Q1 2025 JPMorgan Chase & Co Earnings Call

Yeah.

Operator: Good morning, ladies and gentlemen. Welcome to JPMorgan Chase's first quarter 2025 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 first quarter 2025 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.

Operator: We will now go live to the presentation. The presentation is available on JPMorgan Chase's website. Please refer to the disclaimer in the back concerning forward-looking statements. Please stand by.

Speaker Change: The presentation is available on J P. Morgan Chase's website. Please refer to the disclaimer in the back concerning forward looking statements. Please standby.

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

Speaker Change: At this time I would like to turn the call over to Jpmorgan, Chase's, Chairman and CEO, Jamie Diamond and the Chief Financial Officer, Jeremy Barnum Mr. Garnham. Please go ahead.

Jeremy Barnum: Thank you and good morning, everyone. Starting on page one, the firm reported net income of $14.6 billion, EPS of $5.07 on revenue $46 billion with an ROTC of 21%. These results included a First Republic related gain of $588 million, which was previously disclosed in the 10 On page two, we have more on our first quarter. The firm reported revenue of $46 billion, up $3.5 billion, or 8% year-on-year. NIIX markets was down $430 million, or 2%, driven by the impact of lower rates and deposit margin compression, as well as lower deposit balances and CCB. This was predominantly offset by higher card revolving balances, the impact of securities activity, including from prior quarters, as well as higher wholesale deposits.

Speaker Change: Thank you and good morning, everyone.

Starting on page one the firm reported net income of $14 6 billion EPS of $5 and sometimes on revenue 46 billion with an R. O G suite of 21%.

Speaker Change: These results included first Republic related gain of 588 million, which was previously disclosed in the 10-K.

Speaker Change: Page two we have more on our first quarter results.

Speaker Change: From a reported revenue of 46 billion up three and a half billion or 8% year on year.

Speaker Change: <unk> was down $430 million or 2% driven by the impact of lower rates and deposit margin compression as well as lower deposit balances and she should be.

Speaker Change: It was predominantly offset by higher card revolving balances the impact of securities activity from prior quarters as well as higher wholesale deposits.

Jeremy Barnum: And IRX markets was up 2.2 billion or 20% and excluding the significant item I just mentioned was up 14% largely on higher asset management fees, lower net investment securities losses, and higher investment banking fees. and markets revenue was up 1.7 billion or 21. The expenses of $23.6 billion were up $840 million, or 4%, largely driven by compensation, including growth in employees across the front office and technology, higher brokerage and distribution fees, as well as marketing and legal expenses. The quarter also reflected a $323 million release of the FDIC Special Assessment Accrual compared with a $725 million increase in the prior quarter.

Speaker Change: And I R X markets was up $2 2 billion or 20% and excluding the significant item I. Just mentioned was up 14% largely on higher asset management fees lower investment securities losses, and higher investment banking fees.

Speaker Change: Mortgage revenue was up $1 7 billion or 21%.

Speaker Change: Expenses of $23 6 billion or 840 million or 4%.

Speaker Change: It's really driven by compensation, including growth in employees across our front office technology higher brokerage and distribution fees as well as marketing and legal expense. The quarter also reflected a $323 million of release of the FDIC special assessment accrual compared with $725 million increase in the prior quarter.

Jeremy Barnum: Credit costs were $3.3 billion with net charge offs of $2.3 billion and a net reserve build of $975,000. We have more details on the reserve bill on page three. With this quarter's reserve bill, the firm's total allowance for credit losses is $27.6 billion.

Speaker Change: Credit costs were $3 3 billion with net charge offs of $2 3 billion and in that reserve build of $973 million.

Speaker Change: We have more details on the reserve build on page three.

Speaker Change: With this quarter's reserve bill the firm's total allowance for credit losses was $27 6 billion.

Jeremy Barnum: Let's take a second to add a little bit of context to our thinking surrounding this number in light of the unique environment of the last Our first quarter allowance is anchored on the relatively benign central case economic outlook, which was in effect at the end of the quarter. But in light of the significantly elevated risks and uncertainties at the time, we increased the probability weightings associated with the downside scenarios in our CECL framework. As a result, the weighted average unemployment rate embedded in our allowance is 5.8%, up from 5.5% last quarter, driving the $973 million increase in the allowance.

Speaker Change: Let's take a second to add a little bit of context, where our thinking surrounding this number in light of the unique environment of the last several weeks our first quarter allowance is anchored on the relatively benign central case economic outlook, which was in effect at the end of the corner, but in light of the significantly elevated risks uncertainties at the time, we increased the prop.

Speaker Change: Mobility weightings associated with the downside scenarios in our seasonal framework as a result.

Speaker Change: The average unemployment rate embedded in our allowance is five 8% up from five 5% last quarter driving the $973 million increase in the allowance.

Jeremy Barnum: So with that in mind, the consumer build of $441 million was driven by changes in the weighted average macroeconomic outlook. The wholesale build of $549 million was predominantly driven by credit quality changes on certain exposures and net lending activity, as well as changes in the outlook. In addition, it's important to note that the increase in the allowance is not, to any meaningful degree, driven by deterioration in the actual credit performance in the portfolio, which remains largely in line with expectations.

Speaker Change: With that in mind, the consumer build a $441 million was driven by changes in the weighted average macroeconomic outlook a wholesale build $549 million was predominantly driven by credit quality changes I'm certain exposures not lending activity as well as changes in the outlook.

Speaker Change: It's important to note that the increase in the allowance is not to any meaningful degree driven by deterioration in the actual credit performance in the portfolio, which remains largely in line with expectations.

Jeremy Barnum: With that, let's go to balance sheet and capital on page four. We ended the quarter with a C2-1 ratio of 15.4%, down 30 basis points versus the prior quarter as net income and OCI gains were more than offset by capital distributions and higher RWA. This quarter, the firm distributed $11 billion of capital to shareholders, which reflects $7.1 billion of net common share repurchases and the payment of our common dividend, which has been increased to $1.40 per share. This quarter's higher RWA is primarily driven by overall business growth in markets and some seasonal attacks.

Speaker Change: With that let's go to the balance sheet and capital on page four.

Speaker Change: We ended the quarter with a <unk> ratio of 15, 4% down 30 basis points versus the prior quarter as net income and OCI gains were more than offset by capital distributions and higher R&M you're at.

This quarter the firm distributed $11 billion of capital to shareholders, which reflects $7 1 billion not common share repurchases and the payment of our common dividend, which has been increased to a dollar and 40 cents per share.

Speaker Change: This quarter's higher R. W. I was primarily driven by overall business growth in markets and some seasonal effects.

Jeremy Barnum: Now let's go to our businesses, starting with CCB on page 5. Consumers and small businesses remain financially healthy. Despite the recent downtrends in consumer and small business sentiment based on our data, spend, cash buffers, payment to income ratios and credit utilization are all in line with our expectations.

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

Speaker Change: And sewers and small businesses remain financially healthy despite the recent down trends in consumer and small business sentiment based on our data spend cash buffers payment to income ratios and credit utilization are all in line with our expectations.

Jeremy Barnum: Moving to the financial results, CCP reported net income of $4.4 billion on revenue of $18.3 billion, which was up 4% during and Banking and Wealth Management. Revenue was down 1% year-on-year, driven by lower deposit NII, predominantly offset by growth in wealth management. Average deposits were down 2% year-on-year and flat sequentially, while end-of-period deposits were up 2% quarter-on-quarter. Client investment assets were up 7% year on year, predominantly driven by market performance, and we continue to see strong flows into managed products. In home lending, revenue was up 2% year-on-year and originations were up 42% year-on-year of a small base in a slowly growing market.

Speaker Change: Moving to the financial results <unk> reported net income of $4 4 billion on revenue of $18 3 billion, which was up 4% year on year.

Speaker Change: Banking and wealth management revenue was down 1% year on year, driven by lower deposit NII predominantly offset by growth in wealth management revenue.

Speaker Change: Average deposits were down 2% year on year and flat sequentially, while end of period deposits were up 2% quarter on quarter.

Speaker Change: Client investment assets were up 7% year on year are predominantly driven by market performance and we continue to see strong flows into managed products and home lending revenue was up 2% year on euro and originations were up 42% year on year off a small base and a slowly growing market.

Jeremy Barnum: Turning to card services and auto, revenue is up 12% year-on-year, predominantly driven by card NII and higher revolving balances, as well as higher operating lease income. Card Outstandings were up 10% due to strong account acquisition. And then auto originations were 10.7 billion of 20% driven by higher lease volume.

Speaker Change: Turning to card services and auto revenue was up 12% year on year predominantly driven by card NII on higher revolving balances as well as higher operating lease income and auto card Outstandings were up 10% due to strong account acquisition.

Speaker Change: And in auto originations were $10 7 billion up 20% driven by higher lease volume.

Jeremy Barnum: Expenses of $9.9 billion were up 6% year-on-year, predominantly driven by growth in marketing and technology, higher field compensation, as well as higher auto lease depreciation. Credit costs were $2.6 billion, reflecting net charge-offs of $2.2 billion, up $275 million year-on-year, predominantly driven by the seasoning of recent vintages and card, with delinquencies and losses in line with expectations. The net reserve bill was $475 million, of which $400 million was in CARS.

Speaker Change: Spencers of $9 9 billion were up 6% year on year predominantly driven by growth in marketing and technology higher field compensation as well as higher auto lease depreciation.

Speaker Change: Credit costs were two months of X billion, reflecting net charge offs of $2 2 billion up 275 million year on year predominantly driven by the seasoning of recent vintages and card delinquencies and losses in line with expectations and that reserve build was $475 million of which $400 million wasn't card.

Jeremy Barnum: Next, the Commercial and Investment Bank on page six. CIB reported net income of $6.9 billion on revenue of $19.7 billion, which is up 12% year-to-date. IV fees were up 12% year-on-year and we ranked number one with wallet share of nine. and Advisory fees were up 16% benefiting from the closing of deals announced in 2024. Debt underwriting fees were up 16%, primarily driven by elevated refinancing activity, particularly in leveraged finance. And equity underwriting fees were down 9% year-on-year, reflecting challenging market conditions.

Speaker Change: Next the commercial and investment bank on page six.

Speaker Change: CIB reported net income of $6 9 billion on revenue of $19 7 billion, which is up 12% year on year.

Speaker Change: Fees were up 12% year on year, and we ranked number one with wallet share of 9% and advisory fees were up 16% benefiting from the closing of deals announced in 2024.

Speaker Change: Underwriting fees were up 16%, primarily driven by elevated refinancing activity, particularly in leverage finance and equity underwriting fees were down 9% year on year, reflecting challenging market conditions in light of market conditions, we are adopting a cautious stance on the investment banking outlook, while client engagement and dialogue.

Jeremy Barnum: In light of market conditions, we are adopting a cautious stance on the investment banking outlook. While client engagement and dialogue is quite elevated, both the conversion of the existing pipeline and origination of new activity will require a reduction in the current levels For more information visit www.fema.gov Payments revenue was up 3% year-on-year excluding equity investments driven by higher deposit balances and fee growth predominantly offset by deposit margin compression. Lending revenue was up 11% year-on-year driven by lower losses on hedges partially offset by lower balance. Moving to markets total revenue was up 21% year on year reflecting record performance and Fixed income was up 8% with better performance in rates and commodities against a relatively weak prior year quarter.

Speaker Change: Long, it's quite elevated.

Speaker Change: The conversion of the existing pipeline and origination activity will require a reduction in the current levels of uncertainty.

Speaker Change: Payments revenue was up 3% year on year, excluding equity investments driven by higher deposit balances and fee growth predominantly offset by deposit margin compression.

Speaker Change: Lending revenue was up 11% year on year, driven by lower losses on hedges, partially offset by lower balances.

Speaker Change: Moving to markets total revenue was up 21% year on year, reflecting record performance in equities fixed income was up 8% with better performance in rates and commodities against a relatively weak prior year quarter equities was up 48% as the business performed well during a period of elevated volatility supported by.

Jeremy Barnum: Equities was up 48% as the business performed well during a period of elevated volatility supported by higher client activity and strong monetization of flows, particularly in derivatives. Security Services Revenue was up 7% year-on-year, driven by fee growth and higher deposit balances, partially offset by deposit margin compression.

