Operator: So, you know, the rate curve, the Fed has the rate curve, the forward short-term rate curve, almost 1% higher than what the market has. So, you know, one of the things you got to always prepare for is it could be anything; we don't know what the rate curve is going to be in a year. And so we're quite cautious about that and quite thoughtful about that. You know, obviously, the short-term read is higher recessionary risk, but you know, and inflation is coming down. So I think inflation will come down a little bit. It could easily be stickier than people think, and therefore the rate curve will have to go up a little bit. Okay, thank you very much. Thank you. The next question comes from the line of John McDonald with Autonomous Research.

Jamie Dimon: So we've been quite cautious on interest rates for quite a while. How we invest our portfolio, what our expectations are, our stress testing, you know, the stress test, the CCAR stress test, as you know, had rates going down. I always looked at rates going up and be prepared for whether or not you think it's going to happen. So we've been quite conservative ourselves, and we don't mind continuing to do that because, you know, I remind people that having excess capital isn't losing it. It's kind of earnings in store. You get to deploy it later and maybe at a more opportune time when the time comes.

John Eamon McDonald: You may proceed. Jeremy, wanted to follow up again on the drivers of the NAI revision and the lower rates paid assumption. You mentioned the Fed cuts coming sooner and positive feedback on the customer offers. What about the March events?

Jamie Dimon: And we're not, you know, look at us. We'd like to help the system when it needs help, if we can reasonably do so. And we're not the only ones. You saw a lot of banks do that. And, you know, I was proud of them.

Jamie Dimon: I was proud of all of us; I think all of us did the right thing, whether, you know, ultimately, it works out or not. Well, you know, well, you can second guess that when it happens. But the fact is, you know, I think people want to help the system, and this whole banking thing was bad for banks. And you know, I knew that the second I saw the headline, you know, and you have Credit Suisse. We want healthy community banks, we want healthy regional banks, we want to help them get through this. We have, you know, remember, Mike, as you pointed out, we have the best financial system the world's ever seen. That does not mean it won't have problems, doesn't mean there shouldn't be changes made, but I think it's reasonable for people to help each other in times of need. And we've got, you know, we all did that during COVID. We all did that during COVID.

Jeremy: Did the bank failures there that happened in March, in your view, did they slow the reprice intensity because folks are moving for other reasons, or did they intensify it industry-wide because smaller banks have to reprice to keep their deposits? How do those events influence your view of the reprice? Yeah, John, it's a really good question.

Jamie Dimon: And we've obviously thought about that. But as we sit here today, I guess I have two answers. One is that it doesn't, it's not meaningfully affecting our current outlook. We don't see it as a major driver. And I think in terms of the larger dynamics that you lay out, it's just a little too early to tell. But from where we are right now, the base case is no. Okay, and then I wanted to ask Jamie, there's a narrative out there that the industry could see a credit crunch, banks are going to stop lending, even Jay Powell mentioned that as a risk. Do you see that in terms of anything you look at in terms of lending? And is that a reaction that makes sense that banks might be retrenching a lot here? Do you worry about that for the economy in terms of the credit crunch? Thanks.

Jamie Dimon: If you could, those who could did it during, you know, the great financial crisis, and I would expect, you know, people to do that going forward. Jamie, your CEO letter said the banking crisis isn't over. So what do you mean by that? Or is that dated two weeks later? Are you talking about contagion? Or what?

Jamie Dimon: The number of banks' offsides you can count on your hands in terms of like too much insured exposure, too much ATM, too much uninsured deposits. And so there may be additional bank deposits, I mean, bank failures, something like that, which we don't know. But you're going to see next week, regional banks have pretty good numbers. A lot of people are going to, you know, can take actions to, you know, remediate some of the issues they may have going forward. You know, you've already seen things calm down quite a bit, particularly in deposit flows. Warren Buffett was on TV talking about that he would bet a million dollars, I don't know if you saw that, that no depositor would lose money in America. He's willing to bet his own money. Of course, you know, he's a very bright man.

Jamie Dimon: I wouldn't use the word credit crunch if I were you. Obviously, there's gonna be a little bit of tightness. And most of that will be around certain real estate things. You've heard that from, you know, real estate investors already. So, you know, I just look at that as a kind of a thumb on the scale. It just makes the finance conditions a little bit tighter, you know, increases the odds of a recession. That's what that is.

