Q2 2024 JPMorgan Chase & Co Earnings Call

Operator: A JPMorgan Chase & Co. earnings conference call will begin shortly. BF-WATCH TV 2021, Good morning, ladies and gentlemen. Welcome to JPMorgan Chase's second quarter 2024 earnings call. This call is being recorded.

Unknown Attendee: Good morning, ladies and gentlemen. Welcome to JP Morgan Chase's second quarter of 2024 earnings call. This call is being recorded. Your line will be muted for the duration of the call.

Speaker Change: Good morning, ladies and gentlemen. Welcome to JPMorgan Chase's second quarter 2024 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. The presentation is available on JPMorgan Chase's website, and please refer to the disclaimer in the back concerning forward-looking statements.

Operator: Your line will be muted for the duration of the call. We will now go live to the presentation. The presentation is available on JPMorgan Chase's website, and please refer to the disclaimer at the back concerning forward-looking statements. Please stand by. At this time, I would like to turn the call over to JPMorgan Chase's Chief Financial Officer, Jeremy Barnum. Mr. Barnum, please go ahead. Thank you, and good morning,

Unknown Attendee: We will now go live to the presentation.

Unknown Attendee: The presentation is available on JP Morgan Chase's website, and please refer to the disclaimer in the back concerning forward-looking statements. Please stand by.

Unknown Attendee: At this time, I would like to turn the call over to JP Morgan Chase's Chief Financial Officer, Jeremy Barnum. Mr. Barnum, please go ahead.

Speaker Change: Please stand by.

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

Jeremy Barnum: Thank you, and good morning, everyone. Starting on page one, the firm reported net income of $18.1 billion, EPS of $6.12 on revenue of $51 billion within ROTCE of 28%. These results included the $7.9 billion net gain related to Visa shares, and the $1 billion foundation contribution of the appreciated Visa stock. Also included is 546 million of net investment securities losses in corporate. Excluding these items, the firm had net income of $13.1 billion, EPS of $4.40, and an ROTCE of 20%.

Jeremy Barnum: Starting on page one, the firm reported net income of $18.1 billion, EPS of $6.12 on revenue of $51 billion with an ROTCE of $28.2 billion. These results included the $7.9 billion net gain related to visa shares and the $1 billion foundation contribution of the appreciated visa stock. Also included is $546 million of net investment securities losses in corporate. Excluding these items, the firm had net income of $13.1 billion, EPS of $4.40, and an ROGCE of $20.

Jeremy Barnum: Thank you and good morning everyone. Starting on page 1, the firm reported net income of $18.1 billion, EPS of $6.12 on revenue of $51 billion with an ROTCE of 28%.

Jeremy Barnum: These results included the $7.9 billion net gain related to visa shares and the $1 billion foundation contribution of the appreciated visa stock. Also included is $546 million of net investment securities losses in corporate.

Jeremy Barnum: Excluding these items, the firm had net income of $13.1 billion, EPS of $4.40, and an ROGCE of 20%.

Jeremy Barnum: There are a couple of highlights. In the CIV, IB fees were 50% year-on-year, and 17% quarter-on-quarter, and markets revenue was up 10% year-on-year. In CCB, we had a record number of first-time investors from strong customer acquisition across checking accounts and card, and we've continued to see strong net inflows across AWM.

Jeremy Barnum: Touching on a couple of highlights, in CIB, IB fees were up 50% year on year and 17% quarter on quarter, and markets revenue was up 10% year on year. And at CCB, we had a record number of first-time investors and strong customer acquisition across checking accounts and CARD. And we've continued to see strong net inflows across AWS. Now, before I give more detail on the results, I just want to mention that, starting this quarter, we are no longer explicitly calling out the First Republic contribution in the press.

Jeremy Barnum: Touching on a couple of highlights. In the CIB, IB fees were up 50% year-on-year and 17% quarter-on-quarter, and markets revenue was up 10% year-on-year.

Jeremy Barnum: In CCB, we had a record number of first-time investors and strong customer acquisition across checking accounts and CARD, and we've continued to see strong net inflows across AWM.

Jeremy Barnum: Now, before I give more detail on the results, I just want to mention that starting this quarter, we are no longer explicitly calling out the First Republic contribution in the presentation. Going forward, we'll only specifically call it out if it is a meaningful driver in the year-on-year comparison. As a reminder, we acquired First Republic in May of last year, so the prior year quarter only has two months of First Republic results compared to the full three months this quarter. Also, in the prior year quarter, most of the expenses were incorporated, whereas now they are primarily involved in line of business.

Jeremy Barnum: Now, before I give more detail on the results, I just want to mention that starting this quarter, we are no longer explicitly calling out the First Republic contribution in the presentation.

Jeremy Barnum: Going forward, we'll only specifically call it out if it is a meaningful driver in the year-on-year comparison. As a reminder, we acquired First Republic in May of last year, so the prior year quarter only has two months of First Republic results compared to the full three months this quarter.

Jeremy Barnum: Going forward, we'll only specifically call it out if it is a meaningful driver in the year-on-year comparison. As a reminder, we acquired First Republic in May of last year, so the prior year quarter only had two months of First Republic results compared to the full three months this quarter. Also, in the prior year quarter, most of the expenses were in corporate, whereas now they are primarily in the relevant, Now turning to page 2 for the phone-wide results. The firm reported revenue of $51 billion, up $8.6 billion, or 20% year-on-year.

Jeremy Barnum: Also, in the prior year quarter, most of the expenses were in corporate, whereas now they are primarily in the relevant line of business.

Jeremy Barnum: Now, turning to page two for the firm-lined results. The firm reported revenue of 51 billion, up 8.6 billion or 20% year-on-year, excluding both the visa gain that I mentioned earlier, as well as last year's First-Republic Oregon purchase gain of 2.7 billion. Revenue of 43.1 billion was up 3.4 billion, or 9%. An I.I.X. markets was up 568 million or 3%, driven by the impact of balance sheet mix and higher rates, higher revolving balances in card and the additional month of First-Republic related N.I., partially offset by deposit margin compression and lower deposit balance. An I.I.R.X. markets was up 7.3 billion or 56%; excluding the items I just mentioned, it was up 2.1 billion or 21%, largely driven by higher investment banking revenue and asset management fees.

Jeremy Barnum: Now turning to page 2 for the phone line results.

Jeremy Barnum: The firm reported revenue of $51 billion, up $8.6 billion, or 20% year-on-year.

Jeremy Barnum: Excluding both the visa gain that I mentioned earlier, as well as last year's First Republic bargain purchase gain of $2.7 billion, revenue of $43.1 billion was up $3.4 billion, or 9%. NIIX markets was up 568 million, or 3%. Driven by the impact of balance sheet mix and higher rates, higher revolving balances in CARD, and the additional month of First Republic-related NII, partially offset by deposit margin compression and lower deposit value, IRxMarkets was up 7.3 billion, or 56%.

Jeremy Barnum: Excluding both the visa gain that I mentioned earlier as well as last year's First Republic bargain purchase gain of $2.7 billion, revenue of $43.1 billion was up $3.4 billion or 9%.

Jeremy Barnum: NII X Markets was up $568 million or 3%.

Jeremy Barnum: Driven by the impact of balance sheet mix and higher rates, higher revolving balances in CARD, and the additional month of First Republic-related NII, partially offset by deposit margin compression and lower deposit balances.

Jeremy Barnum: And IRxMarkets was up $7.3 billion, or 56%.

Jeremy Barnum: Excluding the items I just mentioned, it was up 2.1 billion or 21, largely driven by higher investment banking revenue and asset management fees. Both periods included net investment security, and the market's revenue was up 731 million or 10% year on year; expenses of $23.7 billion or up $2.9 billion or 14% year on year. Excluding the foundation contribution I previously mentioned, expenses were up 9%. I'm highly driven by compensation, including revenue-related compensation and growth. The credit costs were $3.1 billion, reflecting net charge-offs of $2.2 billion and a net reserve bill of $821 million.

Jeremy Barnum: Excluding the items I just mentioned, it was up $2.1 billion, or 21%, largely driven by higher investment banking revenue and asset management fees. Both periods included net investment securities losses.

Jeremy Barnum: Both periods included net investment securities losses, and markets revenue was up 731 million, or 10% year-on-year.

Jeremy Barnum: here. Expenses of 23.7 billion, or up 2.9 billion, or 14%, you're on here. Excluding the foundation contribution I previously mentioned, expenses were up 9%. We're not only driven by compensation, including revenue-related compensation and growth and employees. And credit costs were 3.1 billion, reflecting net charge-offs of 2.2 billion and a net reserve bill of 821 million. Net charge-offs were up 820 million year on year, predominantly driven by cart. The net reserve bill included 699 million consumer and 189 million also.

Jeremy Barnum: And market's revenue was up $731 million, or 10% year-on-year.

Jeremy Barnum: Expenses of $23.7 billion were up $2.9 billion, or 14% year-on-year. Excluding the foundation contribution I previously mentioned, expenses were up 9%, primarily driven by compensation, including revenue-related compensation and growth in employees.

Jeremy Barnum: And credit costs were $3.1 billion, reflecting net charge-offs of $2.2 billion and a net reserve build of $821 million.

Jeremy Barnum: Net charge-offs were up $820 million year-on-year, predominantly driven by CART. The net reserve bill included $609 million in consumer and $189 million in wholesale. Onto the balance sheet and capital on page three. We ended the quarter with a CT1 ratio of 15.3%, up 30 basis points versus the prior quarter, primarily driven by net income, largely offset by capital distributions and higher RWA. As you know, we completed CCAR a couple of weeks ago, and I've already disclosed a number of the key points.

Jeremy Barnum: Net charge-offs were up $820 million year-on-year, predominantly driven by CART. The net reserve bill included $609 million in consumer and $189 million in wholesale.

Jeremy Barnum: Onto balance sheet-in capital on page three. We ended the quarter with a C-T-1 ratio of 15.3%, up 30 basis points versus the prior quarter, primarily driven by net income, largely offset by capital distributions and higher RWA. As you know, we completed C-CAR a couple of weeks ago and have already disclosed a number of the key points. Let me summarize them again here. Our preliminary SCB is 3.3%, although the final SCB could be higher. The preliminary SCB, which is out from the current requirement of 2.9%, results in a 12.3% standardized C-T-1 ratio requirement, which goes into effect in the fourth quarter of 2024.

Speaker Change: On to balance sheet and capital on page 3.

Speaker Change: We ended the quarter with a C2-1 ratio of 15.3%, up 30 basis points versus the prior quarter, primarily driven by net income, largely offset by capital distributions and higher RWA.

Speaker Change: As you know, we completed CCAR a couple of weeks ago, and I've already disclosed a number of the key points. Let me summarize them again here. Our preliminary SCB is 3.3%, although the final SCB could be higher.

Jeremy Barnum: Let me summarize them again here. Our preliminary SCB is 3.3%, although the final SCB could be higher. The preliminary SCB, which is up from the current requirement of 2.9%, results in a 12.3% standardized CT1 ratio requirement which goes into effect in the fourth quarter of 2024.

Speaker Change: The preliminary SCB, which is up from the current requirement of 2.9%, results in a 12.3% standardized CT-1 ratio requirement, which goes into effect in the fourth quarter of 2024.

Jeremy Barnum: And finally, the firm announced that the board intends to increase the quarterly common stock dividend from $1.15 to $1.25 per share in the third quarter of 2024. Now, let's go to our businesses, starting with CCB Unpaid. CCP reported net income of $4.2 billion on revenue of $17.7 billion, which was up 3% year-on-year.

Jeremy Barnum: And finally, the firm announced that the board intends to increase the quarterly common stock dividend from $1.15 to $1.25 per share in the third quarter of 2024.

Speaker Change: And finally, the firm announced that the board intends to increase the quarterly common stock dividend from $1.15 to $1.25 per share in the third quarter of 2024.

Jeremy Barnum: Now, let's go to our businesses, starting with CCB on page four. CCB reported net income of 4.2 billion on revenue of 17.7 billion, which was up 3% year on year. In banking and wealth management, revenue was down 5% year on year, reflecting lower deposits and deposit margin compression, partially offset by growth and wealth management revenue. Average deposits were down 7% year on year and 1% quarter on quarter. Fine investment assets were up 14% year on year, predominantly driven by market performance. In a home lending, revenue of 1.3 billion was up 31% year on year, predominantly driven by higher NII, including one additional month of the first public portfolio.

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

Speaker Change: CCB reported net income of $4.2 billion on revenue of $17.7 billion, which was up 3% year-on-year.

Jeremy Barnum: Banking and wealth management revenue was down 5% year on year, reflecting lower deposits and deposit margin compression, partially offset by growth and wealth management. Average deposits were down 7% year on year and 1% quarter on quarter; client investment assets were up 14% year on year, predominantly driven by market performance. In home lending, revenue of 1.3 billion was up 31% year-on-year, predominantly driven by higher NII, including one additional month of the First Republic.

Speaker Change: In banking and wealth management, revenue was down 5% year-on-year, reflecting lower deposits and deposit margin compression, partially offset by growth in wealth management revenue.

Speaker Change: Average deposits were down 7% year-on-year and 1% quarter-on-quarter. Fine investment assets were up 14% year-on-year, predominantly driven by market performance.

Speaker Change: In home lending, revenue of 1.3 billion was up 31% year-on-year, predominantly driven by higher NII, including one additional month of the First Republic portfolio.

Jeremy Barnum: Turning to card services and auto, revenue was up 14% year on year, predominantly driven by higher card NII on higher revolving balances. Cardout standings were up 12% through the strong account acquisition and the continued normalization of overall. And in auto, originations were 10.8 billion, down 10%, coming off strong originations from a year ago, while continuing to maintain healthy margins. Expenses of 9.4 billion were up 13% year on year, predominantly driven by first public expenses now reflected in the lines of business, as I mentioned earlier, as well as field compensation and continued growth in technology and marketing.

Jeremy Barnum: Turning to card services and auto, revenue was up 14% year-on-year, predominantly driven by higher card NII and a higher revolving balance. Card outstandings were up 12% due to strong account acquisition and the continued normalization of Revolve. And in auto, originations were 10.8 billion, down 10% coming off strong originations from a year ago, while continuing to maintain healthy margins. Expenses of $9.4 billion were up 13% year-on-year, predominantly driven by First Republic expenses now reflected in the lines of business, as I mentioned earlier, as well as field compensation and continued growth in technology and marketing. In terms of credit performance this quarter, credit costs were $2.6 billion, reflecting net charge-offs of $2.1 billion of $813 million year-on-year, predominantly driven by cards, as newer vintages season and credit normalization continue.

Speaker Change: Turning to card services and auto, revenue was up 14% year-on-year, predominantly driven by higher card NII on higher revolving balances.

Speaker Change: Card Outstandings were up 12% due to strong account acquisition and the continued normalization of Revolve.

Speaker Change: And in auto, originations were $10.8 billion, down 10% coming off strong originations from a year ago, while continuing to maintain healthy margins.

Speaker Change: Expenses of $9.4 billion were up 13% year-on-year, predominantly driven by First Republic expenses, now reflected in the lines of business, as I mentioned earlier, as well as field compensation and continued growth in technology and marketing.

Jeremy Barnum: Interimless of credit performance this quarter, credit costs were 2.6 billion, reflecting net charge offs of 2.1 billion of 813 million year on year, predominantly driven by card as new or vintage season and credit normalization continues.

Speaker Change: In terms of credit performance this quarter, credit costs were $2.6 billion, reflecting net charge-offs of $2.1 billion, up $813 million year-on-year, predominantly driven by card, as newer vintages season and credit normalization continues.

Jeremy Barnum: James. The net reserve bill was $579 million, also driven by Card, due to long growth and updates to certain macroeconomic variables.

Jeremy Barnum: The net reserve billed was $579 million, also driven by CARD due to long growth and updates to certain macroeconomic variables. Next, the Commercial and Investment Bank on page 5. Our new commercial and investment bank reported net income of $5.9 billion on revenue of $17.9 billion.

Speaker Change: The net reserve billed was $579 million, also driven by CARD, due to long growth and updates to certain macroeconomic variables.

Jeremy Barnum: Next, the commercial and investment bank on page five. Our new commercial and investment bank reported net income of $5.9 billion on revenue of $17.9 billion. You'll note that we are disclosing revenue by business, as well as breaking down the banking and payments revenue by client coverage segment in order to best highlight the relevant trends in both important dimensions of the wholesale franchise. This quarter, IVFIs dropped 50% here on year, and we ranked number one with year-to-date wallet share of 9.5%. In advisory, these dropped 45%, primarily driven by the closing of a few large deals and a week prior year quarter.