Speaker Change: Higher client activity and strong monetization of flows, particularly in derivatives Securities services revenue was up 7% year on year, driven by fee growth and higher deposit balances, partially offset by deposit margin compression.

Jeremy Barnum: The expenses of $9.8 billion were up 13% year-on-year, predominantly driven by higher compensation, legal, and brokerage. Average banking and payments loans were down 3% year on year and down 1% sequentially, as we continue to observe payoff activity and limited demand for new loans across client segments. Average client deposits were up 11% year on year and up 2% sequentially, reflecting increased activity across payments and security services. Finally, credit costs were $705 million, largely driven by the numbers.

Speaker Change: <unk> of $9 8 billion were up 13% year on year predominantly driven by higher compensation legal and brokerage expense average banking and payments loans were down 3% year on year and down 1% sequentially. As we continued to observe payoff activity limited demand for new loans across client segments.

Speaker Change: Client deposits were up 11% year on year, and up 2% sequentially, reflecting increased activity across payments and security services.

Speaker Change: Finally credit costs were $705 million largely driven by the not reserve Bill.

Jeremy Barnum: Then, to complete our lines of business, asset and wealth management on page seven. AWM reported net income of $1.6 billion with free tax margin of 35%. Revenue of $5.7 billion was up 12% year on year, predominantly driven by growth management fees on strong net inflows and higher average market levels, as well as higher brokerage activity and higher deposit Expenses of $3.7 billion were up 7% year-on-year, largely driven by higher compensation, including revenue-related compensation, and continued growth in our private banking and Pfizer teams, as well as higher distribution. Long term net inflows were $54 billion for the quarter, primarily driven by equity.

Speaker Change: And to complete our lines of business asset and wealth management on page seven.

Speaker Change: <unk> reported net income of $1 6 billion with pretax margin of 35% revenue of $5 7 billion was up 12% year on year predominantly driven by growth in management fees on strong net inflows and higher average market levels as well as higher brokerage activity and higher deposit balances.

Speaker Change: There's a $3 7 billion were up 7% year on year, largely driven by higher compensation, including revenue related compensation and continued growth in our private banking advisor teams as well as higher distribution fees.

Speaker Change: Long term net inflows were 54 billion for the quarter, primarily driven by equity and fixed income.

Jeremy Barnum: and Liquidity, we saw net inflows of $36 billion.

Speaker Change: In liquidity, we saw net inflows of 36 billion.

Jeremy Barnum: The U.N. of 4.1 trillion and client assets of 6 trillion, both up 15% year on year driven by continued net inflows and higher market And finally, loans were up 5% year-on-year and flat quarter-on-quarter and deposits were up 7% year-on-year and down 2%.

Speaker Change: You a $4 one trillion in client assets of six trillion were both up 15% year on year, driven by continued net inflows and higher market levels, and finally loans were up 5% year on year and flat for a quarter and deposits were up 7% year on year and down 2% sequentially.

Jeremy Barnum: Turn into corporate on page 8. Corporate reported net income of $1.7 billion. Revenue of $2.3 billion was $102 million year on NII of $1.7 billion was down $826 million year-on-year.

Speaker Change: Turning to corporate on page eight.

Speaker Change: Corporate reported net income of $1 7 billion revenue of $2 3 billion was up $102 million year on year.

Speaker Change: A $1 7 billion was down $826 million year on year.

Jeremy Barnum: NIR was a net gain of $653 million compared with a net loss of $275 million in the prior year. Current quarter included the significant item I mentioned up front, while the prior year quarter included net securities losses of $333 million. The expenses of $185 million were down $1.1 billion year-on-year, driven by the changes to the FDIC Special Assessment Act rules I mentioned earlier.

Speaker Change: <unk> was a net gain of $653 million compared with a net loss of $275 million in the prior year.

Speaker Change: Current quarter included the significant item I mentioned upfront while the prior year quarter included net securities losses of $336 million.

Speaker Change: Expenses of $185 million were down $1 1 billion year on year, driven by the changes in the FDIC Special assessment accruals I mentioned upfront.

Jeremy Barnum: To finish off, let's turn to the full year outlook on We continue to expect NIIx markets to be approximately $90 billion. The firm-wide NII outlook has increased to about $94.5 billion, reflecting an increase in markets in NII, which you should think of as being primarily offset in NIR. Our adjusted expense outlook continues to be about $95 billion. And on credit, we expect the CardNet charge-off rate to be in line with our previous guidance of approximately 3.6%.

Speaker Change: Finish off let's turn to the full year outlook on page nine.

Speaker Change: We continue to expect NII ex market to be approximately $90 million. The firm wide NII outlook has increased to about 94 5 billion, reflecting an increase in market something which you should think of as being primarily offset in I R. R.

Speaker Change: Our adjusted expense outlook continues to be about $95 billion and on credit. We expect the card net charge off rate to be in line with our previous guidance of approximately three 6%.

Jeremy Barnum: So to wrap up, we're pleased with another quarter of strong operating performance. But of course, the focus right now is on the future, which is obviously unusually unstable. But no matter what outcomes eventually materialize, we are eager to do our part to continue to support our clients, the markets, and the broader economy. And we believe the banking system will be a source of strength in this dynamic environment.

Speaker Change: So to wrap up we're pleased with another quarter of strong operating performance, but of course the focus right now is on the future, which is obviously unusually uncertain.

Speaker Change: No matter what outcomes eventually materialize, we are eager to do our part to continue to support our clients the markets and the broader economy and we believe the banking system will be a source of strength in this dynamic environment.

Operator: And with that, let's open the line. Thank you. Please stand by.

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

Speaker Change: Thank you please standby.

Ken Ustin: Our first question comes from Ken Ustin with Autonomous, you may proceed. Good morning, Jeremy. I'm wondering if you could start by just kind of amplifying just the macro commentary that you started off on and given the uncertainty in the world that you referenced, just, you know, how are you seeing the activity change across the customer base from consumers to wholesale? And can you just talk through how that's also just informing, you know, any, any changes in your, some of your, your growth and reserving expectations? Thanks.

Speaker Change: Our first question comes from Ken <unk> with Autonomous you May proceed.

Speaker Change: Hi, Good morning, Hi, Jeremy.

Speaker Change: I'm wondering if you could start by just kind of amplifying just the macro commentary that you started off on and given the uncertainty in the world that you referenced just you know how are you seeing the activity change across the customer base from consumers to wholesale and and can you just talk through how that's also just informing yoga.

Speaker Change: Any changes in your some of your your growth in and reserving expectations. Thanks.

Jeremy Barnum: Sure, Ken. So, I mean, at a high level, I would say that obviously, you know, some of the salient news flow is quite recent. So, you know, we've done some soundings and some checking, both on the consumer side and on the wholesale side. I think on the consumer side, you know, the thing to check is the spending data. And to be honest, the main thing that we see there is what would appear to be a certain amount of frontloading and spending ahead of people expecting price increases from tariffs. So, ironically, you know, that's actually somewhat supportive, all else equal.

Speaker Change: Sure Ken So I mean at a high level I would say that obviously some of the salient news flow is quite recent so.

Speaker Change: We've done some soundings in some checking both on the consumer side and on the wholesale side I think on the consumer side.

Speaker Change: You know the thing to check as the spending data.

Speaker Change: And to be honest the main thing that we see there what would appear to be a certain amount of frontloading spending ahead of people expecting price increases from tariffs. So ironically, that's actually somewhat supportive all else equal.

Jeremy Barnum: But I think what it sort of highlights is that during this transitional period and this elevated uncertainty, you might see some distortions in the data that make it hard to draw a larger In terms of our corporate clients, obviously, they've been reacting to the changes in tariff policy. And at the margin, that shifts their focus away from more strategic priorities with obvious implications for the investment banking pipeline outlook towards more short-term work optimizing supply chains and trying to figure out how they're going to respond to the current environment. So, as a result, I think we would characterize what we're hearing from our corporate clients as, you know, a little bit of a wait-and-see attitude.

Speaker Change: But I think what it sort of highlights is that during this transitional period and this elevated uncertainty you might see some distortions in the data that make it hard to draw a larger conclusions.

Speaker Change: You know in terms of our corporate clients obviously.

Speaker Change: They've been reacting to the changes in tariff policy.

Speaker Change: And at the margin that shifts their focus away from you know.

Speaker Change: More strategic priorities are with obvious implications for the investment banking pipeline outlook towards more short term work optimizing supply chains and trying to figure out how they're going to respond to the current environment. So as a result, I think we would characterize what we're hearing from our from our corporate clients as you know a little bit of a.

Speaker Change: Wait and see attitude I do think you'll see obvious differences across sectors. Some sectors are going to be much more exposed to than others and have more complicated problems to solve and also across the size of the clients. I think you know smaller clients small business and smaller corporates.

Jeremy Barnum: I do think you see obvious differences across sectors. Some sectors are going to be much more exposed than others and have more complicated problems to solve. And also, across the size of the clients, I think, you know, smaller clients, small business and smaller corporates are probably a little bit more challenged. I think the larger corporates have a bit more experience dealing with these things and more resources to manage. So that's a little bit of our read of the situation right now, but certainly, you know, a bit of a wait-and-see attitude. It's hard to make long-term decisions right now, and so we'll see how that plays out.

Speaker Change: <unk> are probably a little bit more challenge I think the larger corporates.

Speaker Change: More experience dealing with these things in a more resources to manage so that's a little bit our read of the situation right now, but certainly.

Speaker Change: You know a bit of a wait and see attitude, it's hard to make long term decisions right now and so we'll see we'll see how that plays out.

Ken Ustin: Yeah, and was one question on the NII X markets holding at 90.

Speaker Change: Yeah, and one question on the NII ex markets holding 90 can you just walk us through the puts and takes up just what's the new curve, you're using which also is subject to change every day and what might have been some of the positive offsets to you know if you put in more expected cuts than you had before thanks.

Jeremy Barnum: Can you just walk us through the puts and takes of just what's the new curve you're using, which also is subject to change every day? And you know, what might have been some of the positive offsets to you know, if you put in more expected cuts than you had before? Thanks. Yeah, that's a good question, Ken. You're right. So if you remember, last quarter, we said that we had one cut in the curve. I think, you know, the latest curve has something like three cuts. And so, you know, we've we've talked a lot, obviously, about how we're asset sensitive, you now see our EAR just goes in the supplement, and probably our empirical EAR is a little bit higher than our modeled EAR as a result of the relatively low, lower than modeled rates paid and consumer.

Yeah. That's a good question, Ken you're right. So if you remember last.

Speaker Change: Last quarter, we said that we had one cut in the curve I think latest curve is something like free cards.

Speaker Change: And so.

Speaker Change: You know we've talked a lot obviously about how we're asset sensitive you now see our EAA are disclosed in the supplement and probably are pure call EAA ours, a little bit higher than our model D. A R. As a result of the relatively low lower than modeled rates paid in consumer. So when you put that together all else equal the drop in our weighted average.

Jeremy Barnum: So when you put that together, all else equal, the drop in the weighted average IORB, which is about 22 basis points, should produce, you know, a notable headwind in our NII X markets. In the curve, basically. Yeah, that's basically, that's just mechanical. Guaranteed not to happen. As Ken said. So that's mechanically just falling through the curve. So yeah, your question is that given that, why are you not revising down?

Speaker Change: Our I O B, which is about 22 basis points.

Speaker Change: Should produce a notable headwind in.

Speaker Change: Our NII ex markets the curve basically yeah. That's basically that's just mechanic guaranteed not to have as cancer. So thats mechanically just flowing through the curve. So yeah. Your question is that given that why are you not revising down and the answer to that is that across all of the puts and takes actually our number is a tiny bit lower it's just not enough to want to change.

Jeremy Barnum: And the answer to that is that across all the puts and takes, actually, you know, our number is a tiny bit lower, it's just not enough to warrant a change in the outlook. But we do have some offsets. So we have some balance effects that are favorable. You will have noted that I talked about higher wholesale deposit balances, for example, we see beta outperforming in a couple different places in CDs and wholesale. The other thing is that you'll recall, we talked before about having a placeholder in our NII outlook for the potential impact of the card late fee rule.