Jamie Dimon: It's not like a credit crunch. Thank you. Our next question comes from Erika Najarian with UBS. You may proceed. Good morning.

Erika Najarian: My first question is, you mentioned that your reserve bill was driven mostly by worse economic assumptions. I'm wondering if you could update us on what unemployment rate you're assuming in your reserve. Yes, Erika, as you know, we take, I'm not going to go into a lot of detail here, but we take the outlook from our economists, we run a bunch of different scenarios, and we probability weight those. The central case outlook from our research team hasn't actually changed, but we felt that in line with what Jamie just said in terms of a little bit of tightening as a result of the events of March, it So we did that, which changed the weighted average expectation, and I think that the weighted average peak unemployment that we're using now is something like 5.8%.

Jamie Dimon: So this crisis is not going away. It will pass. And the one thing I pointed out when I answered the question just before about interest rates, people need to be prepared. They shouldn't pray that they won't go up.

Operator: They should prepare for them going up, and if it doesn't happen, Sharon Dippin. All right, thank you. The next question comes from the line of Betsy Graseck with Morgan Stanley. You may proceed. Hi, good morning, and Betsy Graseck.

Jeremy Barnum: I do want to unpack the question here on the possibility of higher-for-longer rates and how that impacts you in your non-markets NIR. Let's see, did we just lose you? I feel like you just dropped, can't hear me? Hello.

Jeremy: So as we think about all of what you've just told us, so. 81 billion of NII this year, and who knows when the medium-term is going to happen in the mid-70s. The clear strength of the franchise, producing 23% ROTC in a quarter where your CT1 is 13.8% and a reserve that already reflects 5.8% unemployment. As we think about recession and what JPMorgan can earn in a recession, do you think you can hit 17% ROTC even in 2024, assuming we do have a recession, you know, in the 24th, everybody's expecting, given all these revenue dynamics and how prepared you are on Yeah, I mean, that's an interesting question, Erika.

Operator: Okay, so I just wanted to unpack the higher for longer rate possibility as to how it impacts your NII because your NII guide is assuming the forward curve, if I understand correctly. So in the event that you get that higher for longer, you know, just how much does that impact the NII-X markets? Because, you know, I'm trying to triangulate here about maybe you lose some deposits, but if we have higher rates for longer, shouldn't we expect the trajectory to go up from this quarter as opposed to down? That's the question. Go ahead, Jeremy.

Jeremy Barnum: Sure. So, Betsy, your question is very good, and I would say that, you know, as the, like, if you look at the evolution of our outlook last year, it was pretty clear that we were very asset-sensitive, certainly in terms of the sort of one-year forward EAR type measure. You also obviously know that our current EAR actually shows us negative numbers, with a tiny bit liability-sensitive, and I won't get into all the nuances about why that may or may not be a great predictor in the short term. But the point is that the level of rates now is, of course, very different from what it was last year. And at this level of rates, the relationship between our short-term NAI evolution and the curve is not always going to be clear at any given moment. It's quite tricky, and it can behave in somewhat wonky ways as a function of, again, what I've alluded to a couple times on this call, the competitive environment for deposits, which is not, in fact, a sort of mathematically predictable thing as a function of the rate curve

Erika Najarian: I guess I'll say a couple of things. It's a great question. I want to see how Jeremy answers it. Okay, let's take a crack.

Jeremy: Let's see what's possible. I think number one, we believe, have said, and continue to believe that this is fundamentally a 17% share for the cycle ROTC franchise. So, number one.

Jamie Dimon: Number two, as Jamie always says, we run this company for all different scenarios and to have it be as resilient as possible across all different scenarios. On the particular question of ROTC expectations in 2024 contingent on the particular economic outlook, obviously, it depends a lot on the nature of the recession. I think we feel really good about how the company is positioned for a recession, but we're a bank. A very serious recession is, of course, going to be a headline, a headwind for returns, but we think even in a fairly severe recession, we'll deliver very good returns, whether that's 17% or not. Too much detail. Thank you. The next question comes from the line of Jim from Seaport Global Securities; you may proceed. Hey, good morning.

Jeremy Barnum: So that's why we're emphasizing all the different drivers of uncertainty in the NII. Um, yeah, so I just had so next quarter, we all kind of know already. Recorded that, we know a little bit less. Recorded that, we know a little bit less. In 24, we know very little.