Speaker Change: Next, the Commercial and Investment Bank on page 5.

Speaker Change: Our new commercial and investment bank reported net income of $5.9 billion on revenue of $17.9 billion.

Jeremy Barnum: You'll note that we are disclosing revenue by business, as well as breaking down the banking and payments revenue by client coverage segment, in order to best highlight the relevant trends in both important dimensions of the wholesale franchise. This quarter, IB fees were up 50% year-on-year, and we ranked number one with a year-to-date wallet share of 9.5%. In advisory, fees were up 45%, primarily driven by the closing of a few large deals in a week prior to your quarter. Underwriting fees were up meaningfully, with equity up 56% and debt up 51%.

Speaker Change: You'll note that we are disclosing revenue by business, as well as breaking down the banking and payments revenue by client coverage segment, in order to best highlight the relevant trends in both important dimensions of the wholesale franchise.

Speaker Change: This quarter, IBPs were up 50% year-on-year, and we ranked number one with year-to-date wallet share of 9.5%.

Speaker Change: In advisory, fees were up 45%, primarily driven by the closing of a few large deals in a week prior year quarter.

Jeremy Barnum: Underwriting fees were up meaningfully, with equity up 56% and debt up 51%, benefiting from favorable market conditions. In terms of the outlook, we're pleased with both the year-on-year and sequential improvement in the quarter. We remain cautiously optimistic about the pipeline, although many of the same had wins or still in effect. It's also worth noting that poll-forward refinancing activity was a meaningful contributor to the strong performance in the first half of the year. Payments revenue was $4.5 billion, down 4% year-on-year, as deposit margin compression and higher deposit-related client credits were largely offset by fee growth. Moving to markets, total revenue was 7.8 billion of 10% year-on-year.

Speaker Change: Underwriting fees were up meaningfully, with equity up 56% and debt up 51%, benefiting from favorable market conditions.

Jeremy Barnum: Benefiting from Favorable Market Conditions. In terms of the outlook, we're pleased with both the year-on-year and sequential improvement in the quarter. We remain cautiously optimistic about the pipeline, although many of the same headwinds are still in effect. It's also worth noting that pull-forward refinancing activity was a meaningful contributor to the strong performance in the first half of the year. Payments revenue was four and a half billion dollars, down 4% year on year as deposit margin compression and higher deposit related client credits were largely offset by fees. Moving to markets, total revenue was 7.8 billion, up 10% year on year.

Speaker Change: In terms of the outlook, we're pleased with both the year-on-year and sequential improvement in the quarter. We remain cautiously optimistic about the pipeline, although many of the same headwinds are still in effect.

Speaker Change: It's also worth noting that pull-forward refinancing activity was a meaningful contributor to the strong performance in the first half of the year.

Speaker Change: Payments revenue was $4.5 billion, down 4% year-on-year, as deposit margin compression and higher deposit-related client credits were largely offset by fee growth.

Jeremy Barnum: Fixed income was up 5% with continued strength and securitized products, and equity markets were up 21% with equity derivatives up on improved client, Install Record Revenue in Prime on Growth and Client Balances Amid Supportive Equity Market Levels. Security Services revenue of $1.3 billion was up 3% year-on-year, driven by higher volumes and market levels, largely offset by deposit margin compression. Expenses of $9.2 billion were up 12% year-on-year, largely driven by higher revenue-related compensation, legal expense, and volume-related non-compensation.

Speaker Change: Moving to markets, total revenue was $7.8 billion, up 10% year-on-year. Fixed income was up 5%, with continued strength and securitized products. And equity markets was up 21%, with equity derivatives up on improved client activity.

Jeremy Barnum: Big Stinkcom was up 5% with continued strength in security products and equity markets was up 21% with equity derivatives up on improved client activity. We saw a record revenue in Prime on growth and client balances amid supportive equity market levels. Security services revenue was 1.3 billion, was up 3% year-on-year, driven by higher volumes and market levels, largely offset by deposit margin compression. Expenses of 9.2 billion were up 12% year-on-year, largely driven by higher revenue-related compensation, legal expense, and volume-related non-compensation expense. In banking and payments, average loans were up 2% year-on-year due to the impact of the first Republican acquisition and flat sequentially.

Speaker Change: We saw record revenue and prime on growth and client balances amid supportive equity market levels.

Speaker Change: Security Services revenue of 1.3 billion was up 3% year-on-year, driven by higher volumes and market levels, largely offset by deposit margin compression.

Speaker Change: Expenses of $9.2 billion were up 12% year-on-year, largely driven by higher revenue-related compensation, legal expense, and volume-related non-compensation expense.

Jeremy Barnum: In banking and payments, average loans were up 2% year on year due to the impact of the first public acquisition and flat sequential. Demand for new loans remains muted as middle market and large corporate plans remain somewhat cautious due to the economic environment, and revolver utilization continues to be below pre-pandemic levels. Also, capital markets are open and are providing an alternative to traditional bank lending for these clients. However, for CRE, higher rates continue to suppress both lone origination and pale. Average client deposits were up 2% year-on-year and relatively flat sequentially. Finally, credit costs were $384 million.

Speaker Change: In banking and payments, average loans were up 2% year-on-year due to the impact of the First Republic acquisition and flat sequentially.

Jeremy Barnum: Demand for new loans remains muted as middle market and large corporate plans remain somewhat cautious due to the economic environment, and revolver utilization continues to be below pre-pandemic levels. Also, capital markets are open and are providing an alternative to traditional bank lending for these clients. In CRE, higher rates continue to suppress both loan origination and pay-off activity. Average client deposits were up 2% year-on-year and relatively flat sequentially. Finally, credit costs were 384 million. The net reserve build of 220 million was primarily driven by incorporating the first public portfolio in the firm's model approach. That charge-offs were 164 million, of which about a half was a- and Office.

Speaker Change: Demand for new loans remains muted as middle market and large corporate plans remain somewhat cautious due to the economic environment, and revolver utilization continues to be below pre-pandemic levels.

Speaker Change: Also, capital markets are open and are providing an alternative to traditional bank lending for these clients.

Speaker Change: In CRE, higher rates continue to suppress both loan origination and payoff activity.

Speaker Change: Average client deposits were up 2% year-on-year and relatively flat sequentially.

Jeremy Barnum: The net reserve build of $220 million was primarily driven by incorporating the First Republic portfolio in the firm's modeled approach. Net charge-offs were $164 million, of which about half was in. Then, to complete our lines of business, AWM on page 6. Asset and Wealth Management reported net income of $1.3 billion with a pre-tax margin of 32%.

Speaker Change: Finally, credit costs were $384 million. The net reserve bill of $220 million was primarily driven by incorporating the First Republic portfolio in the firm's modeled approach. Net charge-offs were $164 million, of which about half was in office.

Jeremy Barnum: Then, the completed lines of business, AWM, on page 6. Acid and Wild management reported net income of 1.3 billion with pre-tax margin of 32%. Revenue of 5.3 billion was up 6% year on year, earned by growth in management fees on higher average market levels and strong net inflows, as well as higher brokerage activity, largely offset by deposit margin compression. Expenses of 3.5 billion were up 12% year on year, largely driven by higher compensation, primarily revenue-related compensation and continued growth in our private banking and visor teams. For the quarter, long-term net inflows were 52 billion, led by equities in fixed income, and in liquidity, we saw net inflows of 16 billion.

Speaker Change: Then, to complete our lines of business, AWM on page 6.

Speaker Change: Asset and Wealth Management reported net income of $1.3 billion with pre-tax margin of 32%.

Jeremy Barnum: Revenue of $5.3 billion was up 6% year-on-year, driven by growth in management fees on higher average market levels and strong net inflows, as well as higher brokerage activity, largely offset by deposit margin compression. Expenses of $3.5 billion were up 12% year-on-year, largely driven by higher compensation, primarily revenue-related compensation, and continued growth in our private banking advisory committee. For the quarter, long-term net inflows were $52 billion, led by equities and fixed income, and in liquidity, we saw a net inflow of $16 billion.

Speaker Change: Revenue of $5.3 billion was up 6% year-on-year, driven by growth in management fees on higher average market levels and strong net inflows, as well as higher brokerage activity, largely offset by deposit margin compression.

Speaker Change: Expenses of $3.5 billion were up 12% year-on-year, largely driven by higher compensation, primarily revenue-related compensation, and continued growth in our private banking advisor teams.

Speaker Change: For the quarter, long-term net inflows were $52 billion, led by equities and fixed income. And in liquidity, we saw net inflows of $16 billion.

Jeremy Barnum: AUM of 3.7 trillion was up 15% year on year, and client assets of 5.4 trillion were up 18% year on year, driven by higher market levels and continued net inflows. And finally, loans and deposits were both flat quarter-on-quarter.

Jeremy Barnum: AUM of 3.7 trillion was up 15% year-on-year, and client assets of 5.4 trillion were up 18% year-on-year, driven by higher market levels and continued net, And finally, Loans and Deposits were both flat quarterly. Burnington Corporate on page 7. Corporate reported net income of $6.8 billion on revenue of $10.1 billion.

Speaker Change: AUM of $3.7 trillion was up 15% year-on-year, and client assets of $5.4 trillion were up 18% year-on-year, driven by higher market levels and continued net input.

Speaker Change: And finally, loans and deposits were both flat, court-on-court.

Jeremy Barnum: Turning to corporate on page 7, corporate reported net income of 6.8 billion on revenue of 10.1 billion. Excluding this quarter's visor-related gain and the first Republican purchase gain in the prior year, NIR was up approximately 450 million a year on year. NIR was up 626 million year on year, driven by the impact of balance sheet mix, and higher rates. Expenses of 1.6 billion were up 427 million year on year. Excluding foundation contribution, expenses were down 573 million year on year, largely as a result of moving First Republic related expense of a corporate into the relevant segments.

Speaker Change: Turning to corporate on page 7.

Speaker Change: Corporate reported net income of $6.8 billion on revenue of $10.1 billion.

Jeremy Barnum: Excluding this quarter's visa-related gain and the First Republic bargain purchase gain in the prior year, NIR was up approximately $450 million year-on-year. NII was up $626 million year-on-year, driven by the impact of balance sheet mix and higher rates. Expenses of $1.6 billion, or up $427 million year-on-year, excluding foundation. And to finish off, we have the Outlook on... Our 2024 guidance, including the drivers, remains unchanged from what we said at investor. We continue to expect NII and NIIX markets for approximately $91 billion, just at an expense of about $92 billion, and on credit, card net charge offer rates of approximately $3.5 billion.

Speaker Change: Excluding this quarter's visa-related gain and the First Republic bargain purchase gain in the prior year, NIR was up approximately $450 million year-on-year.

Speaker Change: NII was up $626 million year-on-year, driven by the impact of balance sheet mix and higher rates.

Speaker Change: Expenses of $1.6 billion were up $427 million year-on-year, excluding foundation contribution expenses were down $573 million year-on-year, largely as a result of moving First Republic-related expense out of corporate into the relevant segments.

Jeremy Barnum: To finish off, we have the Outlook on page 8. Our 2024 guidance, including the drivers, remains unchanged on what we said at an Investor Day. We continue to expect an II and then IIX markets for approximately 91 billion. Adjusted expense of about 92 billion, and on credit, card net charge of 8 of approximately 3.4%.

Speaker Change: To finish up, we have the Outlook on page 8.

Speaker Change: Our 2024 guidance, including the drivers, remains unchanged from what we said at Investor Day.

Speaker Change: We continue to expect NII and NIIx markets for approximately $91 billion, adjusted expense of about $92 billion, and on credit, card net charge-offer aid of approximately 3.4%.

Jeremy Barnum: But a wrap up, the reported performance for the quarter was exceptional and actually represents record revenue and net income. But more importantly, after excluding the significant items, the underlying performance continues to be quite strong. And as always, we remain focused on continuing to execute with discipline.

Jeremy Barnum: But to wrap up, the reported performance for the quarter was exceptional and actually represents record revenue and netting. But more importantly, after excluding the significant items, the underlying performance continues to be quite strong. And, as always, we remain focused on continuing to execute within the framework. And with that, I'll open the line. Please stand by.

Speaker Change: To wrap up, the reported performance for the quarter was exceptional and actually represents record revenue and net income.

Speaker Change: But more importantly, after excluding the significant items, the underlying performance continues to be quite strong. And as always, we remain focused on continuing to execute with discipline.

Unknown Attendee: And with that, let's open the line for Q&A. Please stand by.

Speaker Change: And with that, let's open the line for Q&A.

Speaker Change: Please stand by.

Steven Chubak: For our first question, we'll go to the line of Steven Chewbuck. From Wolf Research, please go ahead.

Operator: For our first question, we'll go to the line of Steven Chubak from Wolfe Research. Please go ahead. Hi, good morning, Jeremy.

Speaker Change: For our first question, we'll go to the line of Steven Chubak from Wolfe Research. Please go ahead.

Jeremy Barnum: Hi, good morning, Jeremy. So why did I start off with a question on capital? Just given some indications that the Fed is considering favorable revisions to both Basel III endgame and the GSI research calculations, which I know you've been pushing for for some time. As you evaluate just different capital scenarios, are these revisions material enough for they could support a higher normalized Rochy at the firm versus the 17% target. And if so, just how that might impact or inform your appetite for buybacks going forward. Right. Okay.

Steven Joseph Chubak: So I wanted to start off with a question on capital, just given some indications that the Fed is considering favorable revisions to both Basel III's endgame and the G-SIB surcharge calculations, which I know you've been pushing for for some time. As you evaluate just different capital scenarios, are these revisions material enough where they could support a higher normalized ROTC at the firm versus a 17% target? And if so, just how that might impact or inform your appetite for buybacks going forward.

Speaker Change: Hi, good morning, Jeremy.

Steven Joseph Chubak: So I wanted to start off with a question on capital just given some indications that the Fed is considering favorable revisions to both Basel III endgame

Steven Joseph Chubak: and the GSIB surcharge calculations, which I know you've been pushing for for some time.

Steven Joseph Chubak: As you evaluate just different capital scenarios, are these revisions material enough where they could support a higher normalized ROTC at the firm versus a 17% target? And if so, just how that might impact or inform your appetite for buybacks going forward.

Steven Joseph Chubak: Right. Okay, now, thanks, Steve. And actually, before answering the question, I just want to remind everyone that Jamie is not able to join us today because he has a travel conflict overseas. So it's just going to be me today.

Jeremy Barnum: Now, thanks, Steven.

Jeremy Barnum: Actually, before answering the question, I just want to remind everyone that Jamie is not able to join because he has a travel conflict overseas. So it's just going to be me today. Okay, good question on the Capitol and the ROTC. So let me start with the ROTC point first. In short, my answer to that question would be no. It's hard to imagine a scenario coming out of the whole potential range of outcomes on Capitol that involves an upward revision on ROTC. If you think about the way we've been talking about this, we've said that, you know, before the Basel III endgame proposal, we had a 17% lose cycle target, and that, well, you can imagine a range of different outcomes; the vast majority of them involve expansions with denominator, and while we had ideas about changing the perimeter and repricing, all of which are still sort of an effect, most of those would be thought of as minigames rather than things that would actually increase the ROTC, and I don't really think that answer has particularly changed.

Speaker Change: Right, okay now, thanks Steve, and actually before answering the question, I just want to remind everyone that Jamie is not able to join because he has a travel conflict overseas, so it's just going to be me today.

Jeremy Barnum: Okay, good question on the capital and the ROTC. So let me start with the ROTC point first. In short, my answer to that question would be no. It's hard to imagine a scenario coming out of the whole potential range of outcomes on capital that involves an upward revision on raw. If you think about the way we've been talking about this, we said that, you know, before the Basel III endgame proposal, we had a 17% cycle target, and that while you can imagine a range of different outcomes, the vast majority of them involve expansions of the denominator.

Speaker Change: Okay, good question on the capital and the ROTC. So let me start with the ROTC point first.

Speaker Change: In short, my answer to that question would be no. It's hard to imagine a scenario coming out of the whole potential range of outcomes on capital that involves an upward revision on Roth-Z.

Speaker Change: If you think about the way we've been talking about this, we've said that, you know, before the Basel III endgame proposal,

Speaker Change: We had a 17%...

Speaker Change: ZOOCYCLE TARGET, and that

Speaker Change: Well, you can imagine a range of different outcomes, the vast majority of them involve expansions.