Speaker Change: And the outlook, but we do have some offset so we have some balance of facts that are favorable.

Speaker Change: I've noted that I talked about higher wholesale deposit balances for example, we see beta outperforming in a couple of different places and Cds and wholesale the other thing is that you'll recall that we talked before about having a placeholder.

Speaker Change: Our NII outlook for the potential impact of the card late fee rule. We've now removed that so that's a little bit of an offset as well. So that's kind of how you get to unchanged, even though clearly all else equal you know the lower than expected front end rates are a headwind.

Ken Ustin: We've now removed that. So that's a little bit of an offset as well. Thank you.

Erika Najarian: Thank you. Our next question comes from Erika Najarian with UBS you May proceed.

Erika Najarian: Our next question comes from Erika Najarian with UBS. You may proceed. Yes, good morning.

Erika Najarian: Good morning.

Jamie Dimon: This question is for Jamie. Jamie, you were on the media today talking about potential economic turbulence. But Jeremy also mentioned that banking should be – the banking system should be a source of strength in this turbulence. The equity market always seems to think about the banks as, you know, weaker players given how they trade the stocks more on sentiment and fear rather than the mass of the ability of the banks to absorb provisions going forward if we do fall into a slower economic downturn. So I guess just the question here is can you double-click on how you think this is going to impact the economy going forward and maybe double-click on Jeremy's statement that banking – the banking system should be a source of strength?

Speaker Change: And as for Jamie Jamie.

Erika Najarian: Hum on the media today talking about.

Erika Najarian: Protect potential economic turbulence, but Jeremy also mention that banking the banking system should be a source of strength in this turbulence.

Erika Najarian: The equity market always seems to think about the banks as you know weaker players given how they trade the stock tomorrow on sentiment and fear rather than the math of the ability of banks to absorb provisions going forward. If we do fall into a slower slower economic downturn, so I guess.

Speaker Change: Just a question here is can you double click on how you think this is going to impact the economy going forward and maybe double click on Jeremy statement that banking and banking system should be a source of strength.

Jeremy Barnum: Before Jamie answers that, Erika, I just want to make one brief comment, which is the banking system being a source of strength means what it says. In other words, banks doing their job to support the economy. That's not a statement about bank equity performance and the extent to which banks are cyclical or not. Obviously, a recessionary environment, as I've frequently said, all else equal is bad for banks from an equity performance perspective. We're talking about the financial strength of banks' balance sheets and our ability to support our clients. And, you know, everyone trades stocks in a different way.

Speaker Change: Yes, I just before Jamie answers that Erika I, just want to make one brief comment which is the banking system being a source of strength means what it says in other words banks doing their job to support the economy, that's not a statement about bank equity performance and the extent to which banks are cyclical or not like obviously.

Speaker Change: <unk>, a recessionary environment as I frequently side all else equal it is bad for banks.

Speaker Change: Performance perspective, we're talking about.

Speaker Change: The financial strength of bank's balance sheets, and our ability to support our clients and the difficult moment.

Speaker Change: Everyone trade stocks in a different way so sentiment, but banks are corporately ocean. When it comes to the economy. The economy gets worse credit was to go up volumes can chase yield curves can change and we're not predicting all of that but I would say is our excellent economies Michael Feroli I called this morning, specifically to ask them.

Jamie Dimon: So sentiment banks, but banks are, you know, a cork in the ocean when it comes to the economy. If the economy gets worse, credit loss will go up, volumes can change, deal growth can change. And we're not predicting all of that.

Jamie Dimon: What I would say is our excellent economist, Michael Faroli, I called him this morning specifically to ask him, you know, with how they're looking at their forecast today, they think it's about 50-50 for a recession, so I'll just refer to that. Obviously, if there's a recession, credit loss will go up. And other factors will change too.

Speaker Change: How are they looking at their forecast today, because they think it's about 50 50 for a recession. So I'll just refer to that obviously, if there's a recession credit loss will go up.

Speaker Change: And other factors will change too and I think the one thing I'll add to what Jeremy said is.

Jamie Dimon: And I think the one thing I'll add to what Jeremy said is, and I don't usually pay that much attention to anecdotes, but this time I am. And I think you're going to see a lot of companies, you guys, not you, but the analyst community has already reduced its earnings estimates for the S&P by 5%, so now it's up 5% as opposed to up 10%. My guess is it'll be 0 and negative 5 probably the next month. And then you're going to hear 1,000 companies report, and they're going to tell you what their guidance is.

Speaker Change: I don't usually paid that much attention to anecdotes, but this time I am and I think you're going to see a lot of companies you guys not you, but the Alex can be it's already reduces earnings estimates the S&P by 5%. So its narrows up five as opposed to obtain my guess is that will be zero and negative five probably the next month.

Speaker Change: And then youre going to hear a thousand companies report and they're going to tell you. What their guidance is my guess is a lot will remove it they're going to tell you what they think it might do to their customers. Their base. Their earnings are caused their tariffs is different for every company.

Jamie Dimon: My guess is a lot will remove it. They're going to tell you what they think it might do to their customers, their base, their earnings, their costs, their tariffs. It's different for every company. But I assume you'll see that. And anecdotally, a lot of people are not doing things because of this. They're going to wait and see. And that's M&A, that's M&A with middle market companies. That's people's hiring plans and stuff like that. So people have to adjust this new environment. And I think you will see what it is.

Speaker Change: But I assume you'll see that it anecdotally a lot of people are not doing things because of this we're going to wait and see and that's that's that's M&A is M&A with middle market companies, that's people's hiring plans and stuff like that so people have to adjust this new environment and I think you will see what it is.

Jamie Dimon: I just also want to point out, just so you can round it up, this is to make you feel comfortable, not uncomfortable. When COVID hit, unemployment went from like 4% to 15% in a couple of months. And we had to add to reserves in a two-month period $15 billion. And then, to show you how stupid CECL is, in a three-quarter period, we took down the $15 billion. So that just sizes up a bad recession. If it's a mild recession, it'll be less than that. If it's a really bad recession, it'll be more than that. Either way, we can handle it and serve our clients.

Speaker Change: It will also want to point out just to show you can round. It up this is to make you feel comfortable not uncomfortable when COVID-19 hit unemployment went from like 4% to 15% in a couple of months and we had to add to reserves in a two month period $15 billion.

Speaker Change: And then to show how stupid <unk> three months three quarter period, we took down to $15 billion. So just that just sizes up a bad recession, if it's a mild recession it'll be less than that it was a really bad recession will be more than that either way, we can handle it and serve our clients.

Jamie Dimon: Early won't be great and the stock to go down which I look at as an opportunity to buy back more stock. Got it.

Speaker Change: Earnings wont be great to start to go down, which I look as an opportunity to buy back more stock.

Speaker Change: Okay.

Speaker Change: Got it.

Erika Najarian: And a second follow-up question, and I don't disagree with you guys on equity market performance of bank stocks.

Speaker Change: The second follow up question and I don't disagree with you guys on equity market performance of bank stocks. It's just that the mindset of portfolio managers as they always go back to sort of the lowest common denominator of.

Jamie Dimon: It's just that the mindset of portfolio managers is they always go back to sort of the lowest common denominator of fundamental performance versus thinking about resilience.

Speaker Change: Fundamental performance versus thinking about resilience and to that point.

Erika Najarian: And to that point, the second question is on the reserve. You know, Jeremy, you mentioned a weighted average unemployment rate of 5.8%. I think that's above where economists are thinking we could peak even in a recession scenario.

Speaker Change: My question is on the reserve.

Speaker Change: Jeremy mentioned, our weighted average unemployment rate of 5% I think that's above where economists are thinking we could peak even in a recession scenario, how should we think about any incremental builds from here and what you're going you're obviously deteriorating outlook, but you know what more do you need to see.

Jeremy Barnum: How should we think about any incremental builds from here and what you're going, you know, obviously deterioration outlook, but you know, what more do you need to see in terms of how you make decisions about, you know, further builds from here? Yeah, Erika, it's a good question.

Speaker Change: In terms of.

Speaker Change: How do you make decisions about further builds from here.

Speaker Change: Yes, it's a good question, but the truth is there's just a little bit to onetime certainty right now for me to sort of give an outlook for reserves, which is generally not a thing that we do anyway as I mentioned in my prepared remarks.

Jeremy Barnum: But the truth is, there's just a little bit too much uncertainty right now for me to Give an Outlook for Reserves, which is generally not a thing that we do anyway. As I mentioned in my prepared remarks, the accident forecast at the end of the quarter was the sort of bog standard, no landing, barely any increase in unemployment. Given that we knew at the time that there were some big pending announcements and there was quite a bit of elevated uncertainty around that, it felt like the forecasts were kind of lagging because people were just waiting to actually get the information.

Speaker Change: Now the extent forecast at the end of the quarter was sort of bog standard no landing barely any increase in unemployment given that we knew at the time that there was some there was some big pending announcement and that was quite a bit of elevated uncertainty around that and felt like the forecast where it kind of.

Speaker Change: Lagging because people were just waiting to actually get the information that's what it felt appropriate to add a little bit of downside skewed to a probability assessment of it which is what led to the increase and what led to the Bill you know we use this weighted average unemployment thing is a useful.

Jeremy Barnum: And so it felt appropriate to add a little bit of downside skew to our probability assessment, which is what led to the increase and what led to the bill. We use this weighted average unemployment thing as a useful way to help explain what's going on inside the reserve, but obviously the actual mechanisms are quite complex. The depth of any potential recession, the timing of it, the distribution of outcomes, which sectors it hits, idiosyncratic stuff in wholesale, there's a lot. I think on consumer, as Jamie mentioned, it is worth remembering that by far the most important variable is unemployment.

Speaker Change: Way to help explain what's going on inside the reserve, but obviously the actual mechanisms are quite complex you know the depth the eventual recession, the timing of it distribution of outcomes, which sectors had hedged idiosyncratic stuff in wholesale there's a lot I think on consumer as Jamie mentioned it is worth remembering that.

Speaker Change: By far the most important variable is unemployment so you know.

Jeremy Barnum: So if the labor market remains very strong, consumer credit will probably be fine. If it doesn't, then you're going to see it play through the way it always does. Thank you.

Speaker Change: It's the labor market remains very strong consumer credit will probably be fine.

If it if it doesn't then you're going to see it play through the way it always does.

Speaker Change: Thank you.

Speaker Change: Thank you our next question.

Operator: Our next question... I apologize.

Speaker Change: I apologize. Our next question comes from John Mcdonald with curious Securities You May proceed.

John Mcdonald: Our next question comes from John McDonald with Truist Securities. You may proceed. Hi, good morning. Jeremy, on that same topic, no change to the full year credit card net charge-off forecast. How do we square that with the rise in recession risk? Is it because you already have a couple months of delinquencies kind of baked in the cake and this is more an issue for next year or just too early to call?

John Mcdonald: Hi, good morning, Jeremy on that same topic no change to the full year credit card net charge off forecast, how do we square that with the ryzen recession risk is it because you already have a couple of months of delinquencies kind of baked in the cake and this is more of an issue for next year or just too early to call.

Jeremy Barnum: We should have not given you that forecast. We don't know what the number is going to be. I would say that's a short-term number, and based on what's happening today, there's a wide range of potential outcomes. Yeah, okay. Okay, yeah, that's what we're kind of thinking.

John Mcdonald: We should not give you that forecast, we don't know what the number is going to be.

John Mcdonald: I would say, it's a short term number and based on what's happening today is there's a wide range of potential outcomes.

John Mcdonald: Okay.

John Mcdonald: Okay, Yeah, that's what we're kind of thinking.

Jeremy Barnum: But mechanically, John, though, as you alluded to, there are some mechanical elements to the way car charge-off works that means that it's pretty big, it's pretty far out of time. A couple of quarters, yeah. So sort of echoing Jamie's point, you know, it just doesn't necessarily tell you that much about what might actually happen. Even if unemployment were to increase significantly, it probably wouldn't flow through the charge off. Okay, got it.

Speaker Change: Mechanically John though as you alluded to there are some mechanical elements to the way car charge offs works. It means that it's pretty baked pretty far out a couple of quarters sort of echoing Jamie's point.

Speaker Change: It's just doesn't necessarily tell you that much about what might actually happen.

Speaker Change: Even if unemployment were to increase significantly and probably wouldn't flow through to the charge offs until later.

John Mcdonald: And then just on capital, how does this type of macro uncertainty impact your thinking around conserving capital as opposed to deploying it through your investment agenda and buybacks as the stock gets cheaper? Are you still looking to arrest the increase? Or does this kind of The investment that we do in banks, branches, technology, AI is going to continue regardless of the environment. And then we have, you know, depending on what happens to Basel III and CCAR and GSIPI and all that, 30 to 60 billion of excess capital. And in the Chairman's letter I wrote about what we think of that, but based upon the environment, the turbulence, the issues, I like having excess capital.

Speaker Change: Got it and then just on capital how does this type of macro uncertainty impact your thinking around conserving capital as opposed to deploying it through your investment agenda and buyback says the stock is cheaper or just are you still looking to arrest the increase or does this kind of change it.

The investment that we do in banks branches technology AI is going to continue regardless of the environment.

Speaker Change: And then we have to pay what happens to Basel, III, and CCAR and G City, and all of that $30 to 60 billion of excess capital and in the Chairman's letter I wrote about what we think of that but based upon the environment the turbine issues I like having excess capital.

Jamie Dimon: We are prepared for any environment. And that's and that's so we can serve clients. That's not, you know, for any other reason. So We have plenty of capital, plenty of liquidity to get through whatever the stormy seas are.

Speaker Change: We are prepared for any environment and Thats unnecessarily can serve clients that's not.

Speaker Change: For any other reason.

So we have plenty of capital plenty of liquidity to get through whatever the stormy seas are.

Speaker Change: Okay. Thank you.

John Mcdonald: Thanks, John.

Speaker Change: Thanks, Sean.

Operator: Thank you.

Speaker Change: Thank you. Our next question comes from Matt O'connor with Deutsche Bank. Your line is open.

Matt O'connor: Our next question comes from Matt O'Connor with Deutsche Bank. Your line is open. Good morning.

Matt O'connor: Good morning, just wanted to drill down on the credit card spend.

Jeremy Barnum: I just want to drill down on the credit card spend. Any comments in terms of changing patterns on the consumer card spend? There's been headlines of travel kind of going down. Just talk about some of the puts and takes in that up 7% year over year. Yeah, it's a good question. We're seeing that too.

Speaker Change: Any comments in terms of changing patterns on that consumer card spend that's been headlines in travel kind of going down just talk about sort of puts and takes in that up.

Matt O'connor: Up 7% year over year.

Matt O'connor: Yes, it's a good question and we're seeing not two so let me talk about travel I mean, we obviously saw the airlines discuss what they are seeing as headwinds for them specifically in airline travel and we're seeing that too through the card spend.

Jeremy Barnum: So let me talk about travel. I mean, we obviously saw the airlines discuss what they are seeing as headwinds for them, specifically in airline travel. And we're seeing that too through the card spend. It's not obvious to us that that's necessarily an indicator for broader patterns. There are a variety of potential explanations for the narrow drop in airline spend. And as I mentioned previously, another thing that we are seeing, looking at the April data, is what would appear to be a little bit of front-loading spending, specifically in items that might have prices go up as a function of tariffs.

Matt O'connor: Not obvious to us that that's necessarily an indicator for broader patterns there.

Matt O'connor: There are a variety of potential explanations for the narrow drop in an.

Matt O'connor: In airline spend and as I mentioned previously another thing that we're seeing looking at the April data is what would appear to be a little bit of frontloading spending specifically in items that might be.

Matt O'connor: B how prices go up as a function of tariffs. So you see people behaving rationally and I have noted even.

Jeremy Barnum: So you see people behaving rationally, and I have noted even, you know, you hear anecdotes, and I've seen evidence of companies specifically advertising, you know, pre-tariff inventory, and so on and so forth. So it's not that surprising that you're seeing that a little bit in the spending data.

Matt O'connor: You hear anecdotes and I've seen evidence of companies specifically advertising you know we are pre tariff inventory and so on and so forth. So it's not that surprising that you're seeing that a little bit in the spending data.

Matt O'connor: The other thing that people are kind of interested in this space is like what's happening by income band because we have seen some of the retailers and other folks talking about weaknesses in the lower income segment and I think when we look at our card data and also our cash buffers and people checking accounts of course it is true that it is.

Matt O'connor: Relatively weaker and the lower income segment, but when you take a step back and you ask are we seeing signs of distress in the lower income segment. The answer is no. So sure the margin cash buffers are lower or do you see some rotation of spend that spending is a little bit weaker than it was in the peak spending moments, but actually some of the increases in <unk>.

Jeremy Barnum: But when you take a step back and you ask, are we seeing signs of distress in the lower-income segment, the answer is no. So, sure, the margin cash buffers are lower, and you see some rotation of spend, and spending is a little bit weaker than it was in the peak spending moments. But actually, some of the increases in spending that we're seeing in April are actually coming from the lower-income segment. So no evidence of distress, I would say.

Matt O'connor: Spending that we're seeing in <unk>.

Matt O'connor: April are actually coming from the lower income segment. So no evidence of distress I would say.

Unknown Executive: Okay, that's helpful color.

Speaker Change: Okay. That's helpful color and then just separately if we look at the delinquencies for the home lending.

Unknown Executive: And then just separately, if we look at the delinquencies for the home lending, the increase both QQ and year over year, is that just some of the noise from the first Republic deal as you take the marks up front, and then those portfolios essentially be seizing from an accounting point of view, or is there something else going on there? Sorry, that I actually didn't hear which is delinquencies in home lending. I didn't. Interesting. I haven't looked at that.

Speaker Change: The increased gross QQ and year over year is that just some of the noise from the first Republic deal as you've taken box upfront and then.

Speaker Change: The portfolio is essentially.

Speaker Change: Or an accounting point of view or is there something else going on there.

Speaker Change: Alright, I actually didn't hear which fees and delinquencies in home lending.

Speaker Change: Oh interesting I haven't looked at that we will have to get back to you on that.

Unknown Executive: We'll have to get back to you on that.

Unknown Executive: I'll leave it there. I mean, whatever, whatever it is, it wasn't important enough to. get ready. So it could be the First Republic. Yes. Yeah, anything is possible.

Speaker Change: The number whatever it is it wasn't important enough to.

Speaker Change: Get raised so it could be the first Republic accounting, yes.

Speaker Change: Yes anything is possible, we will get back to you on that.

Unknown Executive: We'll get back to you on Okay, thank you.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you. Our next question comes from Steven <unk> with Wolfe Research you May proceed.

Steven Chubak: Our next question comes from Steven Chubak with Wolfe Research. You may proceed. Hi, good morning, and thanks for taking my questions.

Speaker Change: Hi, good morning, and thanks for taking my questions I wanted to start off with one on that the proposed SLR changes and just the impact of rate volatility in the treasury is committed to providing relief to the banks under the SLR just to help mitigate some of the volatility in the 10 year, but given the geopolitical.

Steven Chubak: I wanted to start off with one on the proposed SLR changes and just the impact of rate volatility. The Treasury is committed to providing relief to the banks under the SLR just to help mitigate some of the volatility in the 10-year, but given the geopolitical concerns, weakening global demand for Treasuries, how does it inform your appetite just for purchasing U.S. Treasuries if those reforms are implemented, and just how you're managing rate risk maybe more holistically across the firm just in light of some of the recent volatility?

Speaker Change: Concerns weakening global demand for treasuries, how does that inform your appetite is for purchasing U S. Treasuries. If those reforms are implemented and just how you're managing rate risk maybe more holistically across the firm just in light of some of the recent volatility.

Jamie Dimon: So SLR alone isn't going to change that much for us. It may change for other people.

Speaker Change: Yes, so SLR alone isn't going to change that much for us. It may change. The other people you really need reform across SLR G. SIB CCAR Basel III LCR, all of which has deep flaws in them.

Jamie Dimon: You really need reform across SLR, G-SIFI, CCAR, Basel III, and LCR, all of which has deep flaws in them, to make a material change. And remember, it's not relief to the banks. is relief to the markets. JP Morgan will be fine without an SLR change.

Speaker Change: To make a material change and remember it's not relief to the banks.

Speaker Change: This relief to the market's J P mod will be fine with without an SLR change the reason to change some of these things are so banks.

Jamie Dimon: The reason to change some of these things is so banks, the big market makers can intermediate more in the markets. If they don't, if they do, spreads will come in, there'll be more active traders.

Speaker Change: Big market makers could intermediate more into markets if they don't.

Speaker Change: Do spreads will come in they'll be more active traders.

Jamie Dimon: If they don't, the Fed will have to intermediate, which I think is just a bad policy idea, that every time there's a kerfuffle in the markets, the Fed has to come in and intermediate. They should make these changes.

Speaker Change: I don't if that will have to intermediate which I think is just a bad policy idea every time is a kerfuffle in the markets. The fed has to come in and intermediate so they should make these changes.

Jamie Dimon: The reason why is when you have a lot of volatile markets and very widespread and low liquidity in treasuries, it affects all other capital markets. That's the reason to do it, not as a favor to the banks themselves. We don't take more interest rate exposure to this in any way, shape or form. It's not like we're going to change our position. We intermediate in the markets, help clients do what they have to do. If the banks could take bigger positions, they would have just larger dealer positions and basically take not much more interest rate exposure.

Speaker Change: The reason why is when you have a.

Speaker Change: A lot of volatile markets and very widespread and low liquidity in treasuries. It affects all other capital markets. That's the reason to do it not as a favor to the banks themselves.

Speaker Change: And anyway, we don't take more interest rate exposure exists in any way shape or form.

Speaker Change: Sounds like we're going to change our position we intimated in the mortgage help clients do we have to do.

Speaker Change: The banks could take bigger positions. They would have just larger dealer positions and take no basically taken up much more interest rate exposure.

Jeremy Barnum: I should say, our folks did a fabulous job trading this quarter.

Speaker Change: I would say.

Speaker Change: Our folks did a fabulous job trading this quarter.

Jeremy Barnum: And Steve, all I would add to that is that, you know, it is, of course, true, and we all remember the moment, you know, a few years ago, when, you know, intermediaries were in fact bound by SLOs as a result of the expansion of the deposit base, and extraordinary actions needed to be taken to address that. So we've seen when it is binding, and it works not as designed, which is why we do very much agree that it should be fixed.

Speaker Change: And Steve all I would add to that is that you know.

Speaker Change: It is of course true and we all remember the moment you know a few years ago when our.

Speaker Change: The areas, where in fact bound by US alone and result of the expansion of the deposit base and extraordinary actions needed to be taken to address that so we've seen when it is binding and it works not as design, which is why we do very much agree that it should be fixed I think our point is a little bit as Jamie said in his chairman's letter.

Jeremy Barnum: I think our point is a little bit, as Jamie said in his chairman's letter, that it's not the only thing that needs to be fixed, and that our interactions and we as a bank are not particularly bound by it. There is some interesting nuance to in terms of the potential TLAC issuance impact there. quite sensitive to which particular fix gets put in.

Speaker Change: That is not the only thing that needs to be fixed and that our interactions. Among all of these things and we as a bank are not particularly bound.

Speaker Change: Bound by it.

Speaker Change: There is some interesting nuance to in terms of the potential T. Lac issuance impact there, which is which is quite sensitive to which particular fix gets put in so that'll be an interesting thing to watch.

Steven Chubak: Thank you both for that perspective.

Speaker Change: Thank you both for that perspective, and just for my follow up I did want to ask on the market's outlook. So admittedly less surprising to hear some of the cautious IV commentary.

Steven Chubak: And just for my follow up, did want to ask on the markets outlook. So admittedly, less surprising to hear some of the cautious IB commentary in light of the uncertainty, but was hoping you could speak to the markets businesses, which have been performing extraordinarily well of late, and just given the combination of elevated volatility, but also some indications that clients are taking down risk, how you expect that business to perform over the coming quarters. Yeah, it's a good question.

Speaker Change: In light of the Ontario knee, but was hoping you could speak to the markets businesses, which had been performing extraordinarily well of late and just given the combination of elevated volatility, but also some indications that clients are taking down risk how you expect that business to perform over the coming quarters.

Speaker Change: Yeah, it's a.

Jeremy Barnum: As you know, Steve, we're obviously not going to give markets guidance. Your guess is as good as ours at some level, but the ingredients are the right ingredients. I mean, we've often discussed about how this business all else equal benefits from a volatile environment if markets are operating relatively normally, which they more or less have been. Of course, it's not guaranteed. We need to do a good job managing the risk. And yeah, there are states of the world where if our clients are struggling or deleveraging or taking down risk, that could be a headwind for us.

Speaker Change: Good question as you know, Steve, we're obviously not going to give markets guidance.

Speaker Change: Your guess is as good as ours at some level, but the ingredients all the right ingredients I mean, we've often discussed about how this business all else equal benefits from a volatile environment. If markets are operating relatively normally which they more or less have been of course, its not guaranteed we need to do a good job.

Speaker Change: During the risk.

Speaker Change: And yes, there are stages of the world, where if our clients are struggling or deleveraging or taking down risk that could be a headwind for us. So.

Jeremy Barnum: So we're going to just do what we always do and try to manage the risk well and serve our clients. But you know, we were certainly happy. That's great.

Speaker Change: Just do what we always do and try to manage the risk well and serve our clients.

Speaker Change: We were certainly happy to see the performance this quarter.

Operator: Thank you both for taking my questions.

Speaker Change: That's great. Thank you both for taking my questions.

Speaker Change: Thank you. Our next question comes from Gerard Cassidy with RBC capital markets. You May proceed.

Gerard Cassidy: Our next question comes from Gerard Cassidy with RBC Capital Markets. You may proceed. Thank you.

Jeremy Barnum: Hi, Jeremy. Hi, Jamie. Can you guys share with us, if you take a look at the nontraditional lenders, private credit lenders, they've been very active in grabbing market share from the traditional commercial banks over the last two or three years, particularly since the initial Basel III, you know, endgame proposal came out in July of 23, which is no longer applicable. But are you guys seeing any opportunities where Customers may re-intermediate back into the banks like you're a bank because of this volatility. I mean, it's hard to tell, Gerard. I think it's too early to tell.

Speaker Change: Thank you Jeremy and Jamie.

Gerard Cassidy: Can you guys share with us.

Speaker Change: If you take a look at the non traditional lenders private credit lenders. They have been very active in grabbing market share from the traditional commercial banks over the last two or three years, particularly since the initial Basel III.

Speaker Change: Proposal came out in July of 'twenty, three which is no longer applicable, but are you guys seeing any opportunities where the.

Speaker Change: Customers may REIT intermediate back into the banks like your bank because of this volatility.

Speaker Change: I mean, it's hard to tell Gerard I think it's too early to tell but what I would say is that it kind of your question aligns with what we've been saying about the space for some time, which is we want to be product agnostic here and give our clients. The best option that makes sense for them in the moment of weather.

Jeremy Barnum: But what I would say is that it kind of your question aligns with what we've been saying about this space for some time, which is, you know, we want to be product agnostic here and give our clients the best option that makes sense for them in the moment, whether that's a traditional syndicated lending facility, or something that looks more like a uni-traunch direct lending type structure. We're open for business for all of it.

Speaker Change: That's a traditional syndicated lending facility or something that looks more like a uni tranche direct lending type structure.

Speaker Change: We're open for business for all of it and I would say that you know when we talk about the financial system being a source that the banking system being a source of strength in this environment and part of what we're talking about is our commitment and willingness to lend through cycles as we've always done in the US and then we have the underwriting capability.

Jeremy Barnum: And I would say that, you know, when we talk about the financial system being a source that the banking system being a source of strength in this environment, part of what we're talking about is our commitment and willingness to lend through cycles, as we've always done in the past, and that we have the underwriting capability and the capital and the liquidity and the experience to be, you know, reliable lenders and serving our clients, no matter what type of environment we're in. So if that means that we have an opportunity to, you know, compete incrementally, even more effectively in this environment, that that'll be great.

Speaker Change: On the capital and the liquidity and the experience to be.

Speaker Change: Reliable lenders and serving our clients no matter what type of environment. So if that means that we have an opportunity to just you know.

Speaker Change: Compete incrementally even more effectively in this environment that that'll be great.

Gerard Cassidy: Very good, thank you.

Speaker Change: Very good. Thank you and then as a follow up you both just talked about the potential changes to the different regulatory outcome.

Jamie Dimon: And as a follow-up, you both just talked about the potential changes to the different regulatory outcomes for you and your peers, whether it's SLR or the G-SIB buffer, etc. Can you opine for us, your views, are you more confident with the new administration, the new personnel, whether it's the Treasury Secretary, business or others, the nominees for different regulatory heads, that there will be a better chance of real regulatory reform? They see it the way you guys do versus the prior administration? Yeah, I mean, Gerard, we always say this, and it's true, which is that we work with all administrations and every administration as constructively as possible to express our opinions and advocate for the things that we think are right for the banking system and for the economy as a whole, and that was true before, and it's true now with this administration as well.

Speaker Change: Outcomes for you and your peers, whether it's SLR or the G. SIB buffer et cetera can you pine for us.

Speaker Change: Views are you more confident with the new.

Speaker Change: Administration, the new personnel, whether it's treasury secretary byzant or others. The nominees for different regulatory has that there will be a better chance of real regulatory reform. They see it the way you guys do versus the prior administration.

Gerard Cassidy: Yeah, I mean, Gerard we always say the Senate true, which is that we work with all administrations and every administration as constructively as possible to express our opinions and advocate for the things that we think are right for the banking system and for the economy as a whole and that was true before.

Gerard Cassidy: And it's true now with this administration as well clearly the administration has been quite vocal about wanting more pro growth policies at the margin and for wanting to make it easier for banks to participate more constructively in the economy.

Jamie Dimon: Clearly, the administration has been quite vocal about wanting more pro-growth policies at the margin and for wanting to make it easier for banks to participate more constructively in the economy, and as we see the various folks and the various agencies go through the confirmation process, it will be helpful to have people in seats and get to work on some of the things that we want to get done, so let's see how that plays out, but if We're looking forward to continuing.

Gerard Cassidy: And as we see the various folks in the various agencies go through the confirmation process. It will be helpful to have people in seats and get to work on some of the things that we want to get done so let's see how that plays out but.

Gerard Cassidy: We're we're looking forward to continuing to engage constructively.

Jamie Dimon: I think there's a deep recognition of the flaws in the system. And that should be and fortunately, they got to take a good look at it. Very good, thank you. Thanks, Roger.

Gerard Cassidy: As a deep recognition of the flaws in the system.

Gerard Cassidy: And there should be and we're clearly going to take a good look at it.

Gerard Cassidy: Yeah.

Gerard Cassidy: Very good thank you.

Gerard Cassidy: Thanks Rod.

Ebrahim Poonawala: Thank you. Our next question comes from Ebrahim Poonawala with Bank of America. You may proceed. Thank you. Good morning. I guess just wanted to follow up on the macro uncertainty. I think when you talk to investors, we've gone from enthusiasm for a pro-business administration to a lot of headwinds. And I think Jamie mentioned you have companies take down guidance, etc., potentially over the coming weeks.

Speaker Change: Thank you. Our next question comes from Ebrahim <unk> with Bank of America. You May proceed.

Thank you good morning, I guess just wanted to follow up on the macro uncertainty.

Speaker Change: When you talk to investors we've gone from.

Speaker Change: Enthusiasm put a pro business administration to a lot of headwinds and I think Jamie mentioned, you have companies take down guidance et cetera, potentially over the coming weeks I'm just wondering.

Jamie Dimon: I'm just wondering what is it you think we need to see before this uncertainty abates? Are the 90-day pause that we saw with some of the other countries on tariffs, is that enough? Or I'm just wondering when you talk to clients, corporate CEOs, what are they looking for from the administration that would inject confidence to get back anywhere close to where we were maybe 60 or 90 days ago?

Speaker Change: What is it you think we need to see before this uncertainty abates.

Speaker Change: The 90 day pause that can be sold at some of the other countries that if there's not enough well I'm just wondering when you talk to clients corporate Ceos.

Speaker Change: What are they looking for from the administration that could inject confidence to get back anywhere close to <unk>, maybe 60 or 90 days ago.

Jamie Dimon: First of all, some of all the issues that are raised existed before the new administration, like the geopolitical situation, the excess fiscal deficits, poorly done regulations, and all of that. Obviously, pro-growth is good, pro-business is good, pro-DREG is good. I think the best thing to do is to allow the Secretary of Treasury and the folks working with him and the administration to finish as quick as possible the agreements that they need to make around tariffs and with our trading partners. And I think there'll be agreements in principle, they're not going to be trade agreements themselves would be 5,000 or 10,000 pages long, and that's the best way to go about it right now.

Speaker Change: First of all some of all of the issues that are raised existed before the new administration.

Speaker Change: The geopolitical situation the excess fiscal deficits poorly done regulations.

Speaker Change: All of that obviously pro growth is good pro business is good pro directors is good.

Speaker Change: I think the best thing to do is to allow the.

Speaker Change: The secretary of Treasury.

Speaker Change: And the folks working with them and the administration to finish as quick as possible the agreements that they need to make with the around tariffs and with our trading partners.

Speaker Change: There'll be agreements in principle that accurately trade agreements themselves would be.

Speaker Change: Five or 10000 pages long.

Speaker Change: That's the best way to go there right now.

Jamie Dimon: That does not mean you won't have some of the effects take place anyway. quoted, I guess.

Speaker Change: That does not mean, you won't have some of the effects take place anyway.

Speaker Change: Got it I guess.

Jamie Dimon: As a follow-up, I think there's a lot of concern also in the treasury markets. We've seen the 10-year move from $399 to $450 in a matter of a week. Just your comfort level in terms of the functioning of the treasury market, do you see the Fed stepping in, pausing QT, maybe even initiating some treasury purchases? Any color would be great. Yeah, but you know, again, I mean, we have sticky inflation, we had that before, I personally have told you, I don't think that's going to go away. And that relates to that, obviously, you know, the US dollar is the reserve currency, and that isn't going to change, though some people may feel slightly differently about it.

Speaker Change: As a follow up I think there's a lot of concern also indications new markets. We've seen the 10 year move from 399 to 450 in a matter of a week.

Speaker Change: Just your comfort level in terms of the functioning of the casualty market do you see the fed stepping in.

Speaker Change: And QE Qt, maybe even initiated with them.

Speaker Change: Change the purchase as well.

Speaker Change: Any color would be great.

Speaker Change: Yes, but again.

Speaker Change: I mean, we have sticky inflation, we had that before I personally have told you I don't think that's going to go away.

Speaker Change: And that relates to that obviously the U S dollar as the reserve currency and that isn't going to change. So there was.

Speaker Change: Some people may feel slightly differently about it.

Jamie Dimon: And the Fed We've been we've been consistent. There will be a kerfuffle the Treasury markets because of all the rules and regulations. I've told you that consistently it happened in COVID. It happened before it happened. That will happen. And then when that happens, the Fed will step in. That's what happens. And they're not going to do it now because you don't have all those issues yet. They'll do it when they start to panic a little bit. And we don't know if and when that's going to happen. And we'll see. But the notion that the 10-year Treasury has to go down is a false notion.

Speaker Change: Ed.

Speaker Change: We've been we've been consistent there will be a kerfuffle the treasury market because of all the rules and regulations I've told you that consistently it happened in co created happened before it happened that will happen and when that happens the fed will step in.

Speaker Change: That's what happens and then I can do it now because you don't have all those issues Oh, yes, they will do it when they start to panic, a little bit and we don't know if and when that's going to happen.

Speaker Change: And we'll see.

Speaker Change: But.

Speaker Change: The notion that the 10 year Treasury has to go down is a false notion could we look at history in prior times when you have huge global deficits no back in the seventies.

Jamie Dimon: And if we look at history in prior times, we have huge global deficits. Back in the 70s, in the 60s, the guns and butter, tariffs, at least our economists think will be inflationary to 0.5% or something like that. So we'll have to wait and see and deal with it. Thank you.

Speaker Change: <unk> the guns and butter tariffs.

Speaker Change: Terrorists Alicia archives they will be.

Speaker Change: Inflationary to <unk>, 5% or something like that so we'll have to wait and see and deal with it.

Speaker Change: Thank you.

Jamie Dimon: You know, for most people who haven't dealt with this stuff before, you're going to see a lot of stuff taking place shortly, in the next couple of months, and then we'll know. Thank you so much. Thank you.

Speaker Change: For most people.

Speaker Change: I haven't dealt with this stuff before it and youre going to see a lot of stuff taking place shortly.

Speaker Change: Shortly in the next couple of months and then we'll know.

Speaker Change: But thank you so much.

Speaker Change: Yeah.

Speaker Change: Thank you. Our next question comes from Jim Mitchell with Seaport Global Securities You May proceed.

Jim Mitchell: Our next question comes from Jim Mitchell with Seaport Global Securities. You may proceed. Hey, good morning. Jeremy, just on with four, three to four cuts, sort of all mostly in the back half June to December. How do you think about the trajectory of NII this year? Is there a little more pressure towards the end of the year into 26? Just trying to think of that around that trajectory and jumping off point into next year?

Jim Mitchell: Hey, good morning.

Jeremy just on with four three to four cuts sort of up mostly in the back half June to December.

Jim Mitchell: How do you think about the trajectory of NII this year.

Jim Mitchell: Is there a little more pressure towards the end of the year into 2006, just trying to think of that around that trajectory in the jumping off point into next year.

Jeremy Barnum: Yeah, it's funny, Jim, because, you know, I was asked on the press call, you know, how come we're not like suspending guidance or whatever? And my answer was like, well, you know, whatever we do our best, and it's contingent on, you know, a variety of external variables. And we always make So on the wind curve you're using, which we know will not happen. And the particular nuance, as you recall, from last quarter, where we went into some detail about the various drivers of the NII outlook, including a little bit of a suggestion about the quarterly trajectory, is that it's both the timing of rates and our expected evolution of deposit growth and the different businesses and how Harvard evolved and how that was all going to interact, producing potential trough in different moments.

Speaker Change: Yes, it's funny, John because I was asked on the press call you know how come we're not like suspending guidance or whatever on my answer like well you know whatever.

Jim Mitchell: And we do our vast and that's contingent on.

Jim Mitchell: A variety of external variables and we always make our guidance contingent on that so and that come when curve you use.

Jim Mitchell: Which we know will not happen and the particular nuance as you'll recall from last quarter, where we went into some detail about the various drivers of NII outlook, including a little bit of a suggestion about the quarterly trajectory is that it's both the timing of rates and.

Jim Mitchell: Our expected evolution of deposit growth in the different businesses.

Jim Mitchell: <unk> and how that was all going to a drag producing a potential trough in different moments and then so on and so forth.

Jeremy Barnum: And then I think that given everything that's going on, you know, on that one, probably we'll wait for next quarter to give you any more color on that. Certainly, the back-loaded cuts, all else equal, from a run rate perspective, introduce a little bit of a headwind on an exit rate going into next year. We'll just have to see how the balances play out. and the Next Three Quarters. And maybe just on that, that point on on volumes and deposits, obviously, this kind of volatility tends to drive as corporates and investors go to cash tends to drive higher deposits.

Jim Mitchell: Think that.

Jim Mitchell: Given everything that's going on.

Jim Mitchell: On that one that probably will wait for next quarter to give you any more color on that certainly the back loaded cuts all else equal from a run rate perspective introduce a little bit of a headwind.

Jim Mitchell: Re going into next year, we'll just have to see how the balances play out.

Jim Mitchell: Three quarters.

Jim Mitchell: Right.

Jim Mitchell: That's not happened.

Jim Mitchell: And we have a lot of options and we wanted to do to change our exposure to interest rate.

Jim Mitchell: Right Okay.

Jim Mitchell: And maybe just on that but that point on on volumes and deposits. Obviously this kind of volatility.

Jim Mitchell: <unk> tends to drive as corporates and investors go to cash tends to drive higher deposits. If you did you see that trending.

Jeremy Barnum: If you did you see that trend in in March, and particularly in April, what are the trends like in the deposit side of the equation? A little hard to tell to be honest. It is true that wholesale deposit this quarter outperformed for us relative to our expectations. I don't think I can say with any confidence that that's a result of the environment that we're in. So I think next quarter will probably be a better time to assess It may not be deposits. It may be Treasury bills or various other things. And we've seen which is different.

Speaker Change: And Martin, particularly in April what are the trends like in the deposit side of the equation.

Jim Mitchell: Yeah.

Jim Mitchell: It's a little hard to tell to be honest. It is true that our wholesale deposits this quarter outperformed for us relative to our expectations.

Jim Mitchell: I don't think I can say with any confidence that that's a result of the environment that we're in so.

Jim Mitchell: So I think next quarter will probably be a better time to assess that.

Jim Mitchell: Okay.

Jim Mitchell: It may not be deposits, maybe treasury bills or.

Jim Mitchell: There is other things.

Jim Mitchell: It's not the risk off trade in the 10-year. That is fundamentally different this time. Right, okay, thanks for taking my questions.

Jim Mitchell: What <unk> seen which is different is that the risk off trade in the tenure.

Jim Mitchell: That is fundamentally different this time.

Speaker Change: Right. Okay. Thanks for taking my questions.

Jim Mitchell: Thanks.

Speaker Change: Thank you. Our next question comes from Betsy <unk> with Morgan Stanley You May proceed.

Betsy Graseck: Our next question comes from Betsy Graseck with Morgan Stanley. You may proceed. Thanks.

Betsy Graseck: Good morning, Jamie. Good morning, Jeremy. Two questions. One for Jamie to kick off.

Speaker Change: Thanks, Good morning, Jamie Good morning, Jeremie two questions one for Jamey to kickoff.

Jamie Dimon: Jamie, you've been through many cycles, and I think we're all interested in understanding how you think This next cycle is likely to progress, and I'm wondering, is there anything that you've seen in the past that, you know, looks like this, or that you would, you know, suggest? If, you know, any slowdown coming forward, is it more likely to be similar to what kind of prior cycle you've seen? I get an almost impossible answer. You know, we look at all the cycles, and you know, we prepare for a full range of outcomes. And I don't personally like predicting what the future is going to hold.

Speaker Change: Jim you've been through many cycles.

Speaker Change: And I think we're all interested in understanding how you think.

Speaker Change: This next cycle is likely to progress and I'm wondering is there anything that you've seen in the past that you know.

Speaker Change: Looks like this or that you would suggest.

Speaker Change: If any slowdown coming forward is it more likely to be similar to what kind of prior cycle you've seen.

Speaker Change: Thank you almost impossible answer we look at all of the cycles that we prepare for a full range of outcomes or not I don't personally like predicting the future is going to hold but I do I pointed out over and over there is a lot of issues out there I think some of those issues you are going to see them.

Jamie Dimon: But I do, I pointed out over and over, there's a lot of issues out there. I think some of those issues, you are going to see them resolved, for better or for worse, in the next four months. So maybe when we're doing this call next quarter, we won't have to be guessing. You actually know what the effect of some of these things was with some predictability and stuff like that. But, but it's always the result in a bank is almost always the same, which is, you know, volatile markets, credit losses go up, people get more conservative, investments go down, you know, what looks like a recession, you know, is it mild or hard?

Speaker Change: Resolve for better for worse in the next four months.

Speaker Change: So maybe when we're doing this call next quarter, we won't have to be guessing you actually know what the effect of some of these things was with some predictability and stuff like that but but it's all the result in a bank is almost always the same which is you know volatile markets credit losses go up people get more conservative investments go down.

Speaker Change: It looks like a recession isn't milder or I don't know.

Jamie Dimon: I don't know. And, but, you know, we are. I've been quite cautious and you can see it in our capital, our liquidity, our position, our balance sheet, and so we're prepared. But we do all that so we can serve our clients through thick or thin. We're not guessing about what the future is going to hold. Obviously, if you look at our numbers, we have the margins and capability to get through just about anything. Excellent. Okay, no, thank you for that. Okay.

Speaker Change: But we are.

Speaker Change: I have been quite cautious in and.

Speaker Change: You can see in our capital or liquidity, our position or our balance sheet and.

Speaker Change: So we're prepared but we do all of that so we can serve our clients do we think of them.

Speaker Change: And I'm guessing about what the future is going to hold obviously, if you look at our numbers, we have the margins and capability to get through just about anything.

Speaker Change: Excellent Okay no. Thanks.

Speaker Change: Thank you this is different okay.

Jeremy Barnum: This is different. This is the global economy. And please read my chairman's letter. The most important thing to me is the Western world stays together economically, you know, when we get through all this, and militarily, to keep the world safe and free for democracy. That is the most important thing. I really almost don't care fundamentally about what the economy does in the next two quarters. That isn't that important. We'll get through that. We've had recessions before and all that. It's the ultimate outcome. What's the goal? How can we get there? And it's literally that. I mean, and I, you know, the China issue is a major issue.

Speaker Change: This is different this is the global economy and please read my Chairman's letter. The most important thing to me is the western World stays together economically when we get through all this and militarily to keep the world safe and free for democracy that is the most important thing I really almost don't care.

Speaker Change: Fundamentally about what the economy does next two quarters that isn't that important we will get through that we've had recessions before and all of that is the ultimate outcome, which the goal how can we get there.

Speaker Change: And it's literally that I mean.

Speaker Change: The China issue is a major issue I don't know how thats going to turn out we obviously have to follow the law of the land, but it's a significant change we've never seen.

Jamie Dimon: I don't know how that's going to turn out. You know, we obviously have to follow the law of the land. But you know, it's a significant change we've never seen in our lives.

Speaker Change: Yes.

Betsy Graseck: Okay, thank you so much for that. And yes, looking forward to the next four months and clarity coming.

Speaker Change: Okay. Thank you so much for that and yes looking forward to the next four months and clarity coming.

Betsy Graseck: So then one for Jeremy. Question on the wholesale loans. I'm going into this because I noticed, you know, your average loan growth, I think it was running at about 2% year on year. And then end of period loans was up 5%. And wholesale loans was up seven. I'm just wondering if there was some line drawdowns at quarter end. And it's a broader question on just liquidity. Do you see, you know, your customers looking for more liquidity? Are they drawing down lines? And maybe if you could speak to liquidity in the front end of the market, that'd be helpful too.

Speaker Change: So then one for Jeremy.

Speaker Change: Question on the wholesale loans.

Speaker Change: I'm going into this because I noticed your average loan growth I think it was running at about 2% year on year, and then end of period loans was up 5% and wholesale loans was up seven I'm just wondering if there was some.

Speaker Change: Line draw downs at quarter end and it's a broader question on just liquidity do you see your customers looking for more liquidity or they are drawing down lines and maybe if you could speak to liquidity in the front end of the market that'd be helpful too. Thank you.

Jeremy Barnum: Thank you. Yeah, it's a good question, Betsy. So a couple things. One is, you know, in our soundings of our wholesale clients during sort of the moments of peak uncertainty, we did hear them talking about wanting to focus on shoring up liquidity. Interestingly, I actually asked the question like a day ago, whether we were seeing draws meaning, you know, meaningfully observable draws And the answer to that question was no, at least not yet. So I don't know what to make of that. But perhaps it suggests that that we do not see, you know, that level of heightened anxiety that people are more just focusing on addressing their supply chain.

Speaker Change: Yes, it's a good question Betsy so.

Speaker Change: Couple of things one is.

Speaker Change: And our soundings of our wholesale clients during sort of the moments with peak uncertainty, we did hear them talking about wanting to focus on shoring up liquidity Interestingly I actually asked the question like a day ago, whether we were seeing draws meaning no meaningfully observable.

Speaker Change: Draws from clients and the answer to that question was no at least not yet so I don't know what to make of that but perhaps it suggests that we do not see.

Speaker Change: That level of heightened anxiety that people are more just focusing on addressing their supply chain issues right now.

Jeremy Barnum: um Yeah, so on wholesale loans. Beyond that, I don't think there's that much of a story. You know, we're seeing a bit more growth and sort of like markets loans as opposed to traditional CNI loans in the current moment. But that's another What did you ask also, front end of the yield curve, liquidity? Yeah, just in money markets, Fed funds, you know, the front end. We have heard from our markets colleagues that that is actually functioning.

Speaker Change:

Speaker Change: Yeah. So on the wholesale loans beyond that I don't think there's that much of a story now we're seeing a bit more growth in sort of like markets loans for.

Speaker Change: Additional C&I loans in the current moment, but that's neither here or there.

Speaker Change: Jeff.

Speaker Change: What did you ask also front end of the yield curve liquidity just in.

Speaker Change: Money markets Fed funds, you know the front end.

Speaker Change: We've heard from our for.

Speaker Change: For our markets colleagues is that that's actually functioning smoothly.

Unknown Executive: Okay, thank you.

Speaker Change: Okay. Thank you.

Speaker Change: Yeah.

Unknown Executive: Thanks.

Speaker Change: Thanks.

Speaker Change: Yeah.

Unknown Executive: Thank you.

Speaker Change: Thank you. Our next question comes from Mike Mayo with Wells <unk> Wells Fargo Securities You May proceed.

Mike Mayo: Our next question comes from Mike Mayo with Wells Fargo Securities. You may proceed.

Jamie Dimon: Hey, Jamie, you just said on this call, there's a, quote, deep recognition of flaws, unquote, by the new regulatory regime, and can you put, you or Jeremy, put some meat on the bones as far as what's been an ideal scenario? You keep the safety and soundness of the system, but you rid all, as much as red tape and bureaucracy as possible, how much could, you know, expenses potentially decline? I assume you'd pass on some of that to customers, and you'd keep some of that, and the regulators would save money, so some meat on the bones about the potential concrete savings from deregulation.

Mike Mayo: Hey, Jamie you just said on this call Theres, a quote deep recognition of flaws unquote by the the new regulatory regime and can you put your Jeremy put some meat on the bones as far as what's been an ideal scenario you keep the safety and soundness the system, but you've read all as much as red tape and bureaucracy.

Speaker Change: He is possible how much could.

Speaker Change: <unk> potentially decline I assume he pass on some of that to customers and you can keep some of that and the regulators would save money. So some meat on the bones about the potential concrete savings from deregulation, but before that the the negative what you highlight in the press release and the Chairman later about the trade Wars, Jamie you went from trade wars quote get over.

Jamie Dimon: But before that, the negative, which you highlight in the press release and the chairman letter about the trade wars, Jamie, you went from trade wars, quote, get over it, to this week, say, do something. So just as far as the tariff journey, you know, what were you initially expecting to what happened, and do you really think next earnings call will be through most of the uncertainty? Thanks. Yeah, no, I don't think we'll necessarily be through all the uncertainty. I think you'll just know a lot more. And my quote was about to get over I wish I hadn't said it.

Speaker Change: To this week's eight do something so just as far as the tariff journey.

Speaker Change: What were you initially expecting.

Speaker Change: To what happened and do you really think next earnings call well be through most of the uncertainty.

Speaker Change: Yeah, No I don't think will necessarily to all the uncertainty I think you'll just know a lot more and it Mike <unk> was but get over I wish I hadn't said it I was specifically, referring terrorist relating to protecting national security.

Jamie Dimon: I was specifically referring to terrorists relating to protecting national security. National security is paramount. All things should be subordinated to it. You may need tariffs to help fix some of the problems related to national security. National security is a small part of trade. So and it's rare earths, penicillin, medical ingredients, you know, certain types of, obviously, you've heard about semiconductors. That was my quote about ghetto. I did not change my view about it. I would like to see the administration negotiate trade deals. I think they'll be good for everybody. And they want to do it too.

Speaker Change: National Security is Paramount.

Speaker Change: All things that should be subordinated to it you may need tariffs to help fix some of the problems related national security National Security is a small part of trade.

Speaker Change: And it's rare Earths penicillin.

Speaker Change: Medical ingredients certain types of obviously, you've heard about semiconductors that was my quote about get or I did not change my view about it.

Speaker Change: Like to see the administration negotiate trade deals I think there'll be good for everybody and they wanted to do it to some extent they want to do with these other having conversation to 70, a different people and so I do think if the regulars change regulations. It will free up capital and liquidity to finance the system and I don't I wouldn't expect it.

Jamie Dimon: They've said they want to do it. They said they're having conversations with 70 or 80 different people. And so I do think if the regulators change regulations, it will free up capital and liquidity to finance the system. And I don't, I wouldn't expect an expense drawdown that you're going to see. There will be thousands of hundreds of people, maybe, but it's not going to be peasant. But it will reduce net net the cost of liquidity and the cost of loans and the cost of mortgages, if it's done right. I specifically pointed out the mortgage issue, you know, in my chairman's letter this year about, you know, if they do some of these reforms, the cost of mortgages come down 70 basis points.

Speaker Change: Expense drawdown that youre going to see.

Speaker Change: There will be thousands hundreds of people, maybe but it's not going to be present, but it will reduce net net the cost of liquidity and the cost of loans into Clos to mortgages, if it's done right.

Speaker Change: I, specifically pointed out the mortgage issue.

Speaker Change: My Chairman's letter this year about if they do some of these reforms course of mortgages come down 70 basis points. If I were then might be focused on that right now.

Jamie Dimon: If I were them, I'd be focusing on that right now. And you also mentioned hundreds of billions of dollars of extra lending if you reduce the CET1 ratio, I guess, back down by one-fifth. You have to fix LCR, G-SIFI, CCAR, SLR, and I think would free up hundreds of billions of dollars for JP Morgan annually of various types of lending to the system. Some would be markets, some would be middle market loans, etc. And I pointed out, if you wanted to look at the big numbers, that loans to deposits are now 70% for the banking system writ large.

Speaker Change: No and you also mentioned no hundreds of billions of dollars of extra lending if you reduce the CET one ratio I guess back down by one fifth.

Speaker Change: You have to fix LCR <unk> CCAR.

Speaker Change: SLR and I think we free up hundreds of billions of dollars for Jpmorgan annually of various types of lending to the system. So it would be markets would be middle market loans et cetera, and I pointed out.

Speaker Change: Look at the big numbers.

Speaker Change: Net loans to deposits are now 70% for the banking system writ large that used to be 100%.

Jamie Dimon: That used to be 100%. And the reason for that isn't, it's not just capital. It is also LCR, it is also GCP. And the question you should ask, because you're very smart, Mike, is could you have the same, and I believe you have a safer system, lend more money, have more liquidity, eliminate bank runs, eliminate what happened to First Republic of Silicon Valley, and you can accomplish all of that with completely rational and thoughtful regulations. That's what I would like to see them do. I don't know what's going to happen. We're going to, you know, you can read our, I think our MPRs in public and stuff like that.

Speaker Change: And the reason for that is it it's not just capital. It is also LCR is also <unk>.

Speaker Change: And the question you should you should ask of you a very smart mic is could.

Speaker Change: Could you have had the same that I believe you got to be safer system.

Speaker Change: Lend more money have more liquidity eliminate bank runs eliminate would have the first Republic Silicon Valley and you could accomplish all of that with completely rational and thoughtful regulations. That's what I would like to see them do I don't know what's going to happen.

Speaker Change: It could be.

Speaker Change: Our mpls Republic and stuff like that and.

Jamie Dimon: And so they should do that, you know, just make a better system, or you have the best in the world. You know, we, we've kind of started to cripple it slowly. If you don't, you know, I tell you, you look at these rules and regulations, see Europe. If that's where you want to go, let's just go there.

Speaker Change: So they should do that.

Speaker Change: Make a better system or you have the best in the world.

Speaker Change: We've kind of starting to cripple us slowly if you don't.

Speaker Change: These rules and regulations see Europe.

Speaker Change: That's what we want to go let's just go there.

Jamie Dimon: One short follow-up, just, you know, first quarter you mentioned, you know, good credit, good trading, good EPSB. I'm not sure anyone cares or worried more about the things we're talking about here. But in terms of the risk of being an international company, an international U.S. company during trade wars, and I know JP Morgan is a firm that likes to partner with countries as well as communities and customers. So how do you think about that risk? How should we think about that risk? And hopefully your voice is being heard to speed things along to whatever can be done, getting it done, because you could be in the crosshairs at some point.

Speaker Change: Once you have a follow up test.

Speaker Change: Yeah. He first quarter you mentioned you know good credit good training good EPS be I'm not sure anyone cares are worried more about the things we're talking about here, but in terms of the risk of being an international company and International U S Company during trade Wars, and I know J P. Morgan is a firm that likes to partner with with with countries as well.

Speaker Change: Communities and customers. So how do you think about that risk how should we think about that risk and hopefully your voice is being heard to speed things along to whatever it can be done getting it done because you could be in the crosshairs at some point.

Jamie Dimon: Yeah, I honestly add that to the list of worries. We will be in the crosshairs. That's what's going to happen. And, you know, it's okay. We're deeply embedded in these other countries, people like us, but I do think some clients or some countries will, you know, will feel differently about American banks. And, you know, we will just have to deal with that.

Speaker Change: Yes.

Speaker Change: Honestly Ed to add to the list of worries, we will be in the crosshairs.

Speaker Change: Is going to happen and it's okay.

Speaker Change: We are deeply embedded in these other countries people like us, but I do think some clients or some countries will feel differently about American banks, and well just have to deal with that.

Unknown Executive: All right, thank you. Thank you.

Speaker Change: Alright, thank you.

Speaker Change: Thank you. Our next question comes from Glenn Schorr with Evercore. Your line is open.

Glenn Schorr: Our next question comes from Glenn Schorr with Evercore. Your line is open. Hi, just just one follow up on this whole risk management slash regulatory front. You know, I see I hear and I agree flawed regulatory system could be better. We've had massive volatility. The market plumbing has held in OK so far. And you and others have had borderline spectacular trading results. So. Has something changed? Are the systems better? Are you better able to handle it as your risk management, your people, the diversity of your platform better? Or are there still environments where not all volatility is good?

Speaker Change: Hi, just one follow up on this whole risk management slash regulatory front.

Speaker Change: I see I hear and I agree flawed regulatory system could be better.

Speaker Change: We've had massive volatility the market plumbing is held in okay. So far.

Speaker Change: And you and others have had borderline spectacular trading results. So.

Speaker Change: Has something changed or you are the systems better is better able to handle it is your risk management. Your people the diversity of your platform better or are there still environments, where not all volatility is good.

Jeremy Barnum: I'm curious to get your big picture thoughts. I mean, maybe I'll start with that one, Glenn. So, um, I guess I think that your points aren't mutually exclusive, meaning, you know, I mean, We're always continually improving the franchise. We've talked a lot about inward investment in all of our businesses, including markets. And so we try to be more complete and invest in technology and work more closely with our clients. So I'm sure we're kind of better at it than we were five years ago, as I think probably everyone is at the market. I'm not sure that you can associate that with the current performance.

Speaker Change: Curious to get your big picture thoughts thanks.

Speaker Change: And then maybe ill start with our own one so.

Speaker Change: I guess I think of the airplanes aren't mutually exclusive meaning you know I mean.

Speaker Change: We're always continually improving the franchise, we've talked a lot about inward investment in all of our businesses, including markets and so we try to be more complete.

Speaker Change: You know invest in technology and work more closely with our clients. So I'm sure we're kind of better at it than we were five years ago is I think probably everyone is on the margin.

Speaker Change: Not sure that you can.

Speaker Change: Associate that with the current performance I think this just happened to be very favorable conditions that we've managed very successfully and to your point.

Jeremy Barnum: I think these just happen to be very favorable conditions that we've managed very successfully.