Jamie Dimon: That number, you can imagine, this is a little inside baseball now; the number that we're talking about for 2024 is not based upon an implied curve. It's based upon us looking at multiple potential scenarios, leveling them kind of out, and saying this is kind of a range. And you're absolutely correct; you could have an environment of higher for longer that might be better than that. But remember, higher for longer comes with a lot of other things attached to it.

Jamie Dimon: You know, like, maybe a recession, stagflation, lower volumes. So I wouldn't look at that as high or low as positive. It might be a slight positive in that line, but it probably would be a negative in other lines.

Jim: Maybe just a little bit on the deposit, your thought process there, you've seen some inflows. Why do you think you will lose them going forward? And maybe just maybe talk a little bit about the dynamics and pricing. Do you feel that, given the inflows, you see some pricing power for the larger bank? Yeah, a couple things there.

Jamie Dimon: Yep, got it. Okay, that's super helpful to understand how you think through that. And then the follow-up is just on the buybacks. So do I take your comments to mean that you're on pause now? And if that's the case, what would be the driver of restarting?

Jeremy: So first of all, we don't know, right? The deposits just came in. We don't know; we're guessing. Number two, the deposits just came in. So, by definition, these are somewhat flighty deposits because they just came into us. So it's prudent and appropriate for us to assume that they won't be particularly stable. Number three, there is a natural amount of internal migration of deposits to money funds. So you have to overlay that, and that's embedded in our. And number four, it's a competitive market. And, you know, it's entirely possible that people temporarily come to us and then, over time, decide to go elsewhere. So for all those reasons, you know, we're just being realistic about the stickiness. If I added, I wouldn't say there is, I would say categorically, there's no pricing power that the bigger banks have, because if you look at the pricing, and we look at pricing sheets all the time, every bank is in a slightly different position, and every bank is competing for three months, six months, nine months, savings rates, and There's no pricing power for the bank, but obviously, we all have different franchises, and we're all in a slightly different position. Now, fair, all fair points.

Jamie Dimon: And we're also peering ahead, looking at those little bit of storm clouds, so we're going to be kind of cautious. So we're going to make this decision every day. We also don't like to tell the market what we're doing, just so you know. Yeah. And then can you give us any sense of what Basel IV's endgame means to you and your RWAs? How much should we be baking in for this?

Jeremy Barnum: Yeah, Betsy, we really don't have any new information here, right? I mean, I think clearly, if you go back like a year, we were maybe a little bit more optimistic that it might be across all the different levers and all the different pieces of it closer to capital neutral. I think now it feels like it's likely to be worse than that. Hopefully, it's not too much worse than that.

Jeremy Barnum: And I would just remind you that there are a lot of different levers. So when NPR comes, that's only going to be part of it. There's going to be other pieces to the holistic review, and it's going to take a lot of time to phase in, and we're going to have time to adjust. So, you know, we'll know when we know. And even the banks, by the way, when you look at it, the issue wasn't capital. It was other things.

Jim: And maybe just to follow up on John's question on the lending environment. You talked about the industry likely pulling back. Are you changing your underwriting standards in any way? Just trying to think through whether there is potential for some market share gains given your strength of capital and liquidity? Or how are you thinking about the loan environment? I'd say very modestly, but you know, we look at that all the time.

Jamie Dimon: And so, you know, I'm just hoping regulators are very thoughtful. And the other thing is, they should a priori decide what they want in the banking system at this point. Because I've made it clear. I can look at the banking system today and say that no bank should keep a loan, if possible. That's how much capital is now being required for loans; that will be based on the current rule set. Yeah, because the market is pricing, you know, holds, the market would take loans at much lower capital ratios, and banks are being forced to hold for them. I'm talking about just loans only.

Jamie Dimon: Yeah, and you know, we always say, right, we underwrite through the cycle. And I think notably, we didn't loosen our underwriting standards when all the numbers looked crazy good during the pandemic, and we're not going to like, Thank you very much. Okay, great, thanks.

Operator: The next question comes from the line of Gerard Cassidy with RBC Capital Markets. You may proceed. Thank you. Hi Jeremy.

Gerard Cassidy: In your comments about your CET1 ratio, obviously, it came in strong at 13.8%. You've got the G-CIT buffers obviously going up next year. And we have the stress test coming this summer or in June, the results of which maybe will lead to banks, including yours, having a higher stress capital buffer. Should we think about that CET1 ratio being by the end of the year, do you think? Yeah, so there are a few things on there, Gerard.