Jeremy Barnum: And while we had ideas about changing the perimeter and repricing, all of which are still sort of in effect, you know, most of those would be thought of as mitigants rather than things that would actually, like, increase the ruts. And I don't really think that answer has particularly changed.

Speaker Change: and the denominator. And while we had ideas about changing the perimeter and repricing, all of which are still sort of in effect, you know, most of those would be thought of as mitigants rather than things that would actually like increase the ROTC.

Jeremy Barnum: So as of now, that's what I would say, which is a good pivot to the next point, which is, yeah, we've been reading the same press coverage you've been reading. And it's fun and interesting to speculate about the potential outcomes here, but in reality, we don't know anything you don't know. We don't know how reliable the press coverage is.

Jeremy Barnum: So as of now, that's what I would say, which is a good pivot to the next point, which is, yeah, we've been reading the same press coverage; a couple of you have been reading, and, you know, it's fun and interesting to speculate about the potential outcomes here, but in reality, we don't know anything. You don't know, we don't know how reliable the press coverage is, and so in that sense, I feel like on the overall Capitol return and buy-back trajectory, not much has actually changed relative to what I laid out at investor day, the comments that I made then, the comments that Jamie made then, as well as the comments that Jamie made subsequent week at an industry conference.

Speaker Change: And I don't really think that answer has, you know, particularly.

Speaker Change: So as of now, that's what I would say, which is a good pivot to the next point, which is, yeah, we've been reading the same press coverage you've been reading.

Speaker Change: And, you know, it's fun and interesting to speculate about the potential outcomes here, but in reality, we don't know anything you don't know, we don't know how reliable the press coverage is, and so in that sense, I feel like on the overall capital return and buyback trajectory,

Jeremy Barnum: And so in that sense, I feel like on the overall capital return and buyback for Chuck, not much has actually changed relative to what I laid out at Investor Day, the comments that I made then, the comments that Jamie made then, as well as the comments that Jamie made subsequent week at an industry conference. So maybe I'll just briefly summarize for everyone's benefit what we think that is, which is one: we do recognize that our current practice on capital return and buybacks does lead to an ever-expanding CET1 ratio.

Speaker Change: Not much has actually changed relative to what I laid out at Investor Day, the comments that I made then, the comments that Jamie made then, as well as the comments that Jamie made subsequent week at an industry conference.

Jeremy Barnum: So maybe I'll just briefly summarize for everyone's benefit what we think that is, which is one, we do recognize that our current practice on Capitol return and by-backs does lead to an ever-expanding CT1 ratio, but obviously we're going to run the company over the cycle over time at a reasonable CT1 ratio with reasonable buffers relative to our requirements. So after all the uncertainty is sorted out, the question of the deployment of the Capitol, one way or another, is a matter of when, not if. On the Capitol hierarchy, it's also worth noting that another thing that remains on change, so we're viewing quickly, you know, growing the business organically and organically, sustainable dividend, and in that context, it's worth noting that the board's announced intention to increase it to $1.25 is a 19% increase prior to last year, so that's a testament for performance, and that is a return of Capitol.

Speaker Change: So, maybe I'll just briefly summarize for everyone's benefit what we think...

Speaker Change: We do recognize that our current practice on capital return and buybacks does lead to an ever-expanding C2-1 ratio.

Jeremy Barnum: But obviously, we're going to run the company over the cycle over time at a reasonable CET1 ratio with reasonable buffers relative to our requirements. So after all the uncertainty is sorted out, the question of the deployment of capital one way or another is a matter of when, not if.

Speaker Change: But, obviously, we're going to run the company over the cycle, over time, at a reasonable CET1 ratio with reasonable buffers relative to our requirements. So, after all the uncertainty is sorted out, the question of...

Jeremy Barnum: On the capital hierarchy, it's also worth noting that's another thing that remains unchanged. [inaudible] And so, you know, as we said here today, when you look at the relationship between the opportunity cost of not deploying capital and the opportunities to deploy capital outside the firm, it's kind of hard to imagine an environment where that relationship argues more strongly for patients. So given all that, putting it all together, I'm sorry for the long answer. We remain comfortable with the current amount of excess capital, and as Jamie has said, we really continue to think about it as earnings in store.

Speaker Change: The deployment of the capital one way or another is a matter of when, not if.

Speaker Change: On the capital hierarchy, it's also worth noting that's another thing that remains unchanged.

Speaker Change: Review it quickly, growing the business organically and inorganically, sustainable dividend, and in that context it's worth noting that the board's announced intention to increase it to $1.25 is a 19% increase prior to last year, so that's a testament to our performance and that is a return of capital.

Jeremy Barnum: And then finally, buy-back. But that hierarchy does not commit us to returning 100% of the Capitol generation in any given quarter. And so, you know, as we said here today, when you look at the relationship between the opportunity cost of not deploying the Capitol and the opportunities to deploy the Capitol outside the firm, it's kind of hard to imagine an environment where that relationship argues more strongly for patients.

Speaker Change: And then finally, buyback. But that hierarchy does not commit us to return 100% of the capital generation in any way.

Speaker Change: and a given core data.

Speaker Change: And so, you know, as we said here today, when you look at the relationship between the opportunity cost of not deploying the capital and the opportunities to deploy the capital outside the fund,

Speaker Change: It's kind of hard to imagine an environment where that relationship argues more strongly for patients.

Jeremy Barnum: So, given all that, putting it all together, I'm sorry for the long answer; we remain comfortable with the current amount of excess Capitol. And the same he said, we really continue to think about it as earnings and store. as much as I can.

Speaker Change: So, given all that, putting it all together, I'm sorry for the long answer, we remain comfortable with the current amount of excess capital, and as Jamie has said, we really continue to think about it as earnings in store as much as anything.

Steven Chubak: No need to apologize, Jeremy. That was a really helpful perspective.

Steven Joseph Chubak: That was a really helpful perspective, maybe just for my follow-up on NII. You've been very consistent in flagging the risks related to NII over-earning, especially in light of potential deposit attrition as well as repricing headwinds. In the second quarter, we did see at least some moderation in repricing pressures. Deposit balances were also more resilient, and it was a seasonally weak quarter for deposit growth.

Steven Chubak: Maybe just for my follow-up on NII, you've been very consistent just in flagging the risk related to NII over earning, especially in light of potential deposit attrition, as well as repricing headwinds. In the second quarter, we did see at least some moderation in repricing pressures. Deposit balances were also more resilient in what's a seasonally weak quarter for deposit growth. So just given the evidence that some deposit pressures appear to be abating, do you see the potential for NII normalizing higher? And where do you think that level could ultimately be in terms of stabilization?

Speaker Change: No need to apologize, Jeremy, that was a really helpful perspective. Maybe just for my follow-up on NII, you've been very consistent just in flagging the risks related to NII over-earning, especially in light of potential deposit attrition as well as repricing headwinds.

Speaker Change: In the second quarter, we did see at least some moderation in repricing pressures.

Speaker Change: Deposit balances were also more resilient in what's a seasonally weak order for deposit growth. So just given the evidence that some deposit pressures appear to be abating, do you see the potential for NII normalizing higher? And where do you think that level could ultimately be in terms of stabilization?

Jeremy Barnum: So just given the evidence that some deposit pressures appear to be abating, do you see the potential for NII to normalize higher, and where do you think that level could ultimately be in terms of stabilization? Yeah, interesting question, Steve. So let's talk about deposit balances. So yeah, I see your point about how balance pressures are slightly abating. You know, when you look at the system as a whole, just to go through it, QT is still a bit of a headwind, and loan growth is modest and not enough to offset that.

Jeremy Barnum: Yeah, interesting questions. So let's talk about deposit balances. So, yeah, I see your point about how balance pressures are slightly abating. When you look at the system as a whole, just to go through it, QT is still a bit of a headwind. Long growth is modest and not enough to offset that. And RRP seems to have settled in roughly at its current levels, and there are reasons to believe that it might not go down that much more. Over that could always change, and that could supply extra reserves into the system. But on balance and that across all those various effects, we still think that there are net headwinds to deposit balances.

Jeremy Barnum: And RRP seems to have settled in roughly at its current levels, and there are reasons to believe that it might not go down that much more, although that could always change, and that could supply extra reserves into the system. But on balance, across all those various effects, we still think that, you know, there are net headwinds to deposit balances. So when we think of our balance outlook, we see it as, you know, flat to slightly down, with our sort of market share and growth ambitions offsetting those system-wide hazards.

Speaker Change: Yeah, interesting question, Steve. So, let's talk about deposit balances. So,

Speaker Change: Yeah, I see your point about how balance pressures are slightly abating. You know, when you look at the system as a whole,

Speaker Change: Just to go through it.

Speaker Change: QT is still a bit of a headwind. Loan growth is modest and not enough to offset that. And RRP seems to have settled in roughly at its current levels, and there are reasons to believe that it might not go down that much more, although that could always change and that could supply.

Speaker Change: Extra reserves into the system, but on balance and that across all those various effects

Speaker Change: We still think that, you know, there are net headwinds to deposit balances. So when we think of our balance outlook,

Jeremy Barnum: So when we think of our balance outlook, we see it as flat to slightly down, maybe with our market share and growth ambitions offsetting those system-wide headwinds. So, in terms of normalizing higher, I guess it depends on relative to what. But I think it's definitely too early to be calling the end of the over-earning narrative or the normalization narrative. Clearly, the main difference in our current guidance relative to what we had earlier in the year, which implied a lot more sequential decline, is just the change in the fat outlook. So two cuts versus six cuts is the main difference there.

Speaker Change: We see it as, you know, flat to slightly down, maybe, with our sort of market share and growth ambitions offsetting those system-wide headwinds.

Jeremy Barnum: So, you know, in terms of normalizing higher, I guess it depends on relative to what, but, you know, I think it's definitely too early to be sort of calling the end of the over-earning narrative or the normalization narrative. Clearly, the main difference in our current guidance relative to what we had earlier is just the change in the Fed outlook. So two cuts versus six cuts, the main difference there.

Speaker Change: So, you know, in terms of normalizing higher, I guess it depends on relative to what, but, you know, I think it's definitely too early.

Speaker Change: to be sort of calling the end of the over-earning narrative or the normalization narrative. Clearly, the main difference in our current guidance relative to what we had earlier in the year, which implied a lot more sequential decline,

Speaker Change: is just the change in the Fed outlook, so two cuts versus six cuts is the main difference there. But, you know, obviously based on the latest inflation data and so on, you could easily get back to a situation with a lot more cuts in the yield.

Jeremy Barnum: But obviously, based on the latest inflation data and so on, you could easily get back to a situation with a lot more cuts than the yield curve. So we'll see how it goes. In the end, we're kind of focused on just running the place, recognizing, and then trying not to be distracted by what remains some amount of over earning, whatever it is.

Steven Joseph Chubak: But you know, obviously, based on the latest inflation data and so on, you could easily get back to a situation with a lot more cuts. So we'll see how it goes, you know, and in the end, we're kind of focused on. I'm just running the place recognizing and trying not to be distracted by what remains.

Speaker Change: So we'll see how it goes, you know, and in the end we're kind of focused on just running the place, recognizing and trying not to be distracted by what remains some amount of over-earning, whatever it is.

Steven Chubak: I understand, Jeremy. Thanks so much for taking my questions.

Operator: [inaudible] Jeremy, thanks so much for taking my questions. Next we'll go to the line of Saul Martinez from HSBC. Please go ahead. Hi, good morning.

Speaker Change: Understood, Jeremy. Thanks so much for taking my questions.

Saul Martinez: Next, we'll go to the line of Sol Martinez from HSBC. Please go ahead.

Steve: Thanks, Steve.

Speaker Change: Next we'll go to the line of Saul Martinez from HSBC. Please go ahead.

Saul Martinez: Thanks for taking my question. Jeremy, can you give an update on the stress capital buffer? You noted, obviously, that there is an error in the Fed's calculation due to OCI. Can you just give us a sense of what the dialogue with the Fed looks like? Is there a process to modify the SEB higher?

Saul Martinez: Hi, good morning. Thanks for taking my question.

Jeremy Barnum: Jeremy, can you give an update on the stress capital buffer? You noted, obviously, that. You think there is an error in the Fed's calculation in due to OCI. Can you just give us a sense of what the dialogue with the Fed looks like? Is there a process to modify this to be higher? And if you give us a sense of what that process looks like?

Saul Martinez: Hi, good morning, thanks for taking my question. Jeremy, can you give an update on the stress capital buffer? You noted obviously that.

Saul Martinez: You think there is an error in the Fed's calculation due to OCI. Can you just give us a sense of what the dialogue with the Fed looks like? Is there a process to modify the FCB higher? And if you could give us a sense of what that process looks like.

Jeremy Barnum: Yeah, so I'm not going to comment about any conversations with the Fed, you know, they not to confirm or deny that they even exist, you know, that stuff is private, and, you know, so then if you talk about like the timing here, right, so you know that the stress capital buffer that's been released to 3.3% is a preliminary number. By rule, the Fed has to release that by August 31st; it may come sooner. You know, you talked about an error in the calculation; we haven't used that word. You know, what we know, what we believe rather, is that the amount of OCI gain that came through the Fed's results looked non-intuitively high to us. And, you know, if you adjust that in ways that we think are reasonable, you know, you would get a slightly higher stress capital buffer. Whether the Fed agrees and whether they decide to make that change or not is up to them, and, you know, we'll see what happens.

Jeremy Barnum: And if you could give us a sense of what that process looks like. Yeah, so I'm not going to comment on any conversations with the Fed. You know, not to confirm or deny that they even exist, you know, that stuff is private and and, you know, if you talk about the timing here, right, so you know that the stress capital buffer that's been released at 3.3% is a preliminary number. By rule, the Fed has to release that by August 31st.

Speaker Change: Yeah, so I'm not going to comment about any conversations with the Fed.

Speaker Change: Not to confirm or deny that they even exist, you know, that stuff is private, and, uh...

Speaker Change: And, you know...

Speaker Change: And then if you talk about like the timing here, right, so you know that the stress-capital buffer has been released.

Speaker Change: is a preliminary number. By rule, the Fed has to release that by August 31st. It may come sooner.

Jeremy Barnum: It may come sooner. You know, you talked about an error in the calculation. But we haven't used that word yet.

Speaker Change: You know, you talked about an error in the calculation. We haven't used that word. You know, what we know, what we believe, rather, is that...

Jeremy Barnum: You know, what we know, or rather, what we believe, is that the amount of OCI gain that came through the Fed's disclosed results looked non-intuitively high to us, and, you know, if you adjusted that in ways that we think are reasonable, you would get a slightly higher stress capital buffer. Whether the Fed agrees and whether they decide to make that change or not is up to them, and, you know, we'll see what happens.

Speaker Change: The amount of OCI gain that came through the FEDSA-disclosed results looked non-intuitive.

Speaker Change: And if you adjust that in ways that we think are reasonable, you know, you would get a slightly higher stress-capital buffer.

Speaker Change: Whether the Fed agrees and whether they decide to make that change or not is up to them, and, you know, we'll see what happens.

Jeremy Barnum: I think the larger point is that if you look at the industry as a whole, and if you sort of put us into that with some higher proforma, SCB, whatever it might suitably be, you actually see once again quite a bit of volatility in the year-on-year change in the stress capital buffer from many firms, and it's just sort of reiterating, and another example of what we've said a lot over the years, that it's volatile, it's untransparent, it makes it very hard to manage the capital of a bank, it leads to excessively high management buffers, and, you know, we think it's really not a great way to do things, so I'll leave it at that.

Jeremy Barnum: I think the larger point is that if you look at the industry as a whole, and if you sort of put us into that with some higher proforma SCB, whatever, Unknown Attendee, Erika Najarian, Manan Gosalia, Jeremy Barnum, Kenneth Usdin, Ebrahim Poonawala, Another example of what we've said a lot over the years that it's volatile, it's And, you know, we think it's not a great way to do things. I'll leave it at that. Okay, I got it. That's helpful.

Speaker Change: I think the larger point is that if you look at the industry as a whole, and if you sort of put us into that with some higher proforma SCB, whatever it might be,

Speaker Change: [inaudible]

Speaker Change: And another example of what we've said a lot over the years, that it's volatile, it's untransparent, it makes it very hard to manage the capital of a bank, it leads to excessively high management buffers, and, you know, we think that

Saul Martinez: Okay, got it.