Jamie Dimon: And to your point, I think your specific question of like, are there still forms of volatility that can be bad for the market's franchise? The answer to that question is definitely yes. When you have gappy volatility with no trading volume, people paralyzed, clients unsure what to do, active managers struggling, those environments are bad. So people make fun of the kind of good volatility, bad volatility story, but whether we like it or not, it's real. And in the end, we just have to manage the risks and serve the clients. And as I said earlier, I agree with Jeremy, I'd add to that, you know, volatility leads to bigger bid-ask spreads that all things being equal is better.

Speaker Change: I think your specific question of like is there are there still forms a volatility that can be bad for the market as franchise. The answer to that question is definitely yes, you know when you have got the volatility with no trading volume.

Speaker Change: People paralysed clients unsure what to do active managers struggling those environments are bad. So you know people make fun of the kind of good volatility bad volatility story, but well.

Speaker Change: We like it or not is real.

Speaker Change: And in the end, we just have to manage the risks in sort of the clients and as I said earlier.

Speaker Change: Obviously.

Speaker Change: Great Jeremy I would add to that.

Speaker Change: Volatility of Easter bigger bid ask spreads that all things being equal is better.

Jamie Dimon: And it leads sometimes to higher volumes. So you've seen really high volumes in FX and interest rate swaps and a whole bunch of different things, treasuries, that's better. But it generally points out sometimes that kind of volatility leads to very low volumes. Like you see in DCM today, you know, when you don't have bond deals, you have less trading when you have, so it'll have lower volumes in certain markets and stuff like that. And how it all filters through is almost impossible to tell. But you know, our folks do a great job and we're here to help our clients.

Speaker Change: And at least sometimes to higher volumes, so you've seen really high volumes and FX.

Speaker Change: FX and interest rate swaps and a whole bunch of different things treasuries.

Speaker Change: That's better but as you already pointed out sometimes that kind of bump it would be it's a very low volumes like you see in DCM today, when you don't have.

Speaker Change: <unk> deals, where you have less trading when you have so it will have lower volumes in certain markets and stuff like that and how it all feels it is almost impossible to tell.

Speaker Change: Our folks do a great job.

Jamie Dimon: So we know that volumes can go up or down and spreads can go up or down. And We've had, but the plumbing of the system, I would say the plumbing worked well during COVID too. I mean, it wasn't the plumbing that was a problem. And it wasn't even a problem to go back to some of the real crises we've had. So, but you should always worry about that kind of thing. Make sure it stays true.

Speaker Change: To help our clients. So we know that volumes can go up or down and spread through up or down in.

Speaker Change: Thats been the plumbing of the system.

Speaker Change: I would say the plumbing works well during COVID-19 too.

Speaker Change: It wasn't the plumbing that was a problem and it wasn't even a problem to go back to some of the real crises, we've had so far.

Speaker Change: But you always worry about that kind of thing.

Speaker Change: Make sure it stays true.

Jeremy Barnum: And I do think that the fact that the revenue performance in this quarter is good shouldn't make us lose focus on the importance of the larger fixes around financial resource deployment by regulated banks to supporting the capital markets ecosystem. Everything Jamie's been talking about, about SOR, LCR, ILST, GSIB, Basel III, MRWA, the whole panoply of items which interacts, as we've often talked about, and is miscalibrated, it will at the margin make it harder for banks to serve a stabilizing function in a difficult moment. So that remains quite important. That's a great point. Thanks for that.

Speaker Change: And I do think that the fact that the revenue performance in this quarter is good it shouldnt make us lose focus on the importance of the larger fixes around financial resource deployment by regulated banks to supporting the capital markets ecosystem everything Jim has been talking about about.

Now.

Speaker Change: That's all our LCR I O S T G SIB.

Speaker Change: Boswell Ingemar Wi the whole panoply of other items, which interacts as we've often talked about our business calibrated.

Speaker Change: It will at the margin make it harder for banks to serve a stabilizing function in a difficult moment, so that remains quite important as a policy priority.

Speaker Change: That's a great point, thanks, Brad I appreciate it.

Operator: Appreciate it. Thanks, everyone. Thanks. Thank you.

Brad: Thanks Scott.

Speaker Change: Thank you and our final question will go to the line of Sal Martinez with HSBC you May proceed.

Saul Martinez: And our final question will go to the line of Saul Martinez with HSBC. You may proceed. Hey, good morning. Thanks for taking my question. Most of my questions have been asked and answered, but I guess I'll ask, you know, about costs, since nobody's asked it. But I guess, how should we think about the cost structure and any sort of cost optimization efforts if you do see a revenue slowdown, but not necessarily, you know, a severe downturn? And I think you do have, in the $95 billion guidance, you do have, you know, a good amount of growth penciled in for investing in bankers and branches and tech and marketing.

Sal Martinez: Hey, good morning, Thanks for taking my question.

Speaker Change: My questions have been asked and answered, but I guess I'll ask about costs.

Speaker Change: Nobody's asked it but I guess, how should we think about.

Speaker Change: The cost structure and any sort of cost optimization.

Speaker Change: Afterwards, if you do see a re.

Speaker Change: Revenue slowed down, but not necessarily a severe downturn I think you do have in the $95 billion guidance you do have.

Speaker Change: Good amount of growth penciled in for investing in bankers and branches in tech in marketing in <unk> does it make sense or under what conditions would it make sense for you to maybe pull back on some of these investments or do you think that's just completely shortsighted unless we.

Jeremy Barnum: And I guess, do you, does it make sense, or under what conditions would it make sense for you to maybe pull back on some of these investments, or do you think that's just completely short-sighted unless we, you know, see a real significant downturn in the economy? Yeah, so you've slightly answered your own question there, Saul, but it is nonetheless a good question. So let me unpack it a little bit. So the way I think about it is, there are some elements of the expense base which automatically reset as a function... So we talk about those as volume and revenue-related expense.

Speaker Change: I see a real significant.

Speaker Change: I'll turn in the economy.

Speaker Change: Yes.

Speaker Change: You answered your own question there are several but.

Speaker Change: But it is nonetheless, a good question. So let me let me unpack it a little bit so the way I think about it is there are some elements of the expense base, which automatically reset as a function of the business environment. So we talk about those as volume and revenue related expenses. So you will see those come down as a function of the environment. It's also true.

Jeremy Barnum: And so you will see those come down as a function of the environment. It's also true that there are conceivably certain investment business cases which, depending on how the environment changes, could no longer make sense analyzed in the same way that we analyzed them originally, i.e. through the lens of their ability to generate long-term shareholder value through a long investment cycle. And so if, for whatever reason, the environment changes in such a way as to make certain of those investments less compelling, we would obviously... Of course, the thing that we're not going to do is stop investing in things that we still think are very compelling to our traditional long term investment plans, simply for the purposes of achieving a cosmetic reduction in expenses in an environment where you may or may not have, you know, a reduction in revenues for unrelated reasons.

Speaker Change: There are conceivably certain investment business cases, which depending on how the environment changes could no longer makes sense analyzed in the same way that we analyze them originally I E sort of aligns with our ability to generate long term shareholder value through a long investment cycle.

Speaker Change: If for whatever reason the environment changes in such a way as to make certain that those investments less compelling we would obviously adjust of course the thing that we're not going to do is stop investing in things that we still think are very compelling to our traditional long term investment lines simply for the purposes of achieving a cosmetic reduction.

Speaker Change: On expenses in an environment, where you may or may not have a you know a.

Speaker Change: A reduction in revenues for unrelated reasons as you all know that's just not how we run the company.

Jeremy Barnum: As you all know, that's just not how we run You know, this quarter, as it happens, a question you might have is, you know, how are you managing to keep your guidance the same with what you're saying about, for example, the investment banking outlook? But it's worth noting that investment banking performance this quarter was actually fine. As you know, markets performance was very strong. And there are also some ups and downs in there, I should note, including the fact that there was some sensitivity of the expense base to the strength of the dollar or weakness in this case.

Speaker Change: This quarter as it happens a question you might have as you know how are you managing to keep your guidance the same with what Youre, saying about for example, the investment banking outlook, but it's worth noting that investment banking performance. This quarter was actually fine as you know market's performance was very strong.

Speaker Change: And there are also some ups and downs and there are I should note, including the fact that there are some sensitivity of the expense base of the two.

Speaker Change: The strength of the dollar weakness and that skews and while some of that upside in revenue. It's a little noisy. So that's a factor as well, it's small but I'm just highlighting that there was some slightly non obvious things that aren't strategic off instead of managing the things that I think is very important.

Jeremy Barnum: And while some of that is offset in revenue, it's a little noisy. So you know, that's a factor as well. It's small, but I'm just finding my way around. There's some slightly non-obvious things that aren't strategic. I can say the management thing I think is very important. I always talk about good expenses and bad expenses, and the good expenses are the bankers and branches that we think will pay off. But there are also bad expenses, which I would put in the category of bureaucracy, lack of efficiency, things you don't need to do.

Speaker Change: And I always talk about good expenses embed expenses into good expenses are the bankers in branches that we think will pay off in.

Speaker Change: But they're also bad expenses, which I would put the category bureaucracy, a lack of efficiency things you don't need to do and you can imagine if you go to if you read my Chairman's letter the last Texas called management learnings.

Jamie Dimon: If you read my chairman's letter, the last section is called Management Learnings. And if you look at companies that, you know, over time fail, it's almost always bureaucracy, complacency, arrogance, and lack of attention to detail. And so there is, you know, we're making a – I'm mad at myself for not doing it sooner, to spend a little more time after COVID, the buildup in headcount, the buildup in rules and regulations, the people working or not working from home. After all of those things, we just think there's more efficiency here. And I think some of the – and Mike Mayo mentioned the thing about regulation.

Speaker Change: And if you look at companies that overtime.

Speaker Change: Well, it's almost always drag received complacency arrogance and lack of attention to detail and so there is we're putting we're making.

Speaker Change: Sure.

Speaker Change: A man of myself, but not doing as sooner to spend a little more time that after COVID-19.

Speaker Change: The buildup in head count the buildup in rules and regulations.

Speaker Change: People working or not working from home.

Speaker Change: All of those things, we just think there's more efficiency here.

Speaker Change: I think some of it Mike Mike Mayo mentioned, it's been about regular he is right there will be reductions in cost because rules and regulations will be modified a little bit I mean, we I pointed out.

Jamie Dimon: He is right. There will be reductions in cost because rules and regulations will be modified a little bit. I mean, we – I pointed out resolution recovery, which is a complete waste of time, is 80,000 pages long. It'll never happen that way. CCAR, which is virtually a waste of time, is 20,000 pages long. Okay, we report a trillion, a trillion, I think it's a trillion bits of data every day or something like that to the, all the various regulators and stuff like that. There is this excessive cost built up that we hope we can get rid of and reduce the cost of the system.

Speaker Change: Solution recovery, which is a complete waste of time is 80000 pages long.

Speaker Change: It will never happen that way CCAR, which is virtually a waste of time is 20000 pages long.

Speaker Change: We report a trillion dollar tree I think it's a tree and bits of data every day or something like that to the all the various regulators and stuff like that there is the success of course built up that we can get that hopefully we can get rid of have been reduced across the system and and but it's not the brand new branches. So the.

Jamie Dimon: And, and, but it's not the brand new branches. So we know, and the folks here are working on, you know, we call streamlining, Jim Peabody has got a war room going on it. We already have a significant amount of saves and stuff like that. So and we're having fun doing it. It's like to me, it's like exercising eating your spinach is what we should be doing. We haven't done it for a while.

Speaker Change: The folks here, we're working on we call streamlining Jim Pizza has got a war room going on it we already have a significant amount of saves.

Speaker Change: Saves and stuff like that so and we're having fun doing it so to me, it's like exercise and eat your spinach is what we should be doing we haven't done it for a while so and I apologize to my shareholders.

So and I apologize to my shareholders for not having done this a little bit Okay, that's that's very clear, very helpful. Thank you. Okay. Thanks very much. We'll see you in the next quarter. Thank you all for participating in today's conference. You may disconnect at this time and have a great rest of your day.

Speaker Change: So not having done this work.

Speaker Change: Okay, that's very clear very helpful. Thank you.

Speaker Change: Right.

Speaker Change: Okay. Thanks.

Speaker Change: Score.

Speaker Change: Thank you all for participating in today's conference you may disconnect at this time and have a great rest of your day.

Speaker Change: Yeah.