Jamie Dimon: You know, and that's why you're seeing a lot of capital go to, I mean, a lot of credit go to non-banks, and dramatically, by the way, rapidly and dramatically. And so if you're a regulator, you should be looking at it and saying, do I want that? Is that a good thing for the system? If you believe it's a good thing for the system, raise the capital; more credit will go out of the system. That's fine. If that's what they want, that's fine. But they should do it with forethought. Not accidentally.

Jeremy: So, you know, we've previously said that we were targeting 13 and a half in the first quarter of 24 as a function of assuming an unchanged STB, the increased G-sub step, and operating with a 50 basis point buffer. So the point that Jamie made a second ago, in light of the environment, Fossil 4, dry powder, you know, who knows how we'll tweak that, you know, going forward, but that's still our base. Specifically on the stress test, you know, I'll...

Jamie Dimon: I like the NII from loans better than the gain on sale, so I'll prefer the former, not the latter, but thanks. I appreciate it. Thank you. Thank you. Thank you. Thank you. The next question comes from the line of Glenn Schorr with Evercore ISI.

Operator: Your line is now open, as you talked about in your letter about regulators avoiding the knee-jerk reaction, which you addressed earlier. I'm curious about how they have reacted and should react now, and my point is consumers can move excess cash balances if they want more insurance, they can do that in a lot of different ways move it into the treasury money market. The question I have for you is on the corporate side, have you seen big changes in how corporate treasurers or CFOs are adapting their cash balances? Capital, and should they need to, I appreciate your warm-up.

Jeremy: Contrary to what I've heard some people argue, our ability to predict the SCB ahead of time from running our own process is actually quite limited, and you'll remember last year that even though we did predict an increase, we were off by almost a factor of two in terms of how big it wound up being, and that was a big surprise for the whole industry. So we want to be quite humble about our ability to predict the SCB. But having said that, for right now, we are assuming it will be unchanged. There are some tailwinds in there through the OCI, but we believe there will likely be some offsets and harsher credit shocks in the numbers. So for planning purposes right now, we're assuming flat for SCB, and we'll know soon enough what the actual number is. Sure. And then, just as a follow-up, if I heard you correctly, could you give us a little more color? I think you mentioned that in building the loan loss reserve this quarter, you identified some one-off credits. I don't know if that's how you said it, but some larger credits. Were they oriented towards commercial real estate? Were they commercial? Any more color there?

Jamie Dimon: Yeah, Glenn and Schorr, we really haven't seen any big changes to speak of. And I do think it's worth saying, I think you're sort of hinting at this a little bit when you talk about the behavior of corporations. When we talk about responses to the recent events, through the lens of uninsured deposits, that's obviously very different if you're talking about large balances of non-operating uninsured deposits from financial institutions or de facto financial institutions versus, you know, normal, large corporate operating You know, when we saw it in commercial banking, Payments, Investment Banking, and Custody, you did see money move, or I would call it excess cash was moved out, but they have options. What I would call more like operational cash, so think even of small retail, small companies, middle market companies, et cetera. That tends to be fairly sticky because you have your loans there, you have your money there, and you get more and more competitive in rates.

Jeremy: Um, no, it wasn't commercial real estate. It was just a couple of single-name items in the corporation. Leverage loan-type items or just regular corporate credit? regular corporate credits. I'd rather not get into too much detail. Thank you. The next question comes from the line of Ibrahim Poonawalla with Bank of America Merrill Lynch. You may proceed. Good morning.

Jamie Dimon: That's why I think you see a lot of regional banks; they've got sticky middle market deposits. If I've lent you, you know, $30 million, and you have $10 million, you're probably going to be leaving it in my bank. And you know, and they're also more competitive on the rate for that. So I think you shouldn't be looking at deposits like one class; there's a whole bunch of different types, and, you know, analytically, you go through each one and try to figure out what the stickiness is and what the stickiness is, et cetera.

Ibrahim Poonawalla: I guess maybe one question, Jeremy, you reminded us of the... relatively low office exposure for JPM, but obviously, you're big players in the CRE market. So give us a sense of, when you look at the two pressure points on CRE, one, how much is oversupply, and that probably goes beyond office into apartments. How much of an issue is oversupply in the market as we think about the next few years going into a weakening economy, and how much of a risk is higher for longer rates, in that if the central banks can't cut rates in the next year or two, we Yes, let me sort of respond narrowly in connection with our portfolio and our exposure, okay?

Jamie Dimon: But I think they've already, as the Fed has raised rates, you've already seen, that's the reason we expected outflows, both from consumers and corporate customers. Just to follow up, the other thing that caught my eye in the letter is that you mentioned that you're exploring new capital optimization strategies, including partnerships and securitization. What's different than what you've already been doing? We've got our smartest people figuring out every angle to reduce capital requirements for JP Morgan. That's the difference between them.

Ibrahim Poonawalla: So really, the large majority of our, So, what we've been able to do with our exposure is multi-family lending in supply-constrained markets. And I think it's quite important to recognize the difference between that and sort of higher end, higher price point, non-rent controlled, not supply-constrained markets. So, our space is really quite different in that respect, and I think that's a big part of the reason the performance has been so good for so long.

Jamie Dimon: And we've been doing it. But you know, there's securitizations, there are partnerships, you've seen a lot of private equity in the life insurance companies. And, you know, I expect that we're going to come up with a whole bunch of different things over time. And we'll shed certain assets, too.

Operator: Our final question comes from the line of Matt O'Connor with Deutsche Bank. You may proceed. Good morning.

Jeremy: Of course, we watch it very carefully, and we don't assume that past performance predicts future results here, but I think our multi-family lending portfolio is quite low risk. And also, housing is in short supply in America. It's not massively oversupplied like you saw in 2008. Yeah, and then in terms of office space, as you know, our exposure is quite small.

Jeremy Barnum: You guys talked about one of the drivers of the higher net interest income guide this year being due to likely higher credit card balances. And I was just wondering if you could flesh out what changed there on the outlook, say, versus three months ago. And I guess, is it a good or a bad thing that those balances will be higher than you thought? Yeah, so the story there is kind of the same story we've been talking about for a while. It's just a matter of degree.

Jamie Dimon: Yes, you know, Jamie's also mentioned all the refi dynamics that you mentioned, too, are something that the office space is processing one way or the other. Our office exposure is quite modest, very concentrated in Class A buildings and sort of dense urban locations where, you know, the return to the office narrative as one of the drivers is generally in favor of high occupancy. So again, watching it, they're obviously.

Jeremy Barnum: So you know, we had revolving balances that obviously dropped a lot during the pandemic period. And then we talked about having them recover in absolute dollar terms to the same level as we'd had pre-pandemic, which I think happened last quarter. And then the remaining narrative is just the further normalization of the revolve per account because we have also seen some account growth. And that continues to happen. And so it goes. And yeah, we also agree with Mike's question earlier; we're seeing a higher yield there as well. So, um, and on your question of whether it's good or bad, you know obviously there is a point at which the consumers have too much leverage. We don't see that yet, so it's normalization. That's a good thing for us. Okay, then just separately to squeeze in, you guys took some security losses again this quarter. And in the past, you've talked about, You know, really just going security by security looking for kind of pricing opportunities. Is that kind of what's going on again this quarter, or is there some kind of broader in watching, and that'll be every quarter the rest of our lives? Sell what we find rich, and we buy what we think is dear.

Jamie Dimon: All right, thank you. We have no further questions. Excellent. Folks, thank you very much. Thank you. I'm going to take this back. Thank you, everybody. Thank you. That concludes today's conference. Thank you all for your participation. You may disconnect at this time.

Operator: Thank you. The next question comes from the line of Mike Mayo with Wells Fargo Securities. You may proceed. Hey, Jeremy, you mentioned a degree of re-intermediation into the lending markets; you said capital markets activity has gone to bank lending. And I'm just wondering, as part of your $7 billion increase in IIGuide, are you assuming better loan spread? And on the topic of loan pricing, why aren't your credit card yields going higher than where they are today? Thanks.

Mike Mayo: Yeah, Mike, so on the, and so I think, yeah, you're referring to my comments that I made in the commercial bank about the fact that the larger corporate segment within the commercial bank, which would generally have access to capital markets but also access to bank lending, at the margin is choosing to draw down on revolvers right now rather than access the capital markets. That is not a particularly meaningful driver of the increase in NII guidance. There are a lot of odds and ends in there, but the major drivers are the ones that I called out. And to be honest, I haven't actually specifically checked what's happening with card yields. I would imagine that they've gone up a little bit in line with rates, but I don't know. Follow-up. All right, and then one for you, Jamie.

Mike Mayo: I guess. Taking the 10,000 foot level, I guess when you look at asset liability management, or AOM, you could call this nightmare on Amstreet. And you've seen some big problems at banks. And I guess how would you evaluate yourself, I guess, with this $7 billion hire and fire guy? It is probably good, but to what degree are you willing to sacrifice JPM shareholder money to help rescue problem banks that did not get their asset liability management correct? There are two really different questions.

Jamie Dimon: So, we've been quite cautious on interest rates for quite a while, how we invest our portfolio, what our expectations are, our stress testing. You know, the stress test, the CCAR stress test, as you know, had rates going down. I always looked at rates going up and being prepared for them, whether or not you think it's going to happen. So we've been quite conservative ourselves, and we don't mind continuing to do that because, you know, I remind people that having excess capital isn't losing it. It's kind of earnings in store. You get to deploy it later and maybe at a more opportune time when the time comes.

Mike Mayo: If you could, those who could did it during, you know, the great financial crisis, and I would expect, you know, people to do that going forward. Jamie, your CEO letter said the banking crisis isn't over. So what do you mean by that? Or is that dated two weeks later? Are you talking about contagion? Or what?

Jamie Dimon: So this crisis is not going away. It will pass. And the one thing I pointed out is that when I answered the question just before about interest rates, people need to be prepared. They shouldn't pray that they don't go up. They should prepare for them going up. And if it doesn't happen, serendipitously.

Mike Mayo: All right, thank you. The next question comes from the line of Betsy Graseck with Morgan Stanley. You may proceed. Hi, good morning, and Betsy Graseck.

Betsy L. Graseck: I do want to unpack the question here on the possibility of higher-for-longer rates and how that impacts you in your non-markets NIR. Let's see, did we just lose you? I feel like you just dropped. Can't hear me? Hello.

Betsy L. Graseck: Okay, so I just wanted to unpack the higher for longer rate possibility as to how it impacts your NII because your NII guide is assuming the forward curve, if I understand correctly. So in the event that you get that higher for longer, you know, just how much does that impact the NIIX markets? Because, you know, I'm trying to triangulate here about maybe you lose some deposits, but if we have higher rates for longer, shouldn't we expect the trajectory to go up from this quarter as opposed to down? Is that, that's the question. Go ahead, Jeremy, and then I'll... Sure.

Jeremy: So, Betsy, your question is very good, and I would say that, you know, as the, like, if you look at the evolution of our outlook last year, it was pretty clear that we were very asset-sensitive, certainly in terms of the sort of one-year forward EAR type measure. You also obviously know that our current EAR actually shows us negative numbers, with a tiny bit liability-sensitive, and I won't get into all the nuances about why that may or may not be a great predictor in the short term. But the point is that the level of rates now is, of course, very different from what it was last year. And at this level of rates, the relationship between our short-term NAI evolution and the curve is not always going to be clear at any given moment. It's quite tricky, and it can behave in somewhat... wonky ways as a function of, again, what I've alluded to a couple times on this call, the competitive environment for deposits, which is not, in fact, a sort of mathematically predictable thing as a function of the rate curve.

Jeremy: So that's why we're emphasizing all the different drivers of uncertainty in the NIIO. Yeah, so I just had so next quarter, we all kind of know already. Recorded that we know a little bit less. Recorded that we know a little bit less. In 24, we know very little.

Betsy L. Graseck: Yep, got it. Okay, that's super helpful to understand how you think through that. And then the follow-up is just on the buybacks. So do I take your comments to mean that you're on pause now? And if that's the case, what would be the driver of restarting?

Jamie Dimon: Yeah, no, we're not on pause now. We're doing a little bit now. We obviously have a lot of excess capital. We also like to buy our stock when it's cheap, not just when it's available. And we're also peering ahead, looking at those little bit of storm clouds, so we're going to be kind of cautious. So we're going to make this decision every day. We also don't like to tell the market what we're doing, just so you know. Yeah. And then, can you give us any sense of what Basel IV's endgame means to you and your RWAs? How much should we be baking in for this?

Betsy L. Graseck: Yeah, Betsy, we really don't have any new information here, right? I mean, I think clearly, if you go back like a year, we were maybe a little bit more optimistic that it might be across all the different levers and all the different pieces of it closer to capital neutral. I think now it feels like it's likely to be worse than that. Hopefully, it's not too much worse than that.

Jeremy: And I would just remind you that there are a lot of different levers. So when NPR comes, that's only going to be part of it. There's going to be other pieces to the holistic review, and it's going to take a lot of time to phase in, and we're going to have time to adjust. So, you know, we'll know when we know. And even the banks, by the way, when you look at it, and even though some of the banks are in trouble, have plenty of capital, the issue wasn't capital. It was other things.

Jamie Dimon: And so, you know, I'm just hoping regulators are very thoughtful. And the other thing is they should a priori decide what they want in the banking system at this point. Because I've made it clear. I can look at the banking system today and say that no bank should keep a loan, if possible. That's how much capital is now being required for loans. The loans are based on the current rule set.

Jamie Dimon: Yeah, because the market is pricing, you know, holds, the market would take loans at much lower capital ratios, and banks are being forced to hold for them. I'm talking about just loans only, you know, and that's why you're seeing a lot of capital go to, I mean, a lot of credit go to non-banks, and dramatically, by the way, rapidly and dramatically. And so if you're a regulator, you should be looking at it and saying, do I want that? Is that a good thing for the system? If you believe it's a good thing for the system, raise capital, and more credit will go out of the system. That's fine. If that's what they want, that's fine, but they should do it with forethought and not accidentally.

Betsy L. Graseck: I like the NII from loans better than the gain on sale, so I'll prefer the former, not the latter, but thanks. I appreciate it. Thank you. Bye-bye. Thank you. The next question comes from the line of Glenn Schorr with Evercore ISI. Your line is now open, and you talked about in your letter about regulators avoiding the knee-jerk reaction, which you addressed earlier. I'm curious about how they have reacted and should react. And my point, my question is, consumers can move excess cash balances if they want more insurance. They can do that in a lot of different ways.

Glenn Schorr: Move it, treasuries, money market, extra... The question I have for you is on the corporate side, have you seen big changes in how corporate treasurers or CFOs are managing their cash balances? Yeah, Glenn and Schorr, we really haven't seen any big changes to speak of.

Jeremy: And I do think it's just worth saying, I think you're sort of hinting at this a little bit when you talk about the behavior of corporations. When we talk about responses to the recent events, through the lens of uninsured deposits, that's obviously very different if you're talking about large balances of non-operating uninsured deposits from financial institutions or de facto financial institutions versus, you know, normal, large corporate Payments, Investment Banking, and Custody; you did see money move, or I would call it excess cash was moved out, but they have options. What I would call more like operational cash. So think even of small retail, small companies, middle market companies, et cetera; that tends to be fairly sticky because you have your loans there, you have your money there, and you get more and more competitive in rates. And that's why I think you see a lot of regional banks; they've got sticky deposits.

Jamie Dimon: Middle Market Deposits, But I think they've already, as the Fed has raised rates, you've already seen that's the reason we expected outflows, both from consumers and corporate customers. Just to follow up, the other thing that caught my eye in the letter is that you mentioned that you're exploring new capital optimization strategies, including partnerships and securitization. What's different than what you've already been doing? We've got our smartest people to figure out every angle to reduce capital requirements for J.P. Morgan. That's the difference between them.

Matt O'connor: You guys talked about one of the drivers of the higher net interest income guide this year being due to likely higher credit card balances. And I was just wondering if you could flesh out, you know, what changed there on the outlook, say, versus three months ago? And I guess, is it a good or a bad thing that those balances will be higher than you thought? Yeah, so the story there is kind of the same story we've been talking about for a while. It's just a matter of degree.

Jeremy: So you know, we had revolving balances obviously drop a lot during the pandemic period, and then we talked about having them recover in absolute dollar terms to the same level as we'd had pre-pandemic, which I think happened last quarter. And then the remaining narrative is just the further normalization of the revolve per account because we have also seen some account growth, and that continues to happen. And so. And yeah, we also answered Mike's question earlier; we're seeing a higher yield there as well. So, um, and on your question of whether it's good or bad, obviously, there is a point at which the consumers have too much leverage. But we don't see that yet.

Jeremy: Normalization, that's a good thing for us. Okay, then just separately to squeeze in, you guys took some security losses again this quarter. And in the past, you've talked about, And that'll be every quarter for the rest of our lives. Sell what we find rich, and we buy what we think is dear.

Jamie Dimon: All right, thank you. We have no further questions. Excellent. Folks, thank you very much. Thank you. Thank you. That concludes today's conference. Thank you all for your participation. You may disconnect at this time.

Q1 2023 JPMorgan Chase & Co Earnings Call

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