Saul Martinez: Just following up on capital returns, you know, on Steve's question, I think you highlighted in response that it's a matter of when, not if, and, you know, obviously, Jamie's not there, and I can't speak for Jamie, but he seems to have shown limited enthusiasm for, you know, a special dividend or, you know, buybacks at current valuations. Can you just give us a sense of, you know, how you're thinking about the various options, any updated thoughts on your special dividend, and can you do other things like, for example, have a material increase in your dividend payout, sort of a step function increase where, you know, keep that flat and grow into that, grow your earnings into that over time?

Speaker Change: It's really not a great way to do things, so I'll leave it at that.

Saul Martinez: That's helpful.

Saul Martinez: Just following up on capital returns on Steve's question, you know, I think you highlighted a response, as a matter of when, not if, and, you know, obviously Jamie's not there, you can't speak for Jamie, but seems to have shown limited enthusiasm for, you know, a special dividend, or, or, you know, buybacks at current valuations. You just give us a sense of, you know, how you're thinking about the various options, any updated thoughts on your special, on a special dividend, and can you do other things like, for example, have a material increase in your dividend payout, sort of a step function increase, where, you know, keep that flat and grow into that, grow your earnings into that over time.

Speaker Change: Okay, got it. That's helpful. Just following up on capital returns, you know, on Steve's question, you know, I think you highlighted in response, it's a matter of when.

Speaker Change: Not if, and you know, obviously Jamie's not there, you know, you can't speak for Jamie, but seems to have shown limited enthusiasm for, you know, a special dividend or, you know, buybacks at current valuations.

Speaker Change: Can you just give us a sense of...

Speaker Change: You know, how you're thinking about the various options.

Speaker Change: Any updated thoughts on the special dividend?

Speaker Change: And can you do other things like, for example...

Speaker Change: have a material increase in your dividend payout, sort of a step function increase, where, you know, keep that flat and grow into that, grow your earnings into that over time. Can you just maybe give us a sense of how you're thinking about what, you know, what options you have available to deploy that, you know, that capital?

Jeremy Barnum: Can you just maybe give us a sense of how you're thinking about what, you know, what options you have available to deploy that, you know, that capital? Sure, yeah.

Saul Martinez: Yeah, I mean, I would direct you to read, I'm sure you have, Jamie's comments at the industry conference where he participated the week after Investor Day, because he went into a good amount of detail on this stuff, addressing some of these points. And I think this comment there about the special dividend was that it's not really our preference. You know, we hear from people that many of our investors wouldn't find that particularly appealing, and he said as much that it wouldn't be sort of our first choice.

Jeremy Barnum: I mean, I would direct you to read, I'm sure you have, you know, Jamie's comments at the industry conference, where he participated the week after Investor Day, because he wanted just a good amount of detail on this stuff, addressing some of these points. And I think this comment there about the special dividend was that it's not really our preference; you know, we hear from people that many of our investors wouldn't find that particularly appealing. And he said as much that it wouldn't be sort of our first choice.

Speaker Change: I would direct you to read, I'm sure you have Jamie's comments at the industry conference.

Speaker Change: Where he participated the week after Investor Day because he went into a good amount of detail on this stuff.

Speaker Change: Addressing some of these points and I think this comment there about the special dividend was that it's not really our preference you know, we hear from people that many of our investors

Speaker Change: wouldn't find that particularly appealing.

Jeremy Barnum: So I think the larger point is just that, to you, a little bit to your question, there are a number of tools in the toolkit, and they're really the same tools that are part of a hierarchy. So first and foremost, we're, you know, looking to deploy the capital into organic or inorganic growth. And then, you know, the dividend, I think, we're always going to want to keep it in that sort of like sustainable and also sustainable in a stressed environment. So that continues is the way we think about that. And then at the end of it, it's five acts, and you know, Jamie's been on the record for, you know, over a decade, I think, over many shareholder letters talking about, you know, how he thinks about price and five acts and valuation, and, you know, price is a factor.

Jeremy Barnum: So I think the larger point is just that, to respond a little bit to your question, there are a number of tools in the toolkit. And they're really the same tools that are part of our capital hierarchy. So first and foremost, we're, you know, looking to deploy the capital into organic or inorganic growth. And then, you know, the dividend, I think, we're always going to want to keep it in that sort of sustainable and also sustainable in a stressed environment.

Speaker Change: And he said as much, that it wouldn't be sort of our first choice. So I think the larger point is just that...

Speaker Change: A little bit to your question.

Speaker Change: There are a number of tools in the toolkit, and they're really the same tools that are part of our capital hierarchy. So, first and foremost, we're, you know, looking to deploy the capital into organic or inorganic growth.

Speaker Change: And then, you know, the dividend, I think, we're always going to want to keep it in that sort of, like, sustainable and also sustainable in a stressed environment, so that continues to be the way it is.

Jeremy Barnum: So that continues to be our focus, on that. And then at the end of it, it's buybacks. And you know, Jamie's been on the record for, you know, over a decade, I think, in many shareholder letters, talking about, you know, how he thinks about price and buybacks and valuation and, you know, price is a factor. So, that's sort of the totality of it, is the sort of option. Okay, great. Thanks a lot.

Speaker Change: We think about that.

Speaker Change: And then at the end of it, it's buybacks, and, you know, Jamie's been on the record for, you know, over a decade, I think, over many shareholder letters, talking about, you know, how he thinks about price and buybacks and valuation, and, you know, price is a factor. So...

Jeremy Barnum: So, that's sort of the totality of the sort of option, I guess. Okay, great.

Speaker Change: That's sort of the totality of...

Jeremy Barnum: Thanks a lot.

Speaker Change: These are the options, I guess.

Kenneth Usdin: Next, we'll go to the line of Ken Usdin from Jeffries. Please go ahead.

Speaker Change: Okay, great. Thanks a lot.

Operator: Next, we'll go to the line of Kenneth Usdin from Jeffries. Please go ahead. Thanks a lot.

Speaker Change: Thanks all.

Speaker Change: Next we'll go to the line of Kenneth Usdin from Jeffries. Please go ahead.

Kenneth Michael Usdin: Good morning, Jeremy. Jeremy, you know, great to see the progress on investment banking fees, up sequentially and 50% year over year. And I saw you on the tape earlier just talking about, you know, regulatory concerns a little bit in the advisory space. And we clearly didn't see the debt pull forward play out because your DCM was great again. I'm just wondering, you know, just where you feel the environment is relative to potential.

Kenneth Usdin: Thanks a lot.

Kenneth Usdin: Good morning, Jeremy. Jeremy, you know, great to see the progress on investment banking fees, you know, up sequentially and 50% year-to-year. And I saw you on the tape earlier just talking about, you know, still regulatory concerns a little bit in the advisory space. And we clearly didn't see the debt pull forward playthrough because your DCM was great again.

Kenneth Michael Usdin: Thanks a lot. Good morning, Jeremy. Jeremy, you know, great to see the progress on investment banking fees, you know, up sequentially and 50% year-over-year. And I saw you on the tape earlier just talking about, you know, still regulatory concerns a little bit in the advisory space. And we clearly didn't see the debt pull forward and play through because your DCM was great again. I'm just wondering,

Jeremy Barnum: I'm just wondering, you know, just where you feel the environment is, you know, relative to the potential and just where the dialogue is across the three main bucket areas in terms of like, how does this feel in terms of a current environment versus a potential environment that we could still see ahead? Thanks. Yeah, thanks, Ken. It's progress, right? I mean, we're happy to see the progress. You know, people have been talking about the request banking fee wallet for some time, and it's nice to see not only that you're on your path from a low base, but also a nice sequential improvement.

Jeremy Barnum: And just where the dialogue is across the three main bucket areas in terms of like, how does this feel in terms of a current environment versus a potential environment that we could still see ahead? Thanks. Yeah, thanks, Ken. It's progress, right? I mean, we're happy to see the progress. You know, people have been talking about the Crest banking fee wallet for some time, and it's nice to see not only that you're on your paw from a low base but also a nice sequential improvement.

Kenneth Michael Usdin: You know, just where you feel the environment is, you know, relative to the potential and just, you know, where the dialogue is across the three main bucket areas in terms of, like, how does this feel in terms of a current environment versus a potential environment that we could still see ahead?

Kenneth Michael Usdin: Yeah, thanks, Ken. It's progress, right? I mean, we're happy to see the progress. You know, people have been talking about the request.

Speaker Change: for some time and it's nice to see not only that you're on Europop

Jeremy Barnum: So that's the first thing to say. In terms of dialogue and engagement, it's definitely elevated. So, you know, as I, the dialogue on ECM is elevated and the dialogue on M&A is quite robust as well. So all of those are good things that encourage us and make us hopeful that we could be seeing sort of a better trend in this space.

Jeremy Barnum: So that's the first thing to say. In terms of dialogue and engagement, it's definitely elevated. So, you know, the dialogue on ECM is elevated, and the dialogue on M&A is quite robust as well. So all of those are good things that encourage us and make us hopeful that we could be seeing sort of a better trend in this space. But there are some important caveats.

Speaker Change: Sequential Improvement.

Speaker Change: So, that's the first thing to say. In terms of dialogue and engagement, it's definitely elevated. So, you know, the dialogue on ECM is elevated and the dialogue on M&A is elevated.

Speaker Change: is quite robust as well.

Speaker Change: So all of those are good things that encourage us and make us hopeful that we could...

Jeremy Barnum: But there are some important caveats. So on the DCM side, yeah, we made poll forward comments in the first quarter, but we still feel that this second quarter still reflects a bunch of poll forward and therefore will reasonably cautious about the second half of the year. Importantly, a lot of the activity is refinancing activity as opposed to, for example, acquisition finance. So the fact that M&A remains still relatively muted in terms of actual deals has not gone effects on DCM as well. And when a higher percentage of the wallet is refined, then the poll forward risk becomes a little bit higher.

Speaker Change: be seeing sort of a better trend in this space.

Speaker Change: But there are some important caveats. So on the DCM side, yeah, we made pull-forward comments in the first quarter, but we still feel that this second quarter still...

Jeremy Barnum: So on the DCM side, yeah, we made pull-forward comments in the first quarter, but we still feel that this second quarter still reflects a bunch of pull-forward, and therefore, we're reasonably cautious about the second half of the year. Importantly, a lot of the activity is refinancing activity as opposed to, for example, acquisition finance. So the fact that M&A remains relatively muted in terms of actual deals has knock-on effects on DCM as well.

Speaker Change: Reflects a bunch of pull forward and therefore, we're reasonably cautious about the second half of the year. Importantly, a lot of the activity is refinancing activity as opposed to, for example, acquisition.

Speaker Change: and Finance. So the fact that M&A remains still relatively muted in terms of actual deals has knock-on effects on DCM as well. And when a higher percentage of the wallet is reified, then the pull-forward risk becomes

Jeremy Barnum: And when a higher percentage of the wallet is refi, then the pull-forward risk becomes a little bit higher. You know, on ECM, if you look at it kind of at a remove, you might ask the question, given the performance of the overall indices, you would think it would be a really booming environment for IPOs, for example. And while it's improving, it's not quite as good as you would otherwise

Jeremy Barnum: You know, on ECM, if you look at it, kind of at a move, you might ask the question, give them the performance of the overall indices. You would think it would be a really booming environment for IPOs, for example. And while it's improving, it's not quite as good as you would otherwise expect. And that's driven by a variety of factors, including the fact that this has been widely discussed, the extent to which the performance of the large indices has been driven by a few stocks, the sort of mid cap tech growth space and other spaces that would typically be driving IPOs have had much more muted performance.

Speaker Change: a little bit higher.

Speaker Change: On ACM, if you look at it,

Speaker Change: Out of the blue, you might ask the question, given the performance of the overall indices,

Speaker Change: You would think it would be a really booming environment for IPOs, for example, and while it's improving, it's not quite as good as you would otherwise expect. And that's driven by a variety of factors, including the fact that this has been widely discussed that

Jeremy Barnum: And that's driven by a variety of factors, including the fact that, as has been widely discussed, the extent to which the performance of the large indices is driven by a few stocks, the sort of mid-cap tech growth space, and other spaces that would typically be driving IPOs have had much more muted performance. Also, a lot of the private capital that was raised a couple years ago was raised at pretty high valuations. And so, in some cases, people looking at IPOs could be looking at down rounds. That's an issue.

Speaker Change: The extent to which the performance of the large industries is driven by like a few stocks, the sort of mid-cap tech growth space and other spaces that would typically be driving IPOs have had much more muted performance.

Jeremy Barnum: Also, a lot of the private capital that was raised a couple of years ago was raised at pretty high valuations. And so, you know, in some cases, people looking at IPOs could be looking at down rounds. That's an issue. You know, and while secondary market performance of IPOs has improved meaningfully, in some cases, you know, people still have concerns about that.

Speaker Change: Also, a lot of the private capital that was raised a couple of years ago was raised at pretty high valuations. And so, you know, in some cases, people looking at IPOs could be looking at down rounds.

Jeremy Barnum: And while secondary market performance of IPOs has improved meaningfully, in some cases, people still have concerns about that. So that is a little bit of an overhang on that space. I think we can hope that over time that this fades away, and the trend gets a bit more robust. And yeah, on the advisory side, the regulatory overhang is there, remains there. And so we'll just have to see how that plays out. Thank you for all that, Jeremy.

Speaker Change: That's an issue.

Speaker Change: You know, and while secondary market performance of IPOs has improved meaningfully,

Jeremy Barnum: So, those are a little bit of overhang on that space. I think we can hope that over time that fades away, and the trend gets a bit more robust. And yeah, on the advisory side, you know, the regulatory overhang is there, remains there. And so, we'll just have to see how that plays out.

Speaker Change: In some cases, you know, people still have concerns about that.

Speaker Change: Those are a little bit of an overhang on that space, I think we can hope that over time that fades away and the trend gets a bit more robust.

Speaker Change: And yeah, on the advisory side, you know, the regulatory overhang is there, remains there, and so we'll just have to see how that plays out.

Jeremy Barnum: Thank you for all that, Jeremy. Just one on the consumer side, just anything you're noticing in terms of people just have been waiting for this delinquency stabilization on the credit card side. Obviously, your loss rates are coming in as you expected, and we did see 30 days, pretty flat, and 90 days come down a little bit. Is that seasonal? Is it just a good rate of change trend? Any thoughts there? Thanks.

Kenneth Michael Usdin: And just one on the consumer side, just anything you're noticing in terms of people just waiting for this delinquency stabilization on the credit card side? Obviously, your loss rates are coming in as you expected. And we did see 30 days, you know, pretty flat, and 90 days come down a little bit. Is that seasonal?

Speaker Change: Great. Thank you for all that, Jeremy. And just one on the consumer side, just...

Speaker Change: Anything you're noticing in terms of people just have been waiting for this delinquency stabilization on the credit card side? Obviously, your loss rates are coming in as you expected, and we did see...

Speaker Change: 30 days, you know, pretty flat and 90 days come down a little bit. Any, any, any, any, is that seasonal or is it just a good rate of change trend? Any thoughts there?

Jeremy Barnum: Yeah, I still feel like when it comes to card charge-offs and delinquencies, there's just not much to see there. It's normalization, not deterioration; it's a line of expectations. You know, as I say, we always look quite closely inside the cohorts, inside the income cohorts. And, you know, when you look in there specifically, for example, on spend patterns, you can see a little bit of evidence of, you know, behavior that's consistent with a little bit of weakness and the lower income segments, where you see a little bit of rotation of the spend out of discretionary and non-discretionary.

Jeremy Barnum: Is it just a good rate of change trend? Any thoughts there? Thanks.

Speaker Change: Yeah, I still feel like when it comes to card charge-offs and delinquencies, there's just not much to see there. It's normalization, not deterioration. It's a line of expectations.

Jeremy Barnum: Yeah, I still feel like when it comes to card charge-offs and delinquencies, there's just not much to see there. It's normalization, not deterioration. It's a line of expectations. As I say, we always look quite closely inside the cohorts, inside the income cohorts, and when you look in there, specifically, for example, on spend patterns, you can see a little bit of evidence of behavior that's consistent with a little bit of weakness in the lower income segments, where you see a little bit of rotation of the spend out of discretionary into non-discretionary.

Speaker Change: You know, as I say, we always look quite closely inside the cohorts, inside the income cohorts.

Speaker Change: And, you know, when you look in their...

Speaker Change: specifically, for example, on spin patterns.

Speaker Change: You can see a little bit of evidence of, you know, behavior that's consistent with a little bit of weakness in the lower income segments, where you see a little bit of rotation of the spend.

Jeremy Barnum: But the effects are really quite subtle. And in my mind, definitely entirely consistent with the type of economic environment that we're seeing, which, while very strong, is really a lot stronger than anyone would have thought. Not given the tightness of monetary conditions, say like they've been predicting it a couple of years ago or whatever. You know, you are seeing slightly higher unemployment; you are seeing moderating GDP growth. And so it's not entirely surprising that you're seeing a tiny bit of weakness in some pockets of span. So it all kind of hangs together in what is sometimes actually not a very interesting story.

Speaker Change: Out of discretionary into non-discretionary, but the effects are really quite subtle and, in my mind, definitely entirely consistent with the type of economic environment that we're seeing, which, while very strong and certainly a lot stronger than anyone would have

Jeremy Barnum: But the effects are really quite subtle and, in my mind, definitely entirely consistent with the type of economic environment that we're seeing, which, while very strong and certainly a lot stronger than anyone would have thought, given the tightness of monetary conditions, say, like they'd been predicting it a couple years ago or whatever, you are seeing slightly higher unemployment, you are seeing moderating GDP growth. And so it's not entirely surprising, and some pockets of Span. So it all kind of hangs together in what is, in some sense, actually not a very interesting story. Thank you. Next, we'll go to the line of Glenn Schorr from Evercore ISI. Please go ahead.

Speaker Change: [inaudible]

Speaker Change: moderating GDP growth. And so it's not entirely surprising that you're seeing a tiny bit of weakness in some pockets of spend. So it all kind of hangs together in what is in some sense, actually not a very interesting story.

Jeremy Barnum: Thank you.

Unknown Attendee: Thanks.

Glenn Shore: Next, we'll go to the line of Glenn Shore from Evercore ISI.

Speaker Change: Thank you.

Glenn Paul Schorr: All right, thanks very much. So Jeremy, the discussion so far around private credit and you all, your recent comments have been the ability to add to the balance sheet and compete when you need to compete on the private credit fund. And I do think that most of that discussion has been about the direct lending component. So I'm curious if you're showing more progress and activity on that front, and then, very importantly, do you see the same trend happening on the asset-backed finance side? Because that's a bigger part of the world, and it's a bigger part of your business. So I'd appreciate your thoughts there. Thanks. Yeah, thanks Glenn.

Speaker Change: Thanks again.

Glenn Shore: Please go ahead. Thanks very much. So Jeremy, the discussion so far around private credit and you all, your recent comments have been the ability to add on balance sheet and compete when you need to compete on the private credit fund. I do think that most of the discussion has been about the direct lending component.

Speaker Change: Next, we'll go to the line of Glenn Schorr from Evercore ISI. Please go ahead. Hi, thanks very much.

Glenn Paul Schorr: So Jeremy, the discussion so far around private credit and you all, your recent comments have been the ability to add on balance sheet and compete when you need to compete on the private credit fund. I do think that most of that discussion has been about the direct lending component.

Jeremy Barnum: So I'm curious if you're showing more progress and activity on that front, and then very importantly, do you see the same trend happening on the asset back to the inside because that's a bigger part of the world and it's a bigger part of your business. So I appreciate your thoughts. Thanks. Yeah, thanks, Glenn. So, on private credit, so nothing really new to say there. I think I guess one way the environment is evolving a little bit is that, as you know, a lot of money has been raised in private credit funds looking for deals and sort of a little bit to my prior comments and a relatively muted acquisition finance environment.

Speaker Change: So I'm curious if you're showing more progress and activity on that front, and then very importantly, do you see the same trend happening on the asset-backed finance side? Because that's a bigger part of the world, and it's a bigger part of your business.

Speaker Change: So I'd appreciate your thoughts there. Thanks.

Jeremy Barnum: I'm private credit, so there's nothing really new to say there. I think, I guess one way the environment is evolving a little bit is that, as you know, a lot of money has been raised, you know, in private credit funds looking for deals. And sort of a little bit to my prior comments, in a relatively muted acquisition finance environment, you know, at this point, you've got a lot of money chasing kind of not that many deals. So, the space is a little bit quieter than it was at the margin.

Speaker Change: Yeah, thanks, Glenn. So on...

Speaker Change: on private credit, so nothing really new to say there.

Speaker Change: I guess one way the environment's evolving a little bit is that, as you know, a lot of money has been raised, you know, in private credit funds, looking for deals, and sort of a little bit to my prior comments in a relatively muted acquisition finance environment,

Jeremy Barnum: You know, at this point, you go out of money chasing kind of like not that many deals. So. The space is a little bit quieter than it was at the margin. Another interesting thing to note is some of the discussion about how lender protections that were typical in the syndicated leather finance market, making their way into the private market as well as sort of people realize that even in the private market you probably need some of those protections in some cases, which is sort of supportive of the theme that we've been talking about, about convergence between the direct lending space and the syndicated lending space, which is kind of our core thesis here, which is that we can offer, you know, best in class service across the entire continuum, including, you know, secondary market trading and so on.

Speaker Change: You know, at this point, you've got a lot of money chasing kind of like not that many deals. So...

Jeremy Barnum: Another interesting thing to note is some of this discussion about how lender protections that were typical in the syndicated lever finance market are making their way into the private market as well. People realize that even in the private market, you probably need some of those protections in some cases, which is sort of supportive of the theme that we've been talking about, about convergence between the direct lending space and the public space, which is kind of our core thesis here, which is that we can offer, you know, best in class service across the entire continuum, including, you know, secondary market trading and so on. So we feel optimistic about our offering here. I think the current environment is maybe a little bit quieter than it used to be.

Speaker Change: This space is a little bit quieter than it was at the margin. Another interesting thing to note is...

Speaker Change: Some of this discussion about how lender protections that were typical in the syndicated lever finance market Making their way into the private market as well as

Speaker Change: [inaudible]

Speaker Change: and NMORG, which is our core thesis here, which is that we can offer best-in-class service across the entire continuum, including secondary market trading and so on.

Jeremy Barnum: So, we feel optimistic about our offering there. I think the current environment is maybe a little bit quieter than it was, so it's maybe not a great moment to like kind of test whether we're doing one more or less in the space, so to speak.

Speaker Change: So, we feel optimistic about our offering there. I think the current environment is maybe a little bit quieter than it was, so it's maybe not a great moment to kind of test whether we're doing a lot more or less in this space, so to speak.

Jeremy Barnum: So it's maybe not a great moment to kind of test whether we're doing a lot more or less in the space. And then on asset-backed financing, you actually asked me that question before. And at the time, my answer was that I hadn't heard much about that trend. And that continues to be the case. But clearly, there must be something I'm missing.

Jeremy Barnum: And then on assets back financing, you actually asked me that question before, and at the time I answered was that I hadn't heard much about that trend, and that continues to be the case. But that clearly there must be something I'm missing, so I can follow up on that and maybe we can have a chat about it.

Speaker Change: And then on...

Speaker Change: Asset-backed financing, you actually asked me that question before, and at the time, my answer was that I hadn't heard much about that trend, and that continues to be the case, but clearly, there must be something I'm missing, so I can follow up on that, and maybe we can have a chat about it.

Jeremy Barnum: So I can follow up on that. And maybe we can have a chat about it. No, it's great for you if you're not hearing much about it, so we can leave it at that. Maybe just one quick follow-up. In terms of your overall posturing, you were patient and smart when rates were low, waited to deploy, and it worked out great. We know that story.

Jeremy Barnum: No, it's great for you if you're not hearing much about it, so we can leave it at that. Maybe just one quick follow-up in terms of your just overall posturing on, you were patient and smart when rates were low, waited to deploy, worked out great. We know that story. Now it seems like you have tons of access, liquidity, and you're being patient, and rates are high.

Speaker Change: No, it's great for you if you're not hearing much about it, so we can leave it at that. Maybe just one quick follow-up in terms of your just overall posturing on...

Glenn Paul Schorr: Now, it seems like you have tons of excess liquidity, and you're being patient, and rates are high. And I'm curious about what kind of triggers, what kind of things you're looking for in the market to know if and when you would extend duration. Right. I mean, on duration, you know, in truth, we have actually added a little bit of duration over the last couple quarters.

Speaker Change: You were patient and smart when rates were low, waited to deploy, worked out great, we know that story. Now, it seems like you have tons of excess liquidity and you're being patient.

Jeremy Barnum: And I'm curious on how you think about what kind of triggers, what kind of things you're looking for in the market to know if and when you would extend duration. Right, I mean, underration, you know, in truth, we have actually added a little bit of duration over the last couple quarters. So that's one thing to say that was more last quarter than this quarter. But I guess I would just caution you from a little bit away from looking at kind of our reported cash balances and our balance sheet and concluding that, you know, when you look at the duration concept holistically, that there is a lot to be done differently on the duration fund.

Speaker Change: And rates are high. And I'm curious on how you think about what kind of triggers, what kind of things you're looking for in the market to know if and when you would extend duration.

Jeremy Barnum: So, you know, that's one thing to say that was higher last quarter than this quarter. But I guess I would just caution you a little bit away from looking at kind of our reported cash balances and our balance sheet and concluding that, you know, when you look at the duration concept holistically, that there is a lot to be done differently on the duration front. So clearly, it's true that empirically, we've behaved very asset sensitively in this rate hiking cycle.

Speaker Change: Right, I mean on duration you know in truth we have actually added a little bit of duration over the last couple quarters so you know that's one thing to say that was more last quarter than this quarter.

Speaker Change: Thank you.

Speaker Change: But I guess I would just caution you from a little bit away from looking at kind of our reported cash balances and our balance sheet and concluding that, you know, when you look at the duration concept holistically,

Jeremy Barnum: So clearly, it's true that empirically we behaved like very asset sensitively in this rate hiking cycle, and that has resulted in a lot of excess and AI generation on the way up in the near term. But when we look at the funds' overall sensitivity to rates, we look at it through both like the ER type ones, a short term and a sensitivity, but also a variety of other ones is including various types of scenario analysis, including impacts on capital from higher rates. And as I think Jamie said a couple of times, we actually aim to be relatively balanced on that front.

Speaker Change: that there is a lot to be done differently on the duration fund. So clearly it's true that empirically we behaved like very asset sensitively.

Jeremy Barnum: And that has resulted in a lot of excess NII generation sort of on the way up in the near. But when we look at the fund's overall sensitivity to rates, we look at it through both the EAR type lens, the short-term NAS sensitivity, but also a variety of other lenses, including various types of scenario analysis, including impacts on capital from higher rates. As I think Jamie has said a couple of times, we actually aim to be relatively balanced on that front.

Speaker Change: in this rate hiking cycle and that has resulted in a lot of excess NII generation on the way up in the near term.

Speaker Change: But when we look at the fund's overall sensitivity to rates, we look at it through both the EAR type lens, the short-term NAS sensitivity, and the long-term NAS sensitivity.

Speaker Change: [inaudible]

Speaker Change: As I think Jamie has said a couple of times, we actually aim to be relatively balanced on that front.

Jeremy Barnum: Also, given like the inverted yield curve, it's not as if, you know, extending duration from these levels means that you're walking in, you know, five and a half percent rates. In fact, you know, the forwards are not sort of that compelling given our views about some sort of structural upward pressures on inflation and so on. So I think when you put that all together, I don't think they kind of a big change in duration.

Jeremy Barnum: Also, given the inverted yield curve, it's not as if, you know, extending duration from these levels means that you're locking in, you know, five and a half percent rates. In fact, the forwards are not sort of that compelling given our views about some sort of structural upward pressures on inflation and so on. So I think when you put that all together, I don't think that kind of big change in duration posture is a thing that's front of mind, super helpful. Thanks so much for that.

Speaker Change: Also, given like the inverted yield curve, it's not as if, you know, extending duration from these levels means that you're locking in, you know, five and a half percent rates. In fact, you know, the forwards

Speaker Change: are not sort of that compelling, given our views about some sort of structural upward pressures on inflation and so on. So I think when you put that all together, I don't think that kind of

Jeremy Barnum: Posture is the thing that's front of line for us.

Speaker Change: A big change in duration and posture is a thing that's front of mind for us.

Glenn Shore: You were helpful.

Glenn Shore: Thanks so much for that.

Unknown Attendee: Thanks, Glenn.

Speaker Change: Super helpful. Thanks so much for that.

Matt O'connor: Next, we'll go to the line of Matt O'Connor from Deutsche Bank.

Glenn Paul Schorr: Thanks, guys. Next, we'll go to the line of Matt O'Connor from Deutsche Bank. Please go ahead. Good morning.

Speaker Change: Thanks a lot.

Matt O'connor: Please go ahead.

Speaker Change: Next we'll go to the line of Matt O'Connor from Deutsche Bank. Please go ahead.

Matt O'connor: I was just wondering if you could elaborate on, you know, essentially the math behind the ROTC being too high at 20 and more normalized at 17. Obviously, you've pointed to over-earning on NetAI, and I guess the question is, is that all of it to go from 20 to 17, and if so, is that all consumer deposit costs, or are there a few other components that you could help frame for us? Sure. A good question, Matt.

Jeremy Barnum: Good morning. I was just wondering if you can elaborate on, you know, essentially the map behind the Roxy being too high at 20 and more normalize at 17. Obviously, you've wanted to over-earning on NII, and I think that's a question: is that all of it to go from 20 to 17? And if so, is that all consumer deposit costs, or are there a few other components that you could help frame for us?

Matt O'connor: Good morning.

Matt O'connor: I was just wondering if you can elaborate on, you know, essentially the math behind the Roxy being too high at 20 and more normalized at 17. Obviously, you've pointed to...

Matt O'connor: Over-earning on NII, and I guess the question is, is that all of it to go from 20 to 17? And if so, is that all consumer deposit costs, or are there a few other components that you could help frame for us?

Jeremy Barnum: Sure. Good question, Matt. I mean, I guess the way I think about it is a couple of things. Like, you know, our returns tend to be a bit seasonal, right? So if you kind of fill yourself out, fully or forecast, and make reasonable space on your own, or annals, consensus, whatever, and you think about quarter, like, better look at this on a full-year basis. When you think about the returns and the quarterly numbers, and you actually have to strip out kind of the one-time items. So if you do that, like, whatever you get for this year is still clearly a number that's higher than the 17%.

Jeremy Barnum: I mean, I guess the way I think about it is a couple things like, you know, our returns tend to be a bit seasonal, right? So if you kind of build yourself out a full year forecast and make reasonable assumptions on your own, or analyst consensus, whatever, and you think about the fourth quarter, like, better look at this on a full year basis when you think about the returns and the quarterly numbers, and you actually strip out kind of the one-time items.

Matt O'connor: Sure. Good question, Matt. I mean, I guess the way I think about it is a couple things, like, you know, our returns tend to be a bit seasonal, right? So if you kind of build yourself out a full year forecast and make reasonable, it's based on your own or analyst consensus or whatever, and you think about the fourth quarter, like,

Matt O'connor: Better to look at this on a full-year basis when you think about the returns than the quarterly numbers, and you obviously have to...

Matt O'connor: Strip out kind of the one-time items, so if you do that like whatever you get for this year is still clearly a number That's higher than 17%

Jeremy Barnum: So, yeah, one source of how to end is normalization of one source of how to end is normalization of the NII. Primarily, as a result of expected higher deposit costs, that's, you know, we've talked about that. Part of it is also the yield curve effects. Some cut will come into the curve at some point. And, you know, in the normal course, if you kind of do a very, very, very simple mental model of the company, you would have, like, expenses growing, revenue is growing at some organic GDP-like rate, maybe higher, and expenses growing at a similar, slightly lower rate, producing a relatively stable overhead ratio.

Jeremy Barnum: So if you do that, like whatever you get for this year is still clearly a number that's higher than. So yeah, one source of headwinds is normalization of the NII, primarily as a result of expected higher deposit costs. That's, you know, we've talked about that. Part of it is also the yield curve effects. Some cuts.

Matt O'connor: So yeah, one source of headwinds is normalization of

Matt O'connor: One source of headwinds is normalization of the NII, primarily as a result of expected higher deposit costs. That's, you know, we've talked about that. Part of it is also the yield curve effects. Some cuts will come into the curve at some point.

Jeremy Barnum: And, you know, in the normal course, if you kind of do a very, very, very simple mental model of the company. You would have like expenses growing, revenues growing at some organic GDP like rate, maybe higher, and expenses growing at a similar slightly lower rate producing a sort of relatively stable overhead ratio. But even if the amount of NII normalization winds up being less than we might have thought at some prior point, you still have some background, you know, you still have some normalization of the overhead, As much as our discipline on expense management is as tight as it always has been, their inflation is still non-zero, there are still investments that we're executing, there's still higher expense to come in a slightly flatter revenue environment as a result of, in part, the normalization of NII.

Matt O'connor: And, you know, in the normal course, if you kind of do a very, very, very simple mental model of the company,

Matt O'connor: you would have like expenses growing revenues growing at some organic GDP like rate maybe higher and expenses growing at a similar slightly lower rate producing a

Jeremy Barnum: But even if the amount of NII normalization winds up being less than we might have thought at some prior point, you still have some background, you know, you still have some normalization of the overhead ratio that needs to happen. So, as much as, you know, our discipline on expense management is, you know, as tight as it always has been, their inflation is still non-zero; there are still investments that were executing. There's still, you know, higher expense to come in a slightly flat or a revenue environment as a result of, in part, the normalization of NII.

Matt O'connor: Relatively Stable Overhead Ratio.

Matt O'connor: But even if the amount of NII normalization winds up being less than we might have thought at some prior point,

Matt O'connor: You still have some background.

Matt O'connor: You know, you still have some normalization of the overhead ratio.

Matt O'connor: [inaudible]

Matt O'connor: Inflation is still non-zero. There are still investments that we're executing. There's still, um...

Matt O'connor: And then, you know, the final point is that whatever winds up being the answer on Basel III endgame and all the other pieces,

Jeremy Barnum: And then, you know, the final point is that whatever winds up being the answer on Basel 3N game and all the other pieces, you have to assume some amount of expansion of the denominator, at least based on what we know so far. So, of course, any of those pieces could be wrong, but that's kind of how we get to our 17 percent.

Jeremy Barnum: And then, you know, the final point is that whatever winds up being the answer to Basel III's endgame and all the other pieces of the puzzle, it's not going to be the endgame. You have to assume some amount of expansion of the denominator, at least based on what we know so far. So, of course, any of those pieces could be wrong.

Matt O'connor: You have to assume some amount of expansion of the denominator, at least based on what we know so far. So, of course, any of those pieces could be wrong, but...

Matt O'connor: That's kind of how we get to our 17%. And if you look at the various scenarios that we showed on the last page of my investor day presentation, it illustrates those dynamics and also, you know, how much the range could actually vary as a function of the economy. Yeah, that was a really helpful chart. Just the one follow-up on the yield curve effects. I guess what do you mean by that?

Matt O'connor: And if you look at, you know, the various scenarios that we showed on the last page of my investor rate presentation, it illustrates those dynamics and also, you know, how much the range could actually vary as a function of the economic. Yeah, that was a really helpful chart; just the one follow-up on the yield curve effects. I guess what you mean by that is what it means how the yield curve is inverted. Maybe you're still, you know, bleeding in the impact of that, but kind of longer term, you'd expect a little bit of steepness of the curve, which I would think would help.

Matt O'connor: That's kind of how we get to our 17%. And if you look at, you know, the various scenarios that we showed on the last page of my investor day presentation, it illustrates those dynamics and also, you know, how much the range could actually vary as a function of time.

Matt O'connor: Microsoft Office Word Microsoft, Inc It's a great pleasure to be here. I'm James Dimon, I'm the Director of the Center for Economic Research at Microsoft. I'm also the Director of the Center for Economic Research at the Office of the President of the United Nations. I'm here to talk about the economic environment and other factors.

Speaker Change: Yeah, that was a really helpful chart. Just the one follow-up, on the yield curve effects, I guess, what do you mean by that? Because right now the yield curve is inverted.

Matt O'connor: Because right now, the yield curve is inverted. Maybe you're still bleeding from the impact of that, but kind of longer term, you'd expect a little bit of a steepness in the curve, which I would think would help.

Speaker Change: Maybe you're still, you know, bleeding in the impact of that, but kind of longer term, you'd expect a little bit of steepness of the curve, which I would think would help. But what do you mean by that? Thank you.

Jeremy Barnum: But what does you mean by that?

Jeremy Barnum: Thank you. Yeah, I mean, you're not talking about this before. I guess I sort of, I guess I don't really agree fundamentally with the notion that the way to think about things is that sort of yield curve steepness above and beyond what's priced in by the four words is the source of structural NII or NIM for banks, if you know what I mean. Like, I mean, people have different views about the so-called term premium and obviously in a moment have inverted curve and different types of structural supply dynamics, you know, people thinking on that may be changing.

Jeremy Barnum: But what do you mean by that? Thank you. Yeah, I mean, you and I have talked about this before, I guess I sort of, I guess I don't really agree fundamentally with the notion that the way to think about things is that sort of yield curve steepness above and beyond what's priced in by the forwards is a source of structural NII or NIM for banks, if you know what I mean. People have different views about the so-called term premium and, obviously, at And you can wind up kind of pretty off the beaten track from the capital and other perspectives.

Speaker Change: Yeah, I mean, you and I have talked about this before, I guess, I sort of...

Speaker Change: I guess I don't really agree fundamentally with the notion that the way to think about things is that

Speaker Change: sort of yield curve steepness above and beyond what's priced in by the forwards is a source of structural NII or NEM for banks, if you know what I mean, like

Speaker Change: I mean, people have different views about the so-called term premium, and obviously, in a moment of inverted curve and different types of treasury supply dynamics,

Jeremy Barnum: But I think we saw when race were at zero and the 10-year note was below 2%, everyone sort of, many people were kind of tempted to try to get extra NIM and extra NII by extending duration a lot. But, you know, when the steepness of the curve implies it is driven by the expectation of actually aggressive Fed tightening, you know, it sits a timing issue and you can wind up kind of pretty off-sides from a capital and other perspectives. So there are some interesting questions about whether fiscal dynamics might result in a structurally steep or steeper yield curve down the road and whether that could be, you know, sort of earning the term premium, so to speak, could be a source of NII, but, you know, that feels a bit speculative to me at this point.

Speaker Change: you know, people's thinking on that may be changing, but

Speaker Change: I think we saw when rates were at zero and the 10-year note was below 2%,

Speaker Change: Everyone sort of, many people were kind of tempted to try to get extra NIM, extra NII by extending duration a lot, but you know, when the steepness of the curve implies, is driven by the expectation of actually aggressive FED tightening.

Speaker Change: It's just a timing issue, and you can wind up kind of pretty off sides from a capital and other perspectives. So there are some interesting questions about whether fiscal dynamics might result in a structurally steeper yield curve down the road, and whether that could be...

Matt O'connor: So there are some interesting questions about whether fiscal dynamics might result in a structurally steep or steeper yield curve down the road. And whether that could be, you know, sort of earning the term premium, so to speak, could be a source of NII, but, you know, that feels a bit speculative.

Speaker Change: You know.

Speaker Change: Earning the term premium, so to speak, could be a source of NII, but that feels a bit speculative to me at this point.

Unknown Attendee: Roger.

Unknown Attendee: Okay.

Unknown Attendee: Thank you for the details. Thanks, Bob.

Speaker Change: Got it. Okay, thank you for the details.

Michael Mayo: Next, we'll go to the line of Mike Mayo from Wells Fargo Securities. Please go ahead.

Jeremy Barnum: Okay. Thank you for the details. Thanks. Next, we'll go to the line of Mike Mayo from Wells Fargo Securities. Please go ahead.

Speaker Change: Thanks, Bob.

Speaker Change: Next we'll go to the line of Mike Mayo from Wells Fargo Securities. Please go ahead.

Michael Mayo: Hi. Jeremy, you said it's too early to end the over-earning narrative, and you highlighted higher deposit costs and the impact of lower rates and lower NII and DCM pull-forward and credit costs going higher. Anything I'm missing that list, and what would cause you to end the over-earning narrative? No, actually, I think that is the right list, Mike.

Michael Lawrence Mayo: Hi Jeremy, you said it's too early to end the over-earning narrative, and you highlighted higher deposit costs and the impact of lower rates and lower NII and DCM pull forward and credit costs going higher. Anything I'm missing in that list, and what would cause you to end the over-earning narrative? Um, actually, I think that is the right list.

Speaker Change: Hi.

Michael Lawrence Mayo: Jeremy, you said it's too early to end the over-earning narrative

Michael Lawrence Mayo: Anything I'm missing in that list? And what would cause you to end the over-earning narrative?

Jeremy Barnum: Uh, I mean, Frankly, I think one thing that would end the overrunning narrative is if our annual returns were closer to 17%. I mean, to the extent that that is the cycle number that we believe and that we're currently producing more than that, that's one very simple way to look at that. But the pieces of that are the pieces that you've talked about.

Jeremy Barnum: I mean, frankly, I think one thing that would end the over-earning narrative is if our annual returns were closer to 70%. I mean, to the extent that that is through the cycle number that we believe and that we're currently producing more than that, that's one very simple way to look at that. But the pieces of that are the pieces that you've talked about, and the single most important piece is the deposit margin. You know, our deposit margins are well above historical norms, and that is a big part of the reason that we still are emphasizing the over-earning narrative.

Jeremy Barnum: No, actually, I think that is the right list, Mike.

Speaker Change: Thank you. Bye. Bye.

Speaker Change: I mean, frankly, I think one thing that would end the over-earning narrative is if our annual returns were closer to 17%. I mean, to the extent that that is through the cycle number that we believe and that we're currently producing more than that, that's one very simple way to look at that. But the pieces of that are the pieces that you talked about, and the single most important piece is the deposit margin.

Michael Lawrence Mayo: And the single most important piece is the deposit margin. You know, our deposit margins are well above historical norms. And that is a big part, still emphasizing the over-under. You're 17% through the cycle ROTC on expectation. What is the CET1 ratio that you assume for that?

Speaker Change: You know our deposit margins are well above historical norms and that is a big part of the reason.

Jeremy Barnum: You're 17% through the cycle, roti, and expectation. What is the CET-1 ratio that you assume for that? I mean, we would generally assume requirements plus a reasonable buffer, which, depending on the shape of rules, could be a little bit smaller, a little bit bigger, and no small part as a function of the volatility. of those roles, which goes back to my prior comments on, you know, SCB and C-CAR. But obviously, as you will know, what actually matters is less the ratio and more the dollars, and at this point the dollars are very much a function of where rules land and where the RWA lands and, you know, and obviously things like G-Cybric elevation and so on.

Speaker Change: and that we still are emphasizing the over-earning narrative.

Speaker Change: You're at 17% through the cycle, ROTC, an expectation, what is the CET1 ratio that you assume for that?

Jeremy Barnum: I mean, we would generally assume, you know, requirements plus a reasonable buffer, which, depending on the shape of the rules, Back to my prior comments, you know, SCB, MCCAR. But obviously, as you well know, what actually matters is less the ratio and more the dollars. And at this point, the dollars are where the rules land and where the RWA lands, and obviously things like GCIB recalibration and so on. So we've done a bunch of scenario analysis along those lines.

Speaker Change: I mean, we would generally assume, you know, requirements plus a reasonable buffer, which depending on the shape of rules could be a little bit smaller, a little bit bigger, and no small part as a function of the volatility of those rules.

Speaker Change: which goes back to my prior comments on, you know, SCB and CCAR, but obviously, as you well know, what actually matters is less the ratio and more the dollars, and at this point, the dollars are very much a function of

Speaker Change: Where rules land and where the RWA lands and you know, and obviously things like GSIB recalibration and so on so We've done you know a bunch of scenario analysis along the lines of what I did in yesterday that informs those numbers but

Jeremy Barnum: So, we've done, you know, a bunch of scenario analysis along the lines of what I did in an investor day that informs those numbers, but that is obviously one big element of uncertainty behind that 17 percent, which is why, at an investor day, when we talked about it, you know, both Daniel and I were quite specific about saying that we thought 17 percent was still achievable, assuming a reasonable outcome on the Basel III ending.

Jeremy Barnum: Investor Day that informs those numbers, but that is obviously one big element of uncertainty behind that 17%, which is why at Investor Day, when we talked about it, you know, both Daniel and I were quite specific about saying that we thought 17% was still achievable, assuming a reasonable outcome on the. Let me just zoom out for one more question on the return target. I mean, when I asked Jamie at 2013 Investor Day, you know, would it make sense to have 13.5% capital, he was basically telling me to take a hike, right?

Speaker Change: That is obviously one big element of uncertainty behind that 17%, which is why at Investor Day, when we talked about it, you know, both Daniel and I were quite specific about saying that we thought 17% was still achievable, assuming a reasonable outcome on the Basel III endgame.

Michael Mayo: Let me just zoom out for one more question on the return target. I mean, when I asked Jamie at the 2013 Investor Day, you know, what it makes sense to have 13 and a half percent capital. He was basically telling me to take a hike, right? And now you have 15.3 percent capital, and you're saying, well, we might want to have a lot more capital here.

Speaker Change: Let me just zoom out for one more question on the return target. I mean, when I asked Jamie at the 2013 Investor Day, you know, would it make sense to have 13 and a half percent capital, he was

Jeremy Barnum: And now you have 15.3% capital, and you're saying, well, we might want to have a lot more capital here. I mean, at some point, if you're spending $17 billion a year to improve the company, if you're gaining share with digital banking, if you're automating the back office, if you're moving ahead with AI, if you're doing all these things that I think you say others aren't doing, why wouldn't those returns go higher over time? Or do you just assume you'll be competing those benefits away? Thanks. Um, yeah, I mean, in a short time, Mike, you know, we've talked about this a lot. And Jamie's talked about this a lot.

Speaker Change: basically telling you to take a hike, right?

Jeremy Barnum: I mean, at some point, if you're spending $17 billion a year to improve the company, if you're gaining share with digital banking, if you're automating the back office, if you're moving ahead with AI, if you're doing all these, you know, things that I think you say others aren't doing, why wouldn't those returns go higher over time? Or do you just assume you'll be competing those benefits away? Thanks. Yeah, I mean, I think in short, like, you know, we've talked about this a lot, and Jamie's talked about this a lot. It's a very, very, very competitive market, you know.

Speaker Change: might want to have a lot more capital here. I mean, at some point, if you're spending $17 billion a year,

Speaker Change: to improve the company, if you're gaining...

Speaker Change: share with digital banking, if you're automating the back office, if you're moving ahead with AI, if you're doing all these things that I think you say others aren't doing, why wouldn't those returns go higher over time, or do you just assume you'll be competing those benefits away? Thanks.

Speaker Change: Yeah, I mean, I think in short, Mike, you know, we've talked about this a lot. And Jamie's talked about this a lot. It's a very, very, very competitive market.

Michael Lawrence Mayo: It's a very, very, very competitive market, you know, and we're very happy with our performance. We're very happy with the share we've taken. And 17% is actually an amazing number, actually.

Jeremy Barnum: And we're very happy with our performance. We're very happy with the share we've taken. And 17 percent is like an amazing number, actually. And, you know, like, to be able to do that, given how robust the competition is from banks, from non-banks, from US banks, from foreign banks, and all the different businesses that we compete in, is something that we're really proud of. So, you know, the number has a range around it, obviously. So it's not a promise, it's not a guarantee, and it can fluctuate. But we're very proud to be in the ballpark of being able to think that we can deliver it.

Speaker Change: and we're very happy with our performance. We're very happy with...

Speaker Change: The share we've taken.

Jeremy Barnum: And, you know, like to be able to do that given how robust the competition is from banks, from non-banks, US banks, foreign banks, and all the different businesses. Compete In is something that we're really proud of. So the number has a range around it, obviously. So it's not a promise, it's not a guarantee, and it can fluctuate. But we're very proud to be in the ballpark of being able to think that we can deliver it, again, assuming the outcome of Basel III's endgame. But it's a very, very, very competitive market across all of our products and services. All right, thank you. Next, we'll go to the line of Betsy Graseck from Morgan Stanley. Please go ahead. Hi Jeremy.

Speaker Change: And 17% is like an amazing number, actually.

Speaker Change: And, you know, like, to be able to do that, given how robust the competition is from banks, from non-banks, from U.S. banks, from foreign banks, and all of the different businesses that we compete in,

Speaker Change: is something that we're really proud of. So, you know, the number has a range around it, obviously. So

Speaker Change: It's not a promise, it's not a guarantee, and it can fluctuate, but we're very proud to

Jeremy Barnum: Again, assuming the reason why I'll come on the puzzle to the end game, but it's a very, very, very competitive market across all of our products and services and regions and plantings.

Speaker Change: to be in the ballpark of being able to think that we can deliver it. Again, assuming the reasonable outcome on Basel III endgame, but it's a very, very, very competitive market.

Speaker Change: across all of our products and services and regions and hindsight.

Unknown Attendee: All right. Thank you.

Betsy Graseck: Next, we'll go to the line of Betsy Grassek from Washington. So I did want to ask one drill down question on 2Q. And it's related to the dollar amount of buybacks that you did do. I think in the press release right in the slide deck, it's 4.9 billion common stock net repurchases.

Speaker Change: All right, thank you.

Speaker Change: Next we'll go to the line of Betsy Graseck from Morgan Stanley . Please go ahead.

Betsy Lynn Graseck: So, I did want to ask one drill-down question on 2Q, and it's related to the dollar amount of buybacks that you did do. I think in the press release, right in the slide deck, it's 4.9 billion common stock net repurchases. So, the question here is... What's your governor for you on how much to do every quarter? And, I mean, I understand it's a function of, okay, how much do we organically grow? You know, but even with that...

Speaker Change: Hi, Jeremy.

Betsy Lynn Graseck: So, I did want to ask one drill down question on 2Q, and it's related to the dollar amount of buybacks that you did do. I think in the press release right in the slide deck, it's 4.9 billion common stock net repurchases.

Betsy Graseck: So the question here is, what's the governor for you on how much to do every quarter? And, I mean, I understand it's a function of, okay, how much do we organically grow? You know, but even with that, so you get the organic growth, which, you know, you had some nice movement there, but you do the organic growth and then, you know, is it how much do we earn and we want to buy back our earnings or how should we be thinking about what that repurchased volume should be looking like over time and, you know, I remember over at investor day the whole debate around I don't want to buy back my stock but, you know, we are, right?

Betsy Lynn Graseck: So, the question here is...

Betsy Lynn Graseck: What's the governor for you on how much to do every quarter? And, I mean, I understand it's a function of, okay, how much do we organically grow? You know, but even with that...

Jeremy Barnum: So you get the organic growth, which, you know, you had some nice movement there, but you do the organic growth, and then, you know, is it how much do we earn, and we want to buy back our earnings? Or how should we be thinking about what that repurchase volume should be looking like over time? And, you know, I remember over at Investor Day the whole debate around, I don't want to buy back my stock.

Betsy Lynn Graseck: So you get the organic growth, which, you know, you had some nice movement there, but you do the organic growth and then

Betsy Lynn Graseck: is it how much do we earn and we want to buy back our earnings?

Betsy Lynn Graseck: Repurchase Volume should be looking like over time and you know I remember over at Investor Day the whole debate around I don't want to buy back my stock, but

Jeremy Barnum: But, you know, we are right. So I get this question from investors quite a bit about how should we be thinking about how you think about what the right amount is to be doing here. Yeah, that's a very good and fair question, Betsy. So let me try to unpack it to the best of my ability.

Jeremy Barnum: So, I get this question for investors quite a bit of how should we be thinking about how you think about what the right amount is to be doing here? Yeah, that's a very good and fair question, Betsy. So let me try to unpack it. It's the best of my ability.

Betsy Lynn Graseck: You know, we are, right? So I get this question from investors quite a bit of, how should we be thinking about how you think about what the right amount is to be doing here?

Jeremy Barnum: So, in no particular order, one thing that we've really tried to emphasize in a number of different settings, including in our recent 10 cues, actually, is that we don't want to get into the business of guiding on buybacks. So we're going to buy back whatever we think makes sense in the current moment, sort of, and we prefer the right to sort of change that at any time. So I recognize that not everyone loves that, but that is kind of a philosophical belief, and so I might as well say it explicitly. It was pretty clear and the cue also, but I'm just going to say that again.

Betsy Lynn Graseck: So, um, And don't break their order. One thing that we've really tried to emphasize in a number of different settings, including in our recent 10Qs, is that we don't want to get into the business of guiding on buybacks. So we're gonna buy back whatever we think makes sense in the current moment, sort of, and we prefer the light to sort of change that. I recognize that not everyone loves that, but that is kind of a philosophical belief.

Betsy Lynn Graseck: In no particular order, one thing that we've really tried to emphasize in a number of different settings, including in our recent 10Qs, actually,

Betsy Lynn Graseck: is that we don't want to get into the business of guiding on buyback.

Betsy Lynn Graseck: So, we're going to buy back whatever we think makes sense in the current moment, sort of, and we prefer the right to sort of change that at any time.

Betsy Lynn Graseck: So, I recognize that not everyone loves that, but that is kind of a philosophical belief, and so I might as well say it explicitly. It was pretty clear in the queue also, but I'm just going to say that again. So, that's point one.

Jeremy Barnum: And so I might as well say it explicitly. It was pretty clear in the queue also, but I'm just going to say that again.

Jeremy Barnum: So that's point one. But having said that, let me nonetheless try to address your point on framework and governors. So generally speaking, we think it doesn't make sense to sort of exit the market entirely unless, you know, the conditions are much more unusual than they are right now, let's say. Obviously, when, for whatever reason, we ever need to build capital in a hurry, we've done it before, and we're always comfortable suspending buybacks entirely.

Jeremy Barnum: So that's 0.1. But having said that, let me nonetheless try to address your point on framework and governors. So generally speaking, we think it doesn't make sense to sort of exit the market entirely unless, you know, the conditions are much more unusual than they are right now, let's say. Obviously, when, for whatever reason, if we ever need to build capital in a hurry, we've done it before and we're always comfortable suspending buybacks entirely. But I think some modest amount of buybacks is a reasonable thing to do when you're generating your kind of capital. And so, you know, we were talking before about this 2 billion pace.

Betsy Lynn Graseck: But having said that, let me nonetheless try to address your point on framework and governance.

Betsy Lynn Graseck: and others.

Betsy Lynn Graseck: Generally speaking, we think it doesn't make sense to exit the market entirely unless the conditions are much more unusual than they are right now, let's say. Obviously, when, for whatever reason, if we ever need to build capital in a hurry,

Jeremy Barnum: But I think some modest amount of buybacks is a reasonable thing to do when you're generating your kind of capital. And so, you know, we were talking before about this 2 billion pace, kind of trying to move away from this notion of a pace, but that's where that idea comes from. Let's put it that way.

Betsy Lynn Graseck: We've done it before and we're always comfortable suspending buybacks entirely, but I think some modest amount of buybacks is a reasonable thing to do when you're generating your kind of capital.

Jeremy Barnum: We kind of trying to move away from this notion of a pace, but that's where that idea comes from. Let's put it that way. You talked about the 4.9, which I recognize may seem like a little bit of a random number, but where that actually comes from is the other statement that we made that we have these, you know, significant item gains from Visa. And if you think about what that means, it means that we have, you know, post the acceptance of the exchange offer a meaningful long position and a liquid large cap financial stock, i.e. Visa, which realistically is highly correlated to our own stock.

Betsy Lynn Graseck: And so, you know, we were talking before about this two billion pace, we kind of trying to move away from this notion of a pace, but that's where that idea comes from, let's put it that way.

Jeremy Barnum: You talked about the 4.9, which I recognize may seem like a little bit of a random number, but where that actually comes from is the other statement that we made, that we have these significant item gains from Visa. And if you think about what that means, it means that we have, post the acceptance of the exchange offer, a meaningful long position and a liquid large cap financial stock, i.e. Visa, which is realistically highly correlated to our own stock.

Speaker Change: You talked about the 4.9, which I recognize may seem like a little bit of a random number, but where that actually comes from is the other statement that we made.

Speaker Change: that we have these.

Speaker Change: you know, significant item gains from Visa. And if you think about what that means, it means that we have, you know, post the acceptance of the exchange offer, a meaningful long position and a liquid large cap financial stock, i.e. Visa, which realistically is highly correlated to our own stock. And so in some sense,

Jeremy Barnum: And so in some sense, why carry that instead of just buying back JP Morgan's stock? So we talked about, Jamie talked about, as we liquidated the Visa business, deploying those proceeds into JPM, and that's what we did this quarter. So that is why the 4.9 is a little higher, and it's consistent with my comments yesterday around having slightly increased the amount of 5X.

Jeremy Barnum: And so, in some sense, why carry that instead of just buying back taping Morgan stock? So we talked about Jamie talked about as we liquidate the Visa deploying those proceeds into JPM. And that's what we do this quarter. So that is why the 4.9 is a little higher, and it's consistent with my comments at Investor Day around having slightly increased the amount of the flybacks. And, you know, beyond that, what you're left with is my answer to Steve's question, which is that to your point about buying back earnings or whatever. You know, when we're generating these types of earnings, and there's this much organic capital being generated in the absence of opportunities to deploy it organically or inorganically.

Speaker Change: Why carry that?

Speaker Change: Instead of just buying back JP Morgan's stock. So we talked about, Jamie talked about, as we liquidate the visa deploying those proceeds into JPM, and that's what we did this quarter. So that is why the 4.9 is a little higher, and it's consistent with my comments on yesterday around having slightly increased the amount of 5x.

Jeremy Barnum: And beyond that, what you're left with is my answer to Steve's question, which is that to your point about buying back earnings or whatever, when we're generating these types of earnings, and there's this much organic capital being generated, in the absence of opportunities to deploy it organically or inorganically, and while continuing to maintain our healthy but sustainable dividend, if we don't return the capital, we are going to keep growing the CT1 ratio So one way or the other, that will need to be addressed at some point. It's just that we don't feel that way now.

Speaker Change: And, you know, beyond that, what you're left with is my answer to Steve's question, which is that, to your point about buying back earnings or whatever, you know, when we're generating these types of earnings,

Speaker Change: and there's this much organic capital being generated.

Speaker Change: In the absence of opportunities to deploy it organically or inorganically, and while continuing to maintain our healthy but sustainable dividend,

Jeremy Barnum: And while continuing to maintain our healthy, but sustainable dividend, you know, if we don't return the capital, we are going to keep growing the CT1 ratio. The levels which, if you think about the long strategic outlook of the company, are not reasonable. or just artificially high and unnecessary.

Speaker Change: You know, if we don't return the capital, we are going to keep growing the CT-1 ratio, the levels which, if you think about the long strategic outlook of the company, are not reasonable.

Jeremy Barnum: So, one way or the other, that will need to be addressed at some point; it’s just that we don't feel that now is the right time.

Speaker Change: artificially high and unnecessary. So one way or the other that will need to be addressed at some point, it's just that we don't feel that now is the right time.

Gerard Cassidy: All right, thank you, Jeremy. I appreciate it. Next we'll go to the line of Gerard Cassidy from RBC Capital Markets.

Betsy Lynn Graseck: All right. Thank you, Jeremy. I appreciate it. Next, we'll go to the line of Gerard Cassidy from RBC Capital Markets. Please go ahead, and Jeremy Horian.

Speaker Change: All right. Thank you, Jeremy. Appreciate it.

Speaker Change: Thanks, Betsy.

Gerard Cassidy: Please go ahead. Hi, Jeremy. I know you touched on deposits earlier in the call in response to a question. I noticed on the average balance is the non-interest bearing deposits were relatively stable quarter to quarter versus prior quarters when they've steadily declined, and this is one of the areas, of course, investors have focused on in terms of the future of the net interest margin. For you and your peers, can you elaborate if you can what you're seeing in that non-interest bearing deposit account? I know this is average and not period, and the period number may actually be lower, but what are you guys seeing here?

Speaker Change: Next we'll go to the line of Gerard Cassidy from RBC Capital Markets. Please go ahead. Hi Jeremy, how are you?

Gerard Sean Cassidy: Hi Gerard. Jeremy, I know you touched on deposits earlier in the call in response to a question. I noticed on average balances, the non-interest-bearing deposits were relatively stable quarter to quarter versus prior quarters when they'd steadily declined. And this is one of the areas, of course, investors are focused on in terms of the future of the net interest margin for you and your peers. Can you elaborate, if you can, on what you're seeing in that non-interest-bearing deposit account? I know this is average and not period end, and the period end number may actually be lower.

Speaker Change: [inaudible]

Gerard Sean Cassidy: Jeremy, I know you touched on deposits earlier in the call in response to a question. I noticed on the average balances, the non-interest bearing deposits were relatively stable quarter to quarter versus prior quarters when they have steadily declined. And this is one of the areas, of course, investors are focused on in terms of the future of the net interest margin for you and your peers. Can you elaborate, if you can, what you're seeing in that non-interest bearing deposit account? I know this is average and not period, and the period end number may actually be lower. But what are you guys seeing here?

Jeremy Barnum: But what are you guys seeing here? Yeah, a good question, Gerard. I have to be honest, I hadn't focused on that particular sequential explanation, i.e., you know, quarter on quarter change and average non-interest bearing deposits. But I think the more important question is the big picture question, which is, what do we expect? I mean, how are we thinking about the ongoing migration of non-interest bearing deposits into interest bearing in the current environment and how that affects our NII outlook and our expectation for the weighted average rate paid on deposit?

Jeremy Barnum: Yeah, good question, Gerard.

Jeremy Barnum: I have to be honest, I hadn't focused on that particular sequential explain, i.e., you know, or on quarter change and average non-interest bearing deposits, but I think the more important question is the big picture question, which is what do we expect? I mean, how are we thinking about ongoing migration of non-interest bearing into interest bearing in the current environment and how that affects our, our NII, how look and are actually going to be. There's no expectation for weighted average rate paid on deposits. And the answer to that question is that we do continue to expect that migration to happen. So, if you think about it, you know, in the wholesale space, you know, you have a bunch of clients with some balances and non-interest bearing accounts, and over time, for a variety of reasons, we do see them moving those balances into interest bearing.

Jeremy Barnum: Yeah, good question Gerard. I have to be honest, I hadn't focused on that particular sequential explain, i.e., you know, quarter-on-quarter change and average non-interest rate.

Jeremy Barnum: Deposits.

Jeremy Barnum: But I think the more important question is the...

Jeremy Barnum: The big picture question, which is...

Speaker Change: What do we expect?

Speaker Change: How are we thinking about ongoing migration of non-interest-bearing entities?

Speaker Change: Interest-bearing in the current environment and how that affects our NII outlook and our expectation for weighted average rate paid on deposits.

Jeremy Barnum: And the answer to that question is that we do continue to expect that migration to happen. So if you think about it, you know, in the wholesale space, you have a bunch of clients with some balances and non-interest-bearing accounts, and over time, for a variety of reasons, we do see them moving those balances into interest-bearing accounts. So we do continue to expect that migration will happen, and therefore, that will be a source of headwinds.

Speaker Change: And the answer to that question is that we do continue to expect that migration to happen.

Speaker Change: If you think about it, you know, in the wholesale space, you know, you have a bunch of clients with some balances and non-interest-bearing accounts and over time for a variety of reasons, we do see them moving those balances into interest-bearing. So we do continue to expect that migration to continue.

Jeremy Barnum: So we do continue to expect that migration to happen, and therefore that will be a source of headwinds. And, you know, that migration sometimes happens internally i.e., out of non-interest bearing into interest bearing or into CDEs; sometimes it goes into money markets or into investments, which is what we see happening in our wealth management business. And, you know, some of it does leave the company, but one of the things that we're encouraged by is the extent to which we are actually capturing a large portion of that yield-seeking flow through CDEs and money market offerings, et cetera, across our various franchises.

Gerard Sean Cassidy: And, you know, that migration sometimes happens internally, i.e., out of non-interest-bearing into interest-bearing or into CDs. Sometimes it goes into money markets or into investments, which is what we see happening in our wealth management business, and, you know, some of it does leave the company, but one of the things that we're encouraged by is the extent to which we are actually capturing a large portion of that yield-seeking flow through CDs and money market offerings, et cetera, across our various franchises.

Speaker Change: to happen, and therefore that will be a source of headwinds.

Speaker Change: And, you know, that migration sometimes happens internally, i.e., out of non-interest-bearing into interest-bearing or non-interest-bearing.

Speaker Change: are in the CD news.

Speaker Change: Sometimes it goes into money markets or into investments, which is what we see happening in our wealth management business. And, you know, some of it does leave the company. But one of the things that we're encouraged by is the extent to which we are actually capturing

Speaker Change: A large portion of that yield-seeking flow through CDs and money market offerings, et cetera, across our various franchises.

Jeremy Barnum: So, big picture, I do think that migration out of non-interest bearing into interest bearing will continue to be a thing, and that is a contributor to the modest headwinds that we expect for NII right now. But yeah, I'll leave it at that, I guess.

Gerard Sean Cassidy: So, big picture, I do think that migration out of non-interest-bearing into interest-bearing will continue to be a thing, and that is a contributor to the modest headwinds that we expect for NII right now. Yeah, I'll leave it at that, I guess.

Speaker Change: Big picture, I do think that migration out of non-interest bearing into interest bearing will continue to be a thing, and that is a contributor to the modest headwinds that we expect for NII right now, but

Jeremy Barnum: Very good.

Jeremy Barnum: Very good. And as a follow-up, you've been very clear about the consumer credit card, you know, charge-offs and delinquency levels. And we all know about the Commercial Real Estate Office.

Jeremy Barnum: And, as a follow-up, you've been very clear about the consumer credit card, charge-off some delinquency levels, and we all know about the commercial real estate office. And, you always talk about, you know, over-earning on an interest income. Of course, one of the great credit quality stories for everyone, including yourselves, is the CNI portfolio, how strong it's been for in this elevated rate environment. And, I know your numbers are still quite low, but they're in the corporate investment bank. You had about a $500 million pickup and non-accrual loans. Can you share with us what are you seeing in CNI?

Speaker Change: Yeah, I'll leave it at that, I guess.

Speaker Change: Very good. And as a follow-up, you've been very clear about the consumer credit card, you know, charge-offs and delinquency levels. And we all know about the Commercial Real Estate Office. And you always talk about, you know, over-earning on net interest income, of course. One of the great credit quality stories for everyone, including yourselves, is the C&I portfolio, how strong it's been in this elevated rate environment. And I know your numbers are still quite low, but in the corporate investment bank, you had about a $500 million pickup in non-accrual loans. Can you share with us, what are you seeing in C&I? Are there any early signs of cracks or anything? And again, I know your numbers are still good, but I'm just trying to look forward to see if there's something here over the next 12 months.

Gerard Sean Cassidy: And you always talk about, you know, over-earning on net interest income, of course. One of the great credit quality stories for everyone, including yourselves, is the C&I portfolio and how strong it's been in this elevated rate environment. And I know your numbers are still quite low, but in the corporate investment bank, you had about a $500 million pickup in non-accrual loans. Can you share with us what you are seeing in C&I? Are there any early signs of cracks or anything?

Jeremy Barnum: Are there any early signs of cracks or anything? And, again, I know your numbers are still good, but I'm just trying to look forward to see if there's something here over the next 12 months or so.

Jeremy Barnum: And again, I know your numbers are still good, but I'm just trying to look forward to see if there's anything here over the next 12 months or so. Yeah, it's a good question. I think the short answer is no, we're not releasing early signs of cracks in CNI. I mean, yes, I agree with you that the CNI charge-off rate has been very, very low for a long time. I think that at last year's investor day, if I remember correctly, I think the CNI charge-off rate for the preceding 10 years was something like...

Jeremy Barnum: Yeah, it's a good question. I think the short answer is, no, we're not releasing early signs of cracks in CNI. I mean, yes, I agree with you like the CNI standards, and while we take a lot of pride in that number and I think it reflects the discipline in our underwriting process and the strength of our credit culture across across bankers and the risk team, you know, that's not we don't actually run that franchise to like a zero loss expectation. So you have to assume there's a lot of pressure on that. But, you know, in any given quarter, you know, the CNI numbers tend to be quite 1B and quite idiosyncratic.

Speaker Change: Thanks for watching!

Speaker Change: Yeah, it's a good question. I think the short answer is no, we're not really seeing early signs of cracks in CNI. I mean, yes, I agree with you like the CNI charge off rate has been very, very low for a long time. I think we have

Speaker Change: Besides that, at last year's investor day, if I remember correctly, I think...

Jeremy Barnum: So, that is clearly very low by historical standards, and while we take a lot of pride in that number, I think it reflects the discipline in our underwriting process and the strength of our credit culture across bankers and the risk team. You know, we don't actually run that franchise to like a zero loss expectation, so you have to assume there will be some upper pressure. But, you know, in any given quarter, the CNI numbers tend to be quite flumpy and quite idiosyncratic.

Speaker Change: The CNI charge-off rate over the preceding 10 years was something like literally zero. So that is clearly very low by historical standards, and while we take a lot of pride in that number, and I think it reflects.

Speaker Change: The discipline in our underwriting process and the strength of our credit culture across bankers and the risk team, you know, that's not...

Speaker Change: We don't actually run that franchise to like a zero loss expectation, so you have to assume there'll be some upward pressure on that.

Jeremy Barnum: So I don't think that anything in the current quarter's results, Water, and I haven't heard anyone internally talk that way. Great. Appreciate the insights as always. Thank you. Next, we'll go to the line of Erika Najarian from UBS. Please go ahead. Hi, good morning.

Speaker Change: But, you know, in any given quarter, you know, the CNI numbers tend to be quite lumpy and quite idiosyncratic. So I don't think that anything in the current quarter's results is indicative.

Jeremy Barnum: So I don't think that anything in the current court of results is indicative of anything broader, and I haven't heard anyone internally talk that way.

Speaker Change: of anything broader and I haven't heard anyone internally talk that way I'll say.

Jeremy Barnum: Great. Appreciate the insights, as always.

Unknown Attendee: Thank you.

Speaker Change: Great, appreciate the insights as always. Thank you.

Erika Najarian: Next, we'll go to the line of Erica Najarian from UBS.

Speaker Change: and Xerox.

Erika Najarian: Please go ahead. Good morning.

Speaker Change: Next we'll go to the line of Erika Najarian from UBS. Please go ahead.

Erika Najarian: I just had one cleanup question, Jeremy. The consensus provision for 2024 is $10.7 billion. Could you maybe clarify for once and for all sort of Jamie's comments at an industry conference earlier, and you know, try to sort of triangulate if that $10.7 billion provision is appropriate for the growth level that you are planning for in CARD? Yeah, happy to clarify that. So Jamie's comments were that the allowance is billed in the card allowance. So we're talking about cards. We expected something like $2 billion for the full year.

Jeremy Barnum: I just had one clean up question, Jeremy. The consensus provision for 2024 is 10.7 billion.

Erika Najarian: Hi, good morning. I just had one clean-up question, Jeremy.

Jeremy Barnum: The consensus provision for 2024 is $10.7 billion.

Jeremy Barnum: Could you really clarify, for once and for all, sort of Jamie's comments at an industry conference earlier? And, you know, try to sort of triangulate if that 10.7 billion provision is appropriate for the growth level that you are planning for in card? Yeah, happy to clarify that. So Jamie's comments were that the allowance is filled in the card allowance. So we're talking about cards specifically. We expected something like 2 billion for the full year. As I said here today, our expectation for that number is actually slightly higher, but, you know, it's in the ballpark. And I think in terms of what that means for the consensus on the overall allowance change for the year, you know, last time I checked it still looked a little low on that front.

Erika Najarian: Could you maybe clarify, for once and for all, Jamie's comments at an industry conference earlier, and try to triangulate if that $10.7 billion provision is appropriate for the growth level that you are planning for in CARD?

Speaker Change: Yeah, happy to clarify that.

Speaker Change: The BILD and the CARD allowance, so we're talking about CARD specifically.

Jeremy Barnum: As I sit here today, our expectation for that number is actually slightly higher, but, you know, it's in the ballpark. And I think in terms of what that means for the consensus on the overall allowance change for the year, you know, last time I checked, it still looked a little low on that front. Who knows what it'll actually wind up being, but that remains our view. One question that we've gotten is, you know, how to reconcile that build to the 12%. Well, it's an OS that we've talked about, um, because it seems a little bit high relative to what you would have otherwise assumed if you applied some sort of a standard coverage ratio to that growth.

Speaker Change: We expected something like $2 billion.

Speaker Change: for the full year. As I said here today, our expectation for that number is actually slightly higher, but it's in the ballpark.

Speaker Change: And I think in terms of what that means for the consensus on the overall allowance change for the year, you know, last time I checked, it still looked a little low on that front.

Jeremy Barnum: So who knows what it actually went up being, but that remains our view.

Jeremy Barnum: Um, but the reason that's the case is essentially a combination of higher revolving necks as we continue to see some normalization revolve in that 12%, um, as well as seasoning of earlier vintages, uh, which comes with a slightly higher allowance. Great, thank you. And for our final question, we'll go to the line of Jim Mitchell from Seaport Global Securities. Please go ahead. Oh, hey, hey, good morning.

Jeremy Barnum: One question that we've gotten is, you know, how to reconcile that build to the 12%, you know, a little less than the last that we've talked about because it seems like a little bit high relative to what you would otherwise assume if you apply some sort of a standard coverage ratio to that growth. But the reason that's the case is essentially a combination of higher revolving next, as we continue to see some normalization revolve in that 12%. And as well as seasoning of earlier advantages, which comes with slightly higher allowance per unit of OS growth.

Speaker Change: Who knows what it will actually wind up being, but that remains our view. One question that we've gotten is, you know, how to reconcile that build to the 12%, you know,

Speaker Change: Well it's an OS that we've talked about because it seems like a little bit high relative to what you would have otherwise assumed if you apply some sort of a standard coverage ratio to that growth.

Speaker Change: But the reason that's the case...

Speaker Change: is essentially a combination of higher revolving necks as we continue to see some normalization revolve in that 12%.

Speaker Change: as well as seasoning of earlier vintages, which comes with slightly higher allowance per unit of OS growth.

Jeremy Barnum: Great. Thank you.

James Mitchell: And for our final question, we'll go to the line of Jim Mitchell from Seaport Global Securities.

Speaker Change: Great, thank you.

Erica: Thanks, Erika.

James Mitchell: Please go ahead. Oh, hey, hey, good morning.

Speaker Change: And for our final question, we'll go to the line of Jim Mitchell from Seaport Global Securities. Please go ahead.

James Francis Mitchell: Maybe just one last question on sort of deploying excess capital. Seems like the two primary ways to do that organically would be through the trading book or the loan book. So maybe two questions there. One, trading assets were up 20% year over year. Is that you leaning into it or just a function of demand? And are there further opportunities to grow that? And then secondly, outside of cards, loan demand has been quite weak. And any thoughts from you on if you're seeing any change in demand or how you're thinking about loan demand going forward? Thanks. Thanks, Jim. Good question.

Jim Mitchell: Maybe just one last question on sort of deploying excess capital. Seems like the two primary ways to do that organically would be through the trading book or the loan book. So maybe two questions there. One, trading assets were up 20% year-of-year. Is that you leaning into it, or just a function of demand? And is there further opportunities to grow that?

James Francis Mitchell: Hey, good morning. Maybe just one last question on sort of deploying excess capital. Seems like the two primary ways to do that organically would be through the trading book or the loan book.

James Francis Mitchell: So maybe two questions there. One, trading assets were up 20% year-over-year. Is that you leaning into it or just a function of demand and is there further opportunities to grow that? And then secondly, outside of cards, loan demand has been quite weak. Any thoughts from you on...

Jim Mitchell: And secondly, outside of cards, loan demand has been quite weak, and any thoughts from you on if you're seeing any change in demand or how you're thinking about loan demand going forward. Thanks. Thanks, Jim. Good question. So, yeah, trading assets have been up. That is basically, you know, client activity, primarily secure financing related sort of match book, repo type stuff and similar things that are gross up the balance. You quite a bit, but are quite low risk and therefore quite low RWA intensity. So, while our ability to supply that financing to clients is something that we're happy about and it very much represents us leaning into the franchise to serve our clients, it's not really particularly RWA and therefore capital intensive and therefore doesn't really reflect, you know, an aggressive choice on our part to deploy capital, so to speak.

James Francis Mitchell: If you're seeing any change in demand or how you're thinking about loan demand going forward. Thanks.

Jeremy Barnum: So yeah, trading assets have been up. That is basically, you know, client activity, primarily secure financing related sort of match book repo type stuff and similar things that are grossing up the balance sheet quite a bit but are quite low risk and, therefore, quite low RWA intensity. So while our ability to supply that financing to clients is something that we're happy about, and it very much represents us leaning into the franchise to serve our clients, it's not really particularly RWA and therefore capital intensive and therefore doesn't really reflect, you know, an aggressive choice on our part to deploy capital.

James Francis Mitchell: Thanks, Jim. Good question. So, yeah, trading assets have been up. That is basically, you know, client activity, primarily secure financing related sort of

James Francis Mitchell: [inaudible]

Speaker Change #101: So while our ability to supply that financing to clients is something that we're happy about and it's very much

Speaker Change #101: This represents us leaning in to the franchise to serve our clients. It's not really particularly RWA and therefore capital intensive and therefore doesn't really reflect an aggressive choice on our part to deploy capital, so to speak.

Jim Mitchell: On the loan demand front, yeah, I mean, unfortunately, I just don't have much new to say there on loan demand, meaning to your point, loan demand remains quite muted, you know, everywhere except card. Our card business is, of course, in no way capital constrained, so whatever growth makes sense there in terms of our customer franchise and our ability to acquire accounts and retain accounts and what fits inside our credit risk appetite is growth. It's going to make sense, and so we're very happy to deploy capital to that, but it's not constrained by our willingness for ability to deploy capital to that.

Jeremy Barnum: On the loan demand front, yeah, I mean, unfortunately, I just don't have much new to say on loan demand, meaning, to your point, loan demand remains quite muted everywhere except cards. Our card business is, of course, in no way capital constrained.

Speaker Change #101: on the loan demand front.

Speaker Change #102: Yeah, I mean, unfortunately, I just don't have much new to say there on loan demand, meaning to your point, loan demand remains quite muted. You know, everywhere except card. Our card business is, of course, in no way capital constrained. So

Jeremy Barnum: So whatever growth makes sense there in terms of our customer franchise and our ability to acquire accounts and retain accounts and what fits inside our credit risk appetite is growth that's going to make sense, and so we're very happy to deploy capital to that, but it's not constrained by our willingness or ability to deploy capital. And of course, you know, for the rest of the loan space, the last thing that we're going to do is have the excess capital mean that we lean into, you know, lending that is not inside our risk appetite or inside our credit box.

Speaker Change #102: Whatever growth makes sense there in terms of our customer franchise and our ability to...

Speaker Change #102: Acquire Accounts and Retain Accounts and What Fits Inside Our Credit Risk Appetite.

Speaker Change #102: is growth that's going to make sense, and so we're very happy to deploy capital to that, but it's not constrained by our willingness or ability to deploy capital to that.

Jeremy Barnum: You know, especially in a world where spreads are quite compressed and terms are under pressure. So there's always a balance between capital deployment and assessing risk rationally. And frankly, that is, in some sense, a microcosm of the larger challenge that we have right now. You know, when I talked about, if there was ever a moment when the opportunity cost of not deploying capital relative to how attractive the opportunities outside the walls of the company are, now would be it in terms of being patient. That's a little bit one example of what I would say.

Jeremy Barnum: And of course, you know, for the rest of the loan space, the last thing that we're going to do is have the excess capital mean that we lean in to, you know, lending that is not inside our risk appetite or inside our credit box, you know, especially in a world where spreads are quite compressed and terms are under pressure.

Speaker Change #102: And of course, you know, for the rest of the loan space, the last thing that we're going to do is have the excess capital mean that we lean in to, you know, lending that is not inside our risk appetite or inside our credit box.

Jim Mitchell: So there's always a balance between capital deployment and, you know, assessing economic risk rationally. And frankly, that is, in some sense, a microcosm of the larger challenge that we have right now. You know, when I talked about if there was ever a moment where the opportunity cost of not deploying the capital relative to how attractive the opportunities outside the walls of the company are now, yet in terms of being patient. And that's a little bit one example of what I was referring to. Right. Okay. Great. Thanks.

Speaker Change #102: you know, especially in a world where spreads are quite compressed and terms are under pressure. So there's always a balance between capital deployment and, you know, assessing economic risk rationally. And frankly, that is

Speaker Change #102: In some sense, a microcosm of the larger challenge that we have right now, you know, when I talked about

Speaker Change #102: If there was ever a moment where the opportunity cost of not deploying the capital relative to how attractive the opportunities outside the walls of the company are, now would be it in terms of being patient. That's a little bit one example of what I was referring to.

James Francis Mitchell: Okay, great. Thanks. And we have no further questions. Very good. Thank you, everyone. See you next quarter. Thank you all for participating in today's conference. You may disconnect your line and enjoy the rest of your day.

Unknown Attendee: Thank you.

Unknown Attendee: And we have no further questions. Very good.

Speaker Change #103: All right, okay, great, thanks.

Speaker Change #104: Thank you.

Unknown Attendee: Thank you, everyone. See you next floor.

Speaker Change #105: And we have no further questions.

Thank you all for participating in today's conference. You may disconnect your line and enjoy the rest of your day.

Speaker Change #106: Very good. Thank you everyone. See you next quarter.

Speaker Change #107: Thank you all for participating in today's conference. You may disconnect your line and enjoy the rest of your day.

Speaker Change #107: [inaudible]