Q2 2025 JPMorgan Chase & Co Earnings Call

Earnings Goal. We'll begin shortly.

The JP Morgan Chase. Earnings call Will begin shortly.

Unknown Executive: Good morning ladies and gentlemen. Welcome to JP Morgan Chase's second quarter 2025 earnings call. This call is being recorded.

Unknown Executive: Your line will be muted for the duration of the call. We will now go live Please refer to the disclaimer in the back concerning forward-looking statements. Please stand by.

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

Speaker Change: Good morning, ladies and gentlemen. Welcome to JP Morgan Chase's. Second 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. The presentation is available on JP Morgan Chase's website. Please refer to the disclaimer in the back concerning forward-looking statements, please stand by

Speaker Change: At this time, I would like to turn the call over to JP Morgan. Chases, chairman and CEO Jamie Diamond and Chief Financial Officer. Jeremy Barnum, Mr. Barnum. Please go ahead.

Jeremy Barnum: Thank you very much and good morning. This quarter, the firm reported net income of $15 billion, EPS of $5 billion. on revenue of $45.7 billion with an ROG CEO.

Thank you very much and good morning everyone.

Speaker Change: This quarter of the phone reported net income of 15 billion dollars, EPS of $5.24 on revenue of 45.7 billion with an rotce of 21%.

Jeremy Barnum: These results included an income tax benefit of $774 million, which we describe in more detail in the On the next page we have some more detail. The firm reported revenue of $45.7 billion down $5.7 billion. and IIxMarkets was down $185 million or $1.3 billion. driven by the impact of lower rates and deposit margin compression, predominantly offset by higher wholesale deposits, higher revolving balances in card, as well as the impact of securities and IRX markets was down 6.3 billion or 31.3 billion. and excluding the net gain related to visa shares and net investment securities losses in the prior year was up $1 billion or $8 billion.

These results included an income tax benefit of 774 million, which we described in more detail in the earnings press release.

On the next page, we have some more detail.

Speaker Change: The Firm reported revenue of 45.7 billion down, 5.3 billion or 10% year on year.

And iix markets was down 185 million or 1% driven by the impact of lower rates and deposit margin compression predominantly offset by higher wholesale, deposits, higher revolving, balances in card as well as the impact of Securities activity including from prior quarters.

Jeremy Barnum: driven by higher asset management fees, higher auto lease income, higher investment banking fees, and higher The market's revenue was up $1.1 billion.

Speaker Change: And IX markets was down 6.3 billion or 31% and excluding the net gain related to Visa shares and net investment. Securities losses. In the prior year was up 1 billion or 8% driven by higher Asset Management, fees higher auto, leasing come higher, Investment, Banking fees, and higher payment fees.

Speaker Change: And markets Revenue was up 1.1 billion or 15%.

Jeremy Barnum: Expenses of $23.8 billion were up $66 million, and excluding last year's Visa stock contribution to the firm's foundation, was up $1.1 billion, or 5%, primarily driven by compensation, higher brokerage and distribution fees, as well as higher oil prices. Credit costs were $2.8 billion, with net charge-offs of $2.4 billion, and a net reserve bill of $400 million. The bill was driven by new lending activity, largely offset by a decrease in the probabilities that we attached to the adverse scenarios and the allowance On to the balance sheet on page three. We ended the quarter with a CG1 ratio of 15% down 40 basis points versus the prior quarter as net income was more than offset by capital distributions and higher RWA.

Expenses of 23.8 billion were up 66 million, and excluding last year's Visa stock contribution. To the firm's Foundation was up 1.1 billion or 5%, primarily driven by compensation higher, brokerage and distribution fees, as well as higher Auto lease deprecation.

Speaker Change: And credit costs were 2.8 billion with net. Charge offs of 2.4 billion and a net Reserve, Bill 439 million

Speaker Change: The bill was driven by new lending activity. Largely offset by a decrease in the probabilities that we attached to the adverse scenarios and the allowance get estimation.

Speaker Change: On to the balance sheet on page 3.

Jeremy Barnum: This quarter's higher RWA is primarily driven by an increase in wholesale lending across both CIV markets and banking. and increase in other markets. as well as an increase in carbon.

Speaker Change: We end up the quarter with a ct1 ratio of 15% down 40 basis points versus the prior quarter. As net income was more than offset by Capital distributions on higher rwa.

Speaker Change: This quarter is higher. Rwa is primarily driven by an increase in wholesale lending across both CIB markets and banking.

Jeremy Barnum: As you know, we completed CCAR a couple weeks ago, and with the current rules, our indicative SCB is forward at 2.5% and goes into effect in 4-3-25. Our new SCB also reflects the board's intention to increase the dividend to $1.50 per share Now, let's go to our businesses starting.

Speaker Change: An increase in other markets activity, as well as an increase in card loans.

Speaker Change: As you know, we completed cigar a couple weeks ago under the current rules are indicative of stb, is scored at 2 and a half percent and goes into effect in 4.

Speaker Change: Week 5.

Speaker Change: Our new FCB also reflects the board's intention to increase the dividend to a 1.50 per share in the third quarter.

Jeremy Barnum: To be reported net income of $5.2 billion on revenue of $18.8 billion which was up 6% Banking and wealth management revenue was up 3%, largely driven by growth in wealth management revenue with deposit and NII relatively flat. Average deposits were down 1% year-on-year and flat. Fund Investment Assets were up 14% year-on-year, driven by market performance and continued healthy flows into managed products.

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

Speaker Change: CCB reported, net income of 5.2 billion on revenue of 18.8 billion, which was up 6% year on year.

Speaker Change: Banking and wealth management Revenue was up 3%. Largely driven by growth and wealth management Revenue with deposit, knee relatively flat.

Speaker Change: Average deposits were down 1% year on year and flat sequentially.

Jeremy Barnum: Home Lending, Revenue is down 5% year-on-year, predominantly driven by lower Turning to card services and auto, revenue was up 15% year-on-year, predominantly driven by card NII and higher revolving balances, as well as higher operating lease income and auto. Part Outstandings were up 9% due to strong accounting. and auto originations were up 5% driven by higher lease Expenses of $9.9 billion were up 5% year-on-year, largely driven by growth in technology and auto lease depreciation. The costs were $2.1 billion, reflecting net charge-offs of $2.1 billion, relatively flat year-on-year, in line with expectations.

On investment assets, were up 14% year-on-year driven by market, performance and continued healthy flows into manage products and home, lending Revenue was down 5% year-on-year, predominantly driven by lower knee.

Speaker Change: Turning to Card Services in Auto Revenue was up. 15% year-on-year predominantly driven by car and II on higher revolving balances as well as higher operating, leasing income and Auto.

Start outstandings, were up 9% to the strong account Inquisition, and the auto originations were up 5% driven by higher lease volume.

Speaker Change: Expenses of 9.9 billion rough 5% year-on-year. Largely driven by growth in technology and auto lease depreciation.

Jeremy Barnum: Next, the commercial and investment. CIB reported net income of $6.7 billion on revenue of $19.5 billion, which was up 9% year-on-year. IV fees were up 7% year-on-year, and we continue to rank number one with WalletShare. In advisory, fees were up 8%, benefiting from increased sponsor activity. Debt underwriting fees were up 12%, primarily driven by a few large deals. In equity underwriting, fees were down 6% year-on-year.

Speaker Change: By the costs were 2.1 billion reflecting that charge offs of 2.1 billion relatively flat year on year in line with expectations.

Speaker Change: Next, the commercial and Investment Bank.

Speaker Change: On revenue of 19.5 billion which was up 9% year on year.

IB fees were up 7% year-on-year. We continue to rank number 1 with wallet share of 8.9 billion.

Speaker Change: Percent.

Jeremy Barnum: Our pipeline remains robust, and the outlook, along with the market tone and sentiment, is notably more optimistic. 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 down 6% year-on-year, reflecting higher loss.

Speaker Change: An advisory fees were up, 8%, benefiting from increased sponsor, activity, that underwriting fees were up. 12%. Primarily driven by a few large deals, an equity underwriting fees were down 6% year on year.

Speaker Change: our pipeline remains robust and the Outlook along with the market tone and sentiment is notably more upbeat,

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.

Jeremy Barnum: Moving to markets, total revenue was up 15% year on year. Income was up 14% with improved performance in currencies and emerging markets, grades, and commodities. This was partially offset by fewer opportunities in securitized products. equities was up 15%. We continue to see strong performance across products, most notably in Security Services Revenue was up 12% year-on-year, driven by higher deposit balances.

Speaker Change: Lending Revenue was down, 6% year-on-year reflecting higher, losses on hedges.

Speaker Change: Total revenue was up, 15% year-on-year. We think almost up 14% with improved performance in currencies and Emerging Markets rates and commodities. This was partially offset by fewer opportunities and securitized products and fixed income financing.

Equities was up 15% and continue to see strong performance across products. Most notably in derivatives

Jeremy Barnum: Expenses of $9.6 billion, about 5% Prevented by higher compensation, workers and technology. Partially offset by lower legal... Average banking and payments loans were down 2% year-on-year and up 2% quarter-on-quarter, with sequential growth primarily driven by new loans with larger corporations.

Security Services Revenue was up. 12% year-on-year driven by higher deposit, balances, and fee growth.

Expenses of 9.6 billion were up 5% year on year driven by higher compensation workers and Technology expense.

Partially offset by lower legal expense.

Jeremy Barnum: Average client deposits were up 16% year-on-year and up 5% sequentially, reflecting increased activity across payments and securities Finally, credit costs were $696 million, driven by bills in our CNI portfolio, including new lending activity and downgrades to a handful of names, partially offset by the scenario probability adjustment I mentioned up front.

Speaker Change: average Banking and payments loans were down 2% year on year and up 2% quarter on quarter with sequential growth primarily driven by new loans with larger corporates

Speaker Change: average client deposits were up 16% year-on-year and up 5% sequentially reflecting increased activity, across payments and Security Services. Finally credit costs were 696 million driven by builds and rcni portfolio, including new lending activity and downgrades to a handful of names. Partially offset by the scenario probability adjustment. I mentioned

Jeremy Barnum: Turning to Asset and Wealth Management to complete our lines of business. AWM reported net income of $1.5 billion with a pre-tax margin of $1.5 billion. Revenue of $5.8 billion was up 10% year-on-year, driven by growth in management fees on strong net inflows and higher average market levels, as well as higher brokerage activity and higher deposit For more information visit www.FEMA.gov Expenses, $3.7 billion, we're up 5% year-on-year, driven by higher compensation, including revenue-related compensation, and continued growth in our private banking advisor teams, as well as higher Long-term net inflows were $31 billion for the quarter, led by fixed income.

Returning to us and in wealth management to complete our lines of business awm, reported net, income of 1 and a half billion. With pre-tax margin of 34%, revenue of 5.8 billion was up. 10% year-on-year driven by growth in management fees on Strong, net inflows, and higher average market levels as well as our brokerage activity and higher deposit. Balances,

Expenses 3.7 billion, we're up 5% year-on-year, driven by higher compensation, including Revenue, related, compensation, and continued growth in our private banking advisor teams as well as higher distribution fees.

Jeremy Barnum: Liquidity, we saw a net inflows of $5 billion. AUM of 4.3 trillion was up 18% year-on-year, and client assets of 6.4 trillion were up 19% year-on-year, driven by continued net inflows and higher Finally, loans were up 7% year-on-year and 3% quarter-on-quarter and deposits were up 9% year-on-year.

Speaker Change: Long-term net inflows were 31 billion for the quarter. Led by fixed income inequities.

Speaker Change: And liquidity. We saw net. Inflows of 5 billion.

Jeremy Barnum: Turning to corporate, corporate reported net income of $1.7 billion and includes the tax item I mentioned. Revenue was $1.5 billion for the quarter. NII was $1.5 billion, down $875 million year-on-year. NIR was a net gain of $49 million, up $148 million year-on-year, excluding the prior year's visa-related gains. Expenses $547 million or down $32 million year-on-year, excluding the Foundation prior year.

AUM of 4.3 trillion was up 18% year-on-year and client assets of 6.4 trillion were up 19% year-on-year, driven by continued net inflows and higher market levels. And finally loans were up 7%, year-on-year, and 3%. Quarter on quarter and deposits. Were up 9%, year-on-year, and 2% sequence.

Speaker Change: Turning to corporate corporate reported net income of 1.7 billion and includes the tax item. I mentioned up front Revenue was 1 and a half billion for the quarter and AI was 1 and a half billion down, 875 million year and I was a net gain of 49 million up 148 million year-on-year, excluding the prior years. If these are related gains

Speaker Change: Expenses. 547 million were down 32 million year on year, excluding the foundation contribution.

Unknown Executive: To finish up, I'll tote on the album.

Why are you that I mentioned to this?

Jeremy Barnum: You'll recall that on Investor Day I made a couple of comments previewing the potential evolution of the outlook, so now let me formalize that and give you updated guidance. First, we now expect NII-X markets to be approximately $92 billion, with the increase driven by changes in the forward curve and strong deposit growth in payments, security services, as well as balance growth in CART. Total NII guidance is now about $95.5 billion, implying $3.5 billion.

To finish up, I'll touch on the Outlook.

Speaker Change: you'll recall that that at investor day,

Jeremy Barnum: Second, on adjusted expense, we now expect it to be about $95.5 billion, primarily driven by the impact of the weaker dollar, which is largely bottom line. And finally, on credit, we continue to expect the CardNet charge-off rate to be approximately So reflecting on the quarter, while the environment remains extremely dynamic, in many ways navigating uncertainty is the norm for both us and our clients.

Speaker Change: I made a couple of comments, previewing the potential evolution of the Outlook. So, now, let me formalize that and give you updated guidance. First, we now expect knee X markets to be approximately 92 billion with the increased driven by changes in the forward, curve and strong deposit growth, and payments Security Services, as well as balanced growth portal. And I guidance is now about 95 and a half billion implying 3 and a half billion of markets and I

Speaker Change: Second, an adjusted expense. We now expected to be about 95 and a half billion, primarily driven by the impact of the weaker dollar, which is largely bottom line neutral.

And finally, on credit, we continue to expect the Cardinal charge off rate to be approximately 3.6%

Unknown Executive: We're now happy to take your questions, so let's open them up. Thank you. Please stand by.

Speaker Change: so reflecting on the quarter, while the environment remains extremely dynamic in many ways, navigating uncertainty is the norm for both us and our clients

Speaker Change: Thank you. Please stand by.

Christopher McGrady: Our first question will come from Christopher McGrady with QBW. Your line is open. Great morning. Thanks for the question. Jamie relevant three months ago, there's a lot of optimism. Oh, yeah. Great.

Speaker Change: Our first question will come from, Christopher McGrady with qbw, your line is open.

Unknown Executive: Thanks for having me. Great. Thanks so much.

Speaker Change: Great morning, thanks for the question. Um, Jamie relative to 3 months ago. There's a lot of optimism.

Great. Thanks for having me. Welcome you to the call. Before we get started

Unknown Executive: Relative to three months ago, there's a lot of optimism on financial deregulation and really going to break in the bank's favor.

James Dimon: I'm interested if you agree, number one, with this optimism and anything specifically you could point to. And secondarily, on capital, I'm interested in what's on or off the table in terms of uses of capital. What do you need to see from the macro or regulatory? And how should we be thinking about the timing? Thank you.

Great. Thanks so much, um, relative to 3 months ago. There's there's a lot of optimism on financial deregulation and, and really going to break in the bank's favor. I'm interested. If you agree number 1 with, with this optimism and anything specifically you could point to and secondarily on Capital. Um I'm interested in what's on or off the table in terms of uses of capital, what do you need to see from the macro or Regulatory and and how should we be thinking about the timing? Thank you.

James Dimon: Let me take the second part of that first. So, you know, we have our centered capital hierarchy that we recite a lot. And I want to bore you by reciting it again. But I think it's important because it does serve as a guide in this context, right? So, you know, we deploy our capital against organic and inorganic growth. And we ensure a sustainable dividend and with what's left, you know, we do buybacks. And so we've talked about how to access capital, earnings and store. You saw this quarter that we actually, you know, had some financial resource usage that came through and actually meant that despite keeping the buybacks relatively constant and having organic capital generation be relatively constant, C2-1 ratio dropped a little bit as a function of increased usage organically showing up in our WA expansion.

Let me take the second part of that for us. So, um, you know, we have our centered Capital hierarchy that that we recite a lot and I want to bore you by reciting it again, but I think it's important because it does serve as a guide in this context, right? So you know we deploy our Capital against organic and inorganic growth um and we ensure our sustainable dividends

James Dimon: I think, you know, acquisitions have a high bar both financially, strategically and importantly in some cases culturally. And we also need to think carefully about, you know, things that work outside the regulated perimeter might not work inside the regulated perimeter as well. We have learned some lessons. We don't want to overlearn those lessons. I don't particularly think, other than fundamentally whether things are permissible or not, that that the regulatory environment right now particularly shapes our thinking.

Speaker Change: And with what's left. Um you know we do BuyBacks. And so we've talked about Hawk's capitals earnings in store. Uh you saw this quarter that we actually um you know had some Financial resource usage that came through and actually meant that um despite keeping the BuyBacks relatively consent and having organic Capital generation be relatively constant, procedure on ratio dropped a little bit as a function of increased usage organically, uh, showing up in rwa expansion. So, you know, we're doing what we want to do. But clearly it is a big amount of excess and that does mean that everything is on the table, as it always is, and that includes potentially an organic things. Now, obviously, you know, that needs to be done carefully. I think, um, you know, Acquisitions have a high bar of both financially, uh, strategically and importantly, in some cases culturally. And we also need to think carefully about, you know, things that work outside the regulated perimeter,

James Dimon: Can I say just a broader point about regulations? I think it's very important that the regulators step back and kind of look at the big picture now. It's not just one thing. So nothing's happened yet. I think they should be looking at all these things. But if you look at SLR, GSIPI, CCAR, Basel III, FSRT, the overlap, the duplication, I actually believe that you can make the system simpler, cheaper, more effective, more transparent, and safer. And the things like Silicon Valley Bank and First Republic did not need to happen. If you just modify some things, and you create more liquidity, more loans, and a safer system.

Might not work inside the regulated parameter as well. We have learned some lessons, we don't want to over learn those lessons. Um, but you know, in the end, you know, sometimes we win in a little more or sometimes we lean in a little less, but we wouldn't be doing our jobs if, if we weren't thinking about it. Um, I don't particularly think, uh, other than fundamentally, whether things are permissible or not, that the regulatory environment right now, particularly shapes our thinking on that front.

Speaker Change: Appreciate just a broad, appointment of regulations.

James Dimon: And that's really what they should be looking at, not just SLR. And so I'm hoping that over time they do that. And the second thing I think is even maybe more important is they should answer the question, what do they actually want in our public markets versus our private markets, et cetera? We've gone from 8,000 public companies for about like 25 years ago to 4,000 today. That's happened overseas. Public markets overseas have gotten smaller and smaller. Now, obviously I'm not against private credit. Private credit's growing. And how do you really wanna structure this? And why is it happening?

Speaker Change: You know, I think is very important that the regulated step back and kind of look at the big picture. Now, it's not just 1 thing. So nothing's happened yet. I think they should be looking at all these things. But if you look at SLR, gify ccar, Basel 3 fsrt the overlap, the duplication, I actually believe that you can make the system simpler cheaper, more effective, more transparent and safer. And the things like Silicon Valley Bank and First Republic did not need to happen. Uh, if you just modify some things and you can create more liquidity, more loans and the same for system, and that's really what they should be looking at. Not just SLR, you know? And so I'm hoping that over time, they do that and the second day after that, which I think is even maybe more important is they should answer the question. What do they actually want in in our public markets versus our private markets? Etc, we've gone from 8,000 public companies. I'm talking about like 25 years ago to 4,000 today.

James Dimon: Is that a good thing for America? And so I just, it is time that they take a step back.

James Dimon: There's been, I hear sometimes from some pundits that there's been relaxing of rules and regulations. Absolutely not. There's been nothing but increasing them for the better part of 15 years. They should take a deep breath, step back, and look at the system and answer the question, how can we make it better and stronger for the economy and all involved?

Speaker Change: That's that's happened, overseas public markets overseas have gotten smaller and smaller. You know, obviously I'm not against private credit. Private credit is growing. Uh and how do you really want to structure this? And why is it happening? Is that a good thing for for America? And so I just it is time that they take a step back, there's been you know, I hear sometime from some hundreds that there's been relaxing of rules and regulations. Absolutely not. There's been nothing.

Speaker Change: But increasing them for the better part of 15 years. They should take a deep breath step back and look at the system and answer the question how can we make it better and stronger for the economy and all involved?

James Dimon: And maybe it's sort of gone a bit long here, but just to expand and go into a little bit of detail there, I will note that, you know, Vice Chair Bowman gave a speech on her vision, having come into the new seat for, you know, ongoing work, regulation, and Transcripts provided by Transcription Officer Kaye Pompadour I think at the margin, you know, we do understand the desire to sort of knock some things off the to-do list that have been on it for a long time and clearly need to be addressed like SLR. But, you know, at the same time that that happens, the holistic review done properly across not only capital, but also liquidity, resolution, et cetera, is clearly needed.

James Dimon: More narrowly, in the near term, I think we continue to feel very strongly that of all the things that are out there, one of the worst is G-SIB in the sense of both the original gold plating, the sort of deep conceptual flaws in the framework itself, and the failure to recalibrate it for growth since it was put into effect. I think one of the things that's maybe a little bit under-discussed there is the extent to which it specifically creates strong disincentives for American banks to be strong and globally competitive, and that is, seems to me, the exact opposite of what we want, so that's really one of the ones Appreciate, I appreciate all the color.

Speaker Change: Ongoing work on regulation. And um, I think it's it's pH is pretty comprehensive and lays out some of what Jamie is saying in terms of like the to-do list. I think at the margin, you know, we do understand the desire to sort of knock some things off the to-do list that have been on it for a long time and clearly it needs to be addressed like SLR. Um, but you know, at the same time that that happens. Uh the holistic reviewed on properly across, not only Capital but also included a resolution Etc. Uh is is clearly quite important more narrowly in the near term, I think we continue to feel very strongly that of all the things that are out there 1 of the worst is Gib. Um, in the sense of both the original gold plating the sort of deep conceptual flaws in the framework itself and the failure to recalibrate it for growth since it was put into effect. And I think 1 of the things that's maybe a little bit under discussed, there is the extent to which it specifically creates.

Speaker Change: Strong disincentives for American Banks to be strong and globally competitive. And that is seems to me the exact opposite of what we want. So that's really 1 of the ones that that needs to to get in touch with the I would say.

James Dimon: If I could ask on a follow up, the inorganic comments, I'm interested in, you know, capital allocation between your businesses, where you think, if that were to present an opportunity, where, which businesses would most likely be the use of that capital? I mean, we've talked about that a little bit over time. Obviously, we're not fundamentally capital constrained right now. So, I mean, in addition to the fact that capital isn't the only financial resource that we need to allocate, I would say the larger point is that any good franchise business. that it makes sense from a risk perspective and clear as the cost of equity is going to get done, you know, within reason subject to obvious caveats.

Speaker Change: Appreciate, appreciate all the color if I could ask on a follow-up. Um, the inorganic comments, I'm interested in, you know, Capital allocation between your businesses where you think the if that were to present an opportunity where where uh which businesses would most likely be the use of that Capital, thanks.

James Dimon: So, um, you know, inorganic, it's a good discipline to always be looking, I would have high expectations that will be how we use a lot of capital. And I think it's a very big plus that we grow organically at every business we're in without having to stretch. Great, thanks again. Thank you.

Speaker Change: I mean we've talked about that a little bit over time. Obviously, we're not fundamentally Capital constrained right now. So, I mean, in addition to the fact that Capital isn't the only financial resource that we need to allocate. I would say the larger point is that any good franchise business, that it makes sense from a risk perspective, and we are the cost of equity is going to get done, you know, within reason subject to obvious caveat. So, um, you know you're you're you're organic it's a good discipline to always be looking, I would have high expectations, that would be how I would use a lot of capital.

Speaker Change: And I think it's a very big plus, and we grow organically in every business, we're in without having to stretch.

Great. Thanks again.

Thank you.

Betsy Graseck: Next we will go to the line of Betsy Graseck from Morgan Stanley. You may proceed. Hi, good morning. Um, so two questions. First on the RWA utilization via organic as you described, I wanted to understand in wholesale lending where you highlighted, you know, the CIB was a driver of much of this. Could you speak to the drivers of those drivers. In other words, is it private credit? Is it M&A financing? Is it inventory? What are you seeing in the market here that you're delivering on that's raising that lending profile?

Speaker Change: Thank you next. We will go to the line of Betsy graphic from Morgan Stanley. You may proceed

Betsy Graphic: Hi, good morning.

Betsy Graphic: Um so 2 questions first on the rwa utilization via organic as you described. Um I wanted to understand in wholesale lending where you highlighted you know the CIB was a driver of um much of this could you speak to

The drivers of those drivers in other words, is it private credit? Is it m&a? Financing. Is it inventory? What what are you seeing in the market here that you're delivering on? Um, that's that's that's raising that lending profile.

James Dimon: It's all of the above, Betsy, because we are the switcherel and the financing. We do everything and, you know, we saw a lot of activity come in late in the quarter. Okay. Oh, great. All right. Thank you.

Betsy Graphic: All of the above Betsy because we are the Switzerland of financing.

We do everything and, uh,

We saw a lot of activity.

Betsy Graseck: And then, Jamie, you've... There's been a lot of discussion around Stablecoin, how Stablecoin is going to be impacting banks, and I believe you have an opinion on this.

Oh, great. All right. Thank you. And then Jamie, you've, um, there's been a lot of discussion around stablecoin

James Dimon: We'd love to hear if you could highlight how JPM is thinking about utilizing, leveraging, competing with Stablecoin, and how the JPMD deposit token feeds into all of this as well. Thank you. So a deposit token is effectively the same thing. You're moving money by token. You could pay interest. It's JPMorgan deposit. And stablecoins, we're going to be involved in both JPMorgan deposit coin and stablecoins to understand it, to be good at it. We don't know exactly, I think they're real, but I don't know why you'd want a stablecoin as opposed to just a payment. And but I do think you'd have FinTech, you know, these guys are very smart.

Betsy Graphic: How stablecoin is going to be impacting Banks. And I believe you have a opinion on this would love to hear if you could highlight, how JPM is thinking about

Betsy Graphic: um, utilizing leveraging competing with

Betsy Graphic: stablecoin and how the JPM D deposit token feeds into all of this as well. Thank you.

Yeah, so deposit token is effectively the same thing. You're moving money by token, you could pay interest. It's JP Morgan deposit uh and stable coins. So we're going to be involved in both uh JP Morgan, deposit coin, and stable coins to understand and to be good at it.

James Dimon: They're trying to figure out a way to create bank accounts and get into payment systems. And reward programs. And we have to be cognizant of that. The way to be cognizant is to be involved. So we're going to be in it and learning a lot and player. Okay, super.

Betsy Graphic: We don't know exactly what's and I think they're real, but I don't know why you'd want a stable coin as opposed to just a payment and but I do think you'd have fintech. You know, these guys are very smart. They're trying to figure out a way to, you know, create bank accounts to get the payment systems and rewards programs and and we have to be cognizant of that, the, the way to be cognizant is to be involved.

Betsy Graphic: So we're going to be in it and learning a lot and player.

Betsy Graseck: And then separately on the topic of open banking, I think that's on hold right now with the CFPB on hold right now.

James Dimon: But just wanted to understand, does this hold period give you an opportunity to change how you're pricing for your open banking and fintech relationships here? So, this is very important. So, if we get pricing for a second, we are in favor of the customer. So, we think the customer has the right to, if they want to share their information. What we ask people to do is, what do they, do they actually know what's being shared? What is actually being shared? It shouldn't be everything. It should be what their customer wants. It should have a time limit, because some of these things went on for years.

Betsy Graphic: Okay. Super and then separately on the topic of open banking. Um I think that's on hold right now with the cfpb on hold right now. But just wanted to understand does this hold period give you an opportunity to

Change how your pricing for your open Banking and fintech relationships here.

James Dimon: It should not be remarketed or resold to third parties. And so, we're kind of in favor of all that done properly. And then, the payment, it just costs a lot of money to set up the APIs and stuff like that to run the system, protection. So, we just think it should be done and done right. And that's the main part. It's not like you can't do it.

James Dimon: The last thing is a liability shift. I mean, I don't think JP Morgan should be responsible if you've given your bank passcodes to third parties who market it and do a whole bunch of stuff with it, and then you get scammed or fraud through them. They should be responsible. And we want real clarity about that. And if you see today, you know, a lot of these scams and frauds, you know, run through third party social media and stuff like that, there should be a little more responsibility on their part, so we can all do a better job for the customer.

Betsy Graphic: So this is very important. So if we get pricing for a second, we are in favor of the, of the customer. So we think the customer has the right to if they want to share their information, we ask people to do is what do they do? They actually know it's being shared. What is actually being should be everything, it should be what their customer wants. It should have a time limit because some of these things went on for years it should not be remarket or resolve the third parties. Uh, and so we're it kind of in favor of all that done properly and then the payment is just you know of course a lot of money is set up the apis and stuff like that to run the system protection. Uh, so that we just think it should be done and done right? And that that's the main part. It's not like you can't do it. The last thing is is a liability shift.

Betsy Graphic: I mean, I don't think JP Morgan should be responsible if you've given your bank pass codes to third parties who marketed to do a whole bunch of stuff with it, and then you get scammed or fraud through them, they should be responsible and we want real clarity about that.

Unknown Executive: That's why.

Betsy Graphic: And if you see today, you know, a lot of these scams and fors you run through, third-party social media and stuff like that. There should be a little more responsibility in their apart. So we could all do a better job for the customer.

Betsy Graphic: That's why.

Unknown Executive: Excellent. Okay.

Unknown Executive: Thank you so much for that. Thanks, Betsy. Thank you.

Betsy Graphic: Excellent. Okay, thank you so much for that.

Speaker Change: Thanks Bessie.

Steven Alexopoulos: Next, we will go to the line of Steven Alexopoulos from TD Cowen. You may press. I wanted to start, Jeremy, going back to your comments on inorganic. Table in terms of the use of excess capital. So when I look at the company, you're the largest U.S. bank by assets. You're also the largest in terms of the data you see every day. And you may or may not have seen that Apple's looking at possibly either Shatter getting into the AI game or by looking at a company such as a Perplex . Just thinking out loud here, would it make sense for JP Morgan to consider acquiring an LLM, right?

Speaker Change: Thank you next. We will go to the line of Steven Alex opalos from TD Cowen. You may proceed

Hey, good morning, everyone.

I wanted to start Jeremy, going back to your comments on inorganic things being on the table terms of use of excess capital.

James Dimon: The last two quarters of buybacks are about the last valuation round for perplexity, right? I'm thinking of you guys, you could become the LLM for the financial service. What are your thoughts? We use LLMs, and we're going to be agnostic about that, too. There's no reason for us to own one. At least, we can't figure out why that would make sense.

Speaker Change: So when I look at the company, so you're the largest US Bank by assets. You're also the largest in terms of the data you see every day and you may or may not have seen that Apple's looking at possibly. There's shatter getting into today. I gave more by looking at a company such as a perplexity and just thinking out loud here, would it make sense for JP Morgan to consider acquiring an llm, right? The last 2 quarters of BuyBacks are about the last valuation round for perplexity, right? I'm thinking of you guys, you could become the LM for the financial services industry. What are your thoughts on this?

Jeremy Barnum: And I wouldn't, we will use it and we will obviously be important in using our data to help our Yeah, and on the question of inorganic deployment, I would sort of blend my comments with Jamie's right in the end, I'm just asserting that, of course, we need to look Of course, that's a question comes up given our current excess capital position, but Jamie said clearly that he doesn't I think that's particularly likely for some of the reasons that you emphasize, it's not easy to imagine a deal that would We do a lot of small ones, by the way, which you've seen.

We we use llms and we're going to be agnostic about that too. There's no reason for us to own 1, at least, we can't figure out why that would make sense.

Steven Alexopoulos: Okay, and then going back, Jamie, to your answer to Betsy's question on the tokenized deposit. I get it, how that makes sense. Customers that are inside your walled garden, but it doesn't help that much in terms of dealing with customers outside of your garden.

James Dimon: What's holding up you guys and the other banks getting together to issue something joint, you know, similar, somewhat to what you've done with Zelle and prevent these stable coin companies like Circle coming and offering a more convenient That's a great question and we'll leave the remaining as a question. Without an answer. Well, you're raising a very important point about interoperability of stablecoins and deposits and movement of money. And we're probably trying to solve, but you're raising great points, you can assume we're thinking about all that. Fair enough.

Yeah. And I, I wouldn't but we will use it and we will obviously be a a important in using our data to help our customers. Yeah. And on the question of inorganic deployment, I would sort of blend my comments with Jamie's right in the end. I'm just asserting that. Of course, we need to look at inorganic opportunities and of course, that's a question that comes up given our current Access Capital position but Jamie said clearly that he doesn't think that's particularly likely or some of the reasons that you emphasize. It's not easy to imagine a deal that would actually make sense. We do a lot of small ones by the way. We've seen. Yeah, yeah, okay. And then going back to Jamie to your answer to Betsy's question on the tokenized deposit. I get it. How that makes sense? In terms of the customers that are inside your Walt Garden but it doesn't help them much in terms of dealing with customers outside of your garden. What, what's holding up you guys in the other Banks getting together to issue something

Speaker Change: Joint, you know, similar somewhat to it. You've done with zelle.

And prevent these stable coin companies like Circle coming in offering a more convenient solution to your customers.

Speaker Change: Yeah, that's a great question. And I believe that the remaining is a question without an answer.

Speaker Change: Well it's you're raising a very important point about interoperability of stable coins and deposits and movement of money and what problem you're trying to solve, but you're raising a great points, you can assume we're thinking about all that.

Speaker Change: Okay.

Unknown Executive: Thanks for taking my call. Thank you.

Speaker Change: Fair enough. Thanks for taking my questions.

Ebrahim Poonawala: Next, we will go to the line of Ebrahim Poonawala from Bank of America, Merrill Lynch. You may proceed. Good morning.

Speaker Change: Thank you.

Speaker Change: Next, we will go to the line of Abraham poonawalla from Bank of America marila, Marilyn Lynch, you may proceed.

James Dimon: This almost sounds like a fintech and AI call. But maybe just switching gears, I think, Jamie, your comments in the press release, give us a sense, like, when we think about middle market businesses in the US, what's the state of play there? When we think about interest rates, tariffs, consumer spending slowing, should we be concerned in terms of quality outlook looking out 6, 9, 12 months? What's your take based on all the data that you all look at? You're going to ask about the data, but very important. We love the middle market business. You know, it drives a lot of business.

Good morning. It's almost sounds like a fintech and Ai call but uh, maybe just Switching gears. Uh, I think Jamie your comments in the press release. Give us a sense. Like when we think about Middle Market businesses in the US, uh, what's the state of play there? When we think about interest rates, tariffs consumer spending slowing? Should we be concerned in terms of credit quality Outlook? Looking out, 6 9, 12 months. Just what's your take based on all the data that you all? Look at

Speaker Change: You, you can ask the thing about the data but very important, we love the Middle Market business.

James Dimon: We built, you know, I think 500 Bankers, the innovation economy, which is kind of new to us. Think of, you know, what Silicon Valley Bank used to do and things like that. You know, we still have a huge addressable market and middle market business. We provide not just lending, and that can be leveraged lending, direct lending, you know, but payment services, custody services, asset management services, FX services. So we're going to grow that business, regardless of we predict the environment is going to be in the next six to nine months.

James Dimon: For more information, visit www.FEMA.gov Got it. And I guess just as a follow on, go ahead, Jeremy, yep. No, no, go ahead, ask your follow-up. You know, and I was just wondering in terms of your sense of just the state of play, the health of the balance sheets of these customers, and also if you can expand that into the consumer, any areas of stress from a credit quality perspective, that you that you are beginning to get more concerned today versus three or six months ago? Yeah, right. Okay, because that's what I was gonna try to clarify.

Speaker Change: It drives a lot of business, we build, you know, I think 500 bankers and Innovation economy which is kind of new to us think of you know with Silicon Valley Bank used to do and things like that. You know, we still have a huge addressable Market in the Middle Market business. We provide not just lending and that could be leveraged lending, direct lending, you know, but payment services, custody Services, Asset Management, Services FX services. So we're going to grow that business regardless. If we predict the environment is going to be in the next 6 or 9 months.

Jeremy Barnum: Got it and I guess just as a follow on, go ahead Jeremy. Yep.

No, no, go ahead. Ask you a follow-up.

you know, and I was just wondering in terms of

Jeremy Barnum: your sense of just, the state of play, the health of the balance, sheets of these, uh, customers. And also, if you can expand that into the consumer, any areas of stress, from a credit quality perspective, that you that you are beginning to get more concerned today versus 3 or 6 months ago.

Unknown Executive: This wasn't true.

James Dimon: So let's do consumer quickly. I think, you know, we talk about this every quarter. It's obviously a very important question. We look at it very closely. It obviously matters a lot for us But we continue to struggle to see signs of weakness. We just, you know, the consumer basically seems Now, you know, things are true. Like if you look at indicators of stress, not surprisingly, you see a little bit more stress in the lower income bands than you see in the higher income bands. But that's always true. That's pretty much the definition. And nothing there is out of line with our expectations.

Yeah, right. Okay. Because that's what I was going to try to clarify. I just wasn't sure if you were doing consumer wholesale or both. So let's do consumer quickly, I think um, you know we talk about this every quarter, it's obviously a very important question. We look at it very closely at obviously it matters a lot for us as a company. Well we continue to struggle to see signs of weakness.

Jeremy Barnum: Our delinquency rates are also in line with expectations. You saw that we kept our net charge-off guidance unchanged. All of that looks kind of fine. And, you know, to be honest, as we've said before, fundamentally, while there are nuances around the edges, consumer credit is primarily about labor markets. And in a world with 4.1% unemployment rate, it's just going to be hard, especially in our portfolio, to see a lot of weakness. Now, you know, it is true that if you look at not our data, but, you know, the government's data, I think I was looking at this the other day, like first half real consumer spending of this year versus second half of last year is down.

Jeremy Barnum: We just, you know, the consumer basically seems to be fine. Now, you know, do things are true. Like if you look at indicators of stress, not surprisingly, you see a little bit more stress in the lower income bands and you see in the higher income bands, but that's always true. That's pretty much definitely true. And nothing there is out of line with our expectations, our delinquency rates are also in line with expectations. You saw that we kept our net charge off guidance unchanged. So all of that looks kind of fine. And you know, to be honest, as we've said before, fundamentally well, there are nuances around the edges consumer credit is primarily about Labor markets and in a world with 4.1% on employment rate is this going to be hard especially in our portfolio. Um, to see to see a lot of weakness. Now, you know, it is true that if you look at uh, not our data but you know, the government's data I think I was looking at this the other day, like first half real con.

James Dimon: Now, it's still positive, it's still growing, but it's down. So it's kind of consistent, this sort of soft landing narrative, which is also consistent with the sort of the GP outlook that our economists... Our own data looked sort of in nominal terms on a cohort basis, actually shows spending up a little bit over the same period. So it's kind of the same narrative of things being fine with different signals pointing in slightly different directions, but That was helpful.

Jeremy Barnum: Consumer spending of this year versus second half of last year is down now. It's still positive still growing but it's down. So it's kind of consistent this sort of soft Landing narrative, which is also consistent with the sort of the Gap Outlook that our economists are publishing. Our own data look sort of nominal terms on a cohort basis, actually shows spending up a little bit over the same period, so it's kind of the same Narrative of

Jeremy Barnum: Things being fine with different signals pointing in slightly different directions but nothing particularly concerned.

Jeremy Barnum: And would you say the same about commercial? I mean, basically, yes, you know, you see some idiosyncratic things here and there. And on the point of tariffs, I guess, obviously, you recall the slide that we did on investor day, kind of highlighting that different sectors are going to have different experiences as a function of their margins, their sensitivity to input costs, their amount of pricing power, their amount of leverage, and where the rules actually land. But you know, people are obviously getting some time to adjust. And we're watching it very closely. So we'll see.

That was helpful and would you say the same about?

Unknown Executive: Helpful. Thank you. Thanks.

Jeremy Barnum: I mean basically, yes, you know, you see something using chronic things here and there and on the point of tariffs, I, I guess. Obviously you you recall the slide that we did an investor day kind of highlighting that different sectors are going to have different experiences as a function of their margins, their sensitivity to input cost, their amount of pricing power, the amount of Leverage and where the rules actually land but you know, people are obviously getting some time to adjust and we're watching it very closely so we'll see.

Jeremy Barnum: That's all. Thank you.

Thanks, thank you.

John Mcdonald: Our next question comes from John McDonald with Truro Securities. Your line is open. Hi, good morning. Jeremy, quick follow up on the consumer credit broader comments taken there. But in terms of the NPAs, the non-accruals and consumers seem to have a bit of a jump. Is there something technical there? Maybe just talk to that. Yeah, thanks for that, John.

Speaker Change: Thank you. Our next question comes from John McDonald with tourist security. Your line is open.

Hi, good morning, uh Jeremy quick, follow up on the consumer credit broader uh comments taken there. But uh, in terms of the npas, the non-accruals and consumers seem to have a bit of a jump. Is there something technical there or maybe just talk to that?

Jeremy Barnum: I'm glad to get a chance to clarify this. There is something technical, which has to do with customers in the home lending customers in the LA area, using our forbearance, you know, availability, as a result of the wildfires. So that is resulting in an uptick in the non performing. But when you think about land value, and the insurance there, the actual loss I Minimus, I would say. So we always do that for customers when they have a real difficult time.

John Mcdonald: So so that's, that's what's driving Okay, great.

Speaker Change: Yeah, thanks for that John. I'm glad to get a chance to clarify. This, there is something technical, um, which has to do with, um, customers in the, uh, home lending customers in the LA area using our forbearance, uh, you know, uh, uh, availability, uh, as a result of the wildfires. So, that is resulting, in an uptick in the non-performing. But when you think about land value and the insurance there, the actual loss expectation, is the minimums. I would say. So really do that for customers where they have real difficulties. Exactly, so. So that's um, that's what's driving that 1.

Jeremy Barnum: And wanted to ask for some more color on retail deposits, maybe in the context of Marianne's presentation from Investor Day. Could you remind us of what's given you incremental confidence in seeing some improvement in deposit margin and kind of producing that mid to upper single digit deposit growth that Marianne talked about? Yeah, sure. So I think what you're referring to is a slide where Marianne talked about kind of the potential for 6% consumer deposit growth, you know, next year. And, you know, that's a nice number. And as you've written, you know, that that would produce some nice revenue consequences, all else being equal.

Jeremy Barnum: The way I think about that number is to kind of build it up step by step. So you start with, you know, in general, the consumer deposit base in the system has grown probably slightly above nominal GDP. A thing that's been true for us recently is that as a result of our market position and our pricing choices, we've probably lost a little bit of share during the rate hiking cycle, sort of in isolation from yield-seeking flows. With the yield-seeking flows having abated a little bit, that relative headwind is kind of behind us or increasingly behind us, and you've got some core growth reasserting itself.

Jeremy Barnum: You saw us call out the growth in net new accounts in consumer checking this quarter, and that's one of the key drivers. And then as you know well, when you look at the franchise, we kind of have, you know, number one, ongoing expansion, number two, seasoning of the old expansion, and number three, deepening in the core markets. So when you put all that together and you look at sort of the history of the growth, macro environment, et cetera, that's how you get to that type of 6% number. Now, obviously, things could change quite dramatically to produce a different number, among other things.

Yeah, sure. So um, I think what you're referring to is slider, Marion talked about kind of the potential for 6% consumer deposit growth. Um, you know, next year and, you know, that's a a nice number and as you've written, you know, that that would produce some nice, uh, Revenue consequences all else being equal the way I think about that number is to kind of Build It Up, step by step. So you start with, you know, in general, um, the consumer deposit base in the system has grown uh probably slightly above normal GDP. Um, I think that's been true for us recently. Is that a result as a result of our Market position and our pricing choices? We've probably lost a little bit of share during the rate hiking cycle. Sort of in isolation from yield-seeking flows. But the yield seeking flow is having a baited a little bit that relative, uh, headwind is kind of behind us or increasingly behind us. And you've got some core growth reasserting itself. You saw us call out, um, the growth,

In that new accounts and consumer checking this quarter and that's 1 of the key drivers and then as you know, well when you look at the franchise, we kind of have, you know, number 1, ongoing expansion number 2, seasoning of the old expansion. And number 3, deepening in uh the core markets. So when you put all that together and you look at sort of the history of the growth macro environment, Etc, that's how you get to that type of 6% number. Now,

Jeremy Barnum: You'll recall that Marianne's slide also talked about a stress scenario with lower rates, which perhaps somewhat non-intuitively would produce actually higher growth as a result of even less yield-seeking flow and a, you know, higher consumer savings rate. But the flip side of that is also true, which is an unexpectedly high rate environment would probably lead to lower balance growth also. So we like to say, you know, those are all being equal type numbers, but all else is Got it.

Obviously things could change quite dramatically to produce a different number of my other things. You'll recall that Marianne slide also talked about a stress scenario with lower rates, which perhaps somewhat not intuitively would produce actually higher growth as a result of, even less yield-seeking flow and a, um, you know, higher consumer savings rate. But the flip side of that is also true. Which is an unexpectedly High rate environment would probably lead to um, lower balance growth, although in consumer. So we like to say, you know, those are all those being equal type numbers, but all else is never equal.

Unknown Executive: Great.

Unknown Executive: Thank you. Thanks a lot, John.

Speaker Change: Got it. Great. Thank you.

John: Thanks a lot John.

Mike Mayo: Thank you. Next we will go to the line of Mike Mayo with Wells Fargo. Your line is open.

Jeremy Barnum: Hey, Jeremy, can you talk about why commercial loan growth was much stronger in the second quarter and any strength by geography and Jamie, can you address what regulators could do to potentially have banks lend more in the future, consistent with what the Treasury Secretary said is his goal? Thanks. Yeah, thanks, Mike. So among growth, as you know, it's useful to sort of break this down between what I would think of as like relationship blending, that kind of drives the whole franchise, and that we sometimes look at, maybe as an indicator of the health of the corporate sector, in some sense, and people like to look at it as a read across for the smaller banks, etc.

Speaker Change: Thank you next. We will go to the line of Mike Mayo with Wells, Fargo. Your line is open.

Uh, hey uh Jeremy, can you talk about why commercial loan growth was much stronger in the second quarter and any strength by geography and and Jamie can you address what Regulators could do to potentially have Banks. Lend more in the future consistent with what? The treasury secretary said is his goal, is his goal. Thanks.

James Dimon: That part of the franchise remains fine, but sort of muted as, you know, customers have access to capital markets and revolving utilization is sort of wider. But as I as I noted, I think previously, and as you see coming through the IVP performance, there was just quite a bit of deal activity in the second half of the quarter, a lot of which is well known in public. And some of that is on our balance sheet, and we're very happy to have it.

Speaker Change: Yeah, thanks Mike. So among Brothers, as you know, it's useful to sort of break this down between what I would think of as like relationship blending, they kind of drives the whole franchise and we sometimes look at maybe as an indicator of the health of the corporate sector, in some sense, and people like to look at it as a read across for the smaller Banks, Etc. That that part of the franchise remains fine, but sort of muted.

Speaker Change: as uh you know, customers have access to Capital markets and and revolut be realization is sort of flat-ish in general

James Dimon: And to answer your other question, Mike, so you know, some of the, I'm going to give you some things you could actually do. So I think you should do them and reduce risk in the system. I'm only going to talk about how they increase lending for a second. So G-SIFTI inhibits, if you look at it, both a little bit of lending and a little bit of market making. LCR inhibits both because it's a very rigid way of looking at a bank balance sheet. It doesn't really give you credit for potential access to the window and things like that.

Speaker Change: But as I as I noted, I think previously, um and as you see coming through the IBC performance, um there was just quite a bit of deal activity in the second half of the quarter. Um, a lot of which is well known in public, and some of that is on our balance sheet and we're very happy to have it there.

Speaker Change: To answer your other question, Mike. So you know some of the I'm going to go give you some things that you could actually do. So I think you should do them and reduce risk in the system. I'm only going to talk about how they increase lending for a second and so G50 inhibit inhibits, if you look at it, both a little bit of lending and a little bit of Market making.

James Dimon: CCAR, in some cases, inhibits, you know, people, we talk about C-Carness, but you know, there's a lot of C-Carness from small business loans and stuff like that, where people kind of hold that back a little bit because it creates too much volatility. And C-CAR capital, the FSRT, the fundamental book, it's all the, when you look at all these things, I think you can create more lending, more liquidity, more flexibility, and reduce the risk in the system. And also just C-E-T, just capital usage, et cetera. So, and reducing the risk in the system, I think it goes to make it friendlier for community banks, you know, which we do want to do.

Speaker Change: Uh, LCR inhibits both because it's a very rigid way of looking at the bank balance sheet, it doesn't really give you credit for potential access to window and things like that. Uh, see car in some cases in, you know, people, we we talked about CC carnis, but, you know, there's a lot of CC Carnage from a small business loans and stuff like that, where people kind of hold that back up.

James Dimon: And so if you look at like total loan to deposit, they used to be a hundred percent, but now 70%. Okay, and that's a huge difference. It took place over 10 or 15 years. And, you know, can you get that back to 85% and have the banking system be just as safe as sound? Absolutely.

Speaker Change: A little bit because it creates too much volatility and ccar capital uh uh, the fsrt the fundamental book. And so all the, when you look at all these things, you could, I think you can create more like, lending more liquidity, more flexibility and reduce the risk in the system, and also just CT just Capital usage, Etc. So, uh, and the reducing the risk in the system. I need to also make it friendlier for Community Banks. You know, which we do want to do. And so, um, if you look at like, total loan to deposits, they used to be 100%. But now 70%

Thank you, sister be just as safe as sound, absolutely.

James Dimon: You didn't mention the cost to make a loan. Is there potential for streamlining there? Yes, and I put securitization in that category. We need a more active securitization market, and all these things can reduce the actual cost of making a loan. I've pointed out in the past that mortgages probably cost 30 or 40 or 50 basis points more because of excessive securitization, origination, and servicing requirements. Those could be changed and would help mortgages, particularly for low-income individuals. We've just failed to do it for 10 years, and it wouldn't create any additional risk. We can show you data that shows that.

Uh, you didn't mention the cost to make a loan, is there a potential for streamlining? Their yeah, yeah.

James Dimon: And last one, when you say inorganic growth, would you buy a private credit firm? Is that something you'd at least consider? I would say it's not high on my list because we can do it ourselves, and you're buying people and comp plans, and you know, I also think, you know, you may have seen peak private credit a little bit. I don't know that, but you know, we already do it. So, you know, if it was the right people, the right price, the right shoe, we should look at it. I think, Mike, you should always be open-minded when people come to you with something you hadn't thought about before.

Yes, and I put securitizations in that category, are you? We need a more active securitization market and all these things can reduce the actual cost of making loans. I pointed out in the past that mortgages probably cost, 30 or 40 or 50 basis points more because of excessive uh, securitization origination and servicing requirements, those could be changed and would dramatically help mortgages particularly for low-income individuals, and we've just have failed to do it for 10 years. And it wouldn't create any additional risk. And I we could show you the data that shows that

Speaker Change: And and last 1, um, when you say inorganic growth, would you buy a private credit Farm? Is that something you'd at least consider?

I've I, I would say.

It's not high in my list because we can do it ourselves and you know, buying people and comp plans and and you know, I also think, you know, you may have seen Peak private credit a little bit. I don't I don't know that.

James Dimon: You just get smarter by looking at these. Actually, I can't believe we're in that comment. Pete, Pete, Pete, private credit. I can't leave on those three words.

But, you know, we're we already do it. So, you know, if it was the right people at the right price, the right should be. Should look at it. Yeah, I'm I I think Mike, you should always be open-minded when people come to you, with something you hadn't thought about before you you just get smarter by looking at these things.

Speaker Change: Actually, I can't.

James Dimon: What do you mean by peak private credit? I've mentioned that credit spreads are very low. It's grown dramatically over time. And you know, you have to pay up a lot for it. And I'm not saying it's not going to grow some more, but I've just just, I would have a slight reluctance depending on who it was. But you might know your bankers might come to us with something tomorrow that we just hadn't thought about that is a complete natural fit for us. Natural fit being product and people and culture.

What PE PE Peak, private credit. I can't leave on those 3 words. What do you mean by Peak private credit?

Speaker Change: I I mentioned that credit spreads is very low, it's grown dramatically over time. Uh and you know you have to pay up a lot for it.

You know, I'm not saying it's not going to grow some more, but I'm just, just, I would have a slight reluctance depending on who it was, but you might, you know, your Bankers might come to us with something tomorrow that we just hadn't thought about. That is a complete natural fit for us, natural fit being product and people are and culture.

Jeremy Barnum: Sorry, Jeremy. No, I was literally going to say what Jamie just said. All right, thank you. Thank you.

Jeremy Barnum: Sorry, Jeremy.

No, I was literally going to say what Jamie just said. So we're good.

Speaker Change: All right. Thank you.

Erika Najarian: Next we will go to the line of Erika Najarian with UBS. Hey, good morning. You know, you know, Jamie and Jeremy, you've talked about simplifying the regulatory construct. And it seems like, you know, based on the progress so far, you know, we'll mostly get there, particularly, you know, with Basel III endgame and GSIB, which impacts you so much. And to that end, if we do get a more simplified regulatory construct that addresses both the capital and liquidity constraints. Does that move up JP Morgan's natural ROTC? You know, you talk about 17% through the cycle a lot.

Thank you next. We will go to the line of Erika najarian with UBS. You may proceed.

Hey, good morning. Um, you know, you know, Jamie and Jeremy. You've talked about simplifying, the regulatory construct, and it seems like, you know, based on the progress so far, you know, we we mostly get there particularly, you know, with bosel 3, endgame and and Gib, which impacts you so much and to that end, if we do get a more simplified regulatory construct um that addresses both the capital and liquidity constraints.

James Dimon: You know, obviously, you know, perhaps we would optimize the denominator. Why wouldn't that be additive to your natural ROTC? Or does this get passed back on to, you know, your clients in terms of pricing? In a competitive world, it is irrational to think that, and when it applies to all the competitors, that everyone's just going to make a lot more money and keep it as opposed to compete in the marketplace. Hopefully we'll still have a good competitive position relative to everybody else, but no, I don't think you should automatically say it's going to increase your returns.

Speaker Change: Does that move up JP Morgan's, natural natural? Rosy, you know, you talked about 17% through the cycle, a lot, you know, obviously um you know perhaps we would optimize the denominator. Why wouldn't that be additive to your natural Rosy or does this get passed back on to, you know, your clients in terms of pricing?

Speaker Change: The competitive world, it is a rational thing that and when it applies to all the competitors that everyone's going to make a lot more money and keep it as opposed to compete in the marketplace.

Jeremy Barnum: Remember Jeff Bezos says your margin is my opportunity? That would be a huge opportunity for fintech, private credit, you know, alternative players, etc. So you have to be a little careful to think that would happen. I think it's a good thing for the system though. Exactly. And as we always say, Erika, right, like the market's very competitive, and the returns are high. And you know this, but I would just refer you to the slide that I delivered on yesterday about how, you know, in some cases, it makes, you know, all else equal compared to buying back shares at these prices doing healthy, well underwritten, compelling franchise business with a 14% return.

Hopefully, we'll still have a, you know, good competitive position relative to everybody else, but no, I I don't think you should automatically see. It's going to increase your returns. Remember. Jeff Bezos says your your margin is my opportunity.

Speaker Change: That that would be a huge opportunity for fintech private credit, you know, uh uh, alternative players, Etc. So, you have to be a little careful to think that would happen. I think it's a good thing for the system though.

Jeremy Barnum: We're definitely supposed to do that. And if we do a lot of that, it will dilute down the weighted average ROTC of the company in ways that are nonetheless clearly accretive to shareholders. So Jeremy showed you a little thing about business units that earn high returns to low returns. Now, they shouldn't do the low return ones because they fit hand in glove with other stuff. If you didn't do it, you might lose the other. But there are some businesses out there with very high returns that we just grow. We deploy capital by adding bankers or branches or products, not directly by deploying capital.

Yeah, exactly. And as we always say, Erica, right, like the Market's very competitive and the returns are high and, you know, this, but I would just refer you to the slide that I delivered at investor day about how, you know, in some cases it it makes a, you know, all our sequel compared to buying back shares at these prices doing healthy. Well, underwritten compelling franchise business with a 14% return would definitely supposed to do that actually,

James Dimon: So just think of branches, that does our private banking or things like that. No, for sure.

So just think of branches, you know, that that those are a private banking or things like that.

Jeremy Barnum: And I think that's a big discussion point with investors in terms of talking about actually the EPS gains rather than just ROTC improvement. And the second question I had is, you know, you mentioned and clearly we saw it in the numbers, you know, a late in the quarter pickup and activity levels. And I'm wondering, as we think about sentiment and what this means for the second half, is it, you know, did activity levels pick up because it felt like we were taking extreme outcomes from care of policy off the table? You know, is it the tax bill certainty?

Jeremy Barnum: I guess I'm just wondering, has some of the issues that prevented activity levels, or really stunted it in April and early May, have those fully been taken out of your clients thinking as we think about the second half of the year and activity levels continuing from here? Jeremy, you might want to start. I'll just answer the question by saying, honestly, we don't know. No, and you've seen how rapidly pipelines can grow and shrink. And so you that lesson, you know, we've learned over and over, and it may stay wide open for a year and a half, something may happen geopolitically, that all of a sudden that pipeline slows a little bit.

Speaker Change: Yep. For sure. Um, and I think that's a big discussion point with investors in terms of talking about actually the EPS gains rather than just Rossi Improvement. And the second question I had is, you know, you mentioned and clearly, we saw it in the numbers, you know, Elite in the quarter pickup and activity levels. And I'm wondering as we think about sentiments and what this means for. The second half, is it, uh, you know, that activity levels pick up because it felt like we were taking um, extreme outcomes from tariff policy off the table. You know, is it the the tax bill certainty? I guess I'm just wondering how has has has has some of the issues that prevented activity levels or really stunted it in April and early may have those fully been taken out of your clients thinking as we think about the second half of the year and activity levels continuing from here.

Jeremy Barnum: It's Jeremy. You might want to. I I'll just answer this question by saying.

Honestly we don't know know and and you've seen how rapidly pull pipelines can grow and Shrink.

Jeremy Barnum: And so I'm always a little cautious to guess what that's going to be. But you know, if it continues this way, yeah, you're gonna have the active buckets. Yeah. And my version of that, Erika, would be to say that, you know, you talked about certain material risk getting And that's clearly not true, right? All the terrorists are all still there, quite prominently. In many cases in the daily news flow, maybe at the margin, you know, the tails are a little bit less fat right now. I think it's also true that in terms of our, what the things that we've said about our investment banking pipeline have been consistently quite cautious and at a certain point, you know, when you have the type of performance that you have this quarter, it starts to make your cautiousness seem less credible.

And so you that lesson you know we've learned over and over and it may stay wide open for a year and a half something may happen. And geopolitically they're all a sudden that pipeline slows a little bit and so you know I I'm always a little cautious to guess what? That's going to be. But you know, if it continues this way. Yeah. You're going to have the active buckets. Yeah. And my version of that Erica would be to say that, you know, you talked about certain of the tail risk getting

Taken completely off the table, and that's clearly not true, right? The all the tail risks are all still there, uh, quite prominently and

Jeremy Barnum: So we wanted to take a hard look at ourselves and say, what do we really think? And it's like, yeah, the Zenderman is better, but as Jamie says, like that can change overnight and there are a lot of risks. I do think that extending the tax bill for business to know, you know, what their taxes are going to be, is a positive going forward and that does reduce the risk that the bill didn't get done. I also think when it comes to tariffs, you know, I think the initial liberation date is now there's more, you know, talk, there's more things getting done, a couple have been announced, a couple have been delayed, that reduces that risk a little bit.

Unknown Executive: Hopefully they'll get done. So there's still risk out there, but I am hopeful some of these frameworks are completed soon, at least before August 1st. and a thank you.

Speaker Change: in many cases in the Daily News flow, maybe at the margin, you know, the tails are a little bit less fat right now. I think it's also true that in terms of our what the things that we've said about our investment banking pipeline, have been consistently quite cautious and a certain point, you know, when you have the type of outperformance that you have, this quarter starts to make your cautiousness seem less credible. So, we wanted to take a hard look at ourselves and say, what do we really think? And it's like, yeah, the sentiment is better but as Jamie says like that can change overnight and there are a lot of risks. I do think that extending the tax bill for business to know, you know what their taxes would be is a positive going forward and that does reduce the risk that the bill didn't get done. I also think when it comes to tariffs, you know, I think the initial Liberation day there's now there's more, you know, talk there's more things get done, a couple of the nouns, a couple of been delayed that reduces that risk a little bit.

Speaker Change: And hopefully they'll get done. So there is still risk out there. But I am hopeful that some of these Frameworks are completed soon. At least before August 1st.

Speaker Change: Thank you.

Unknown Executive: Thank you.

Jim Mitchell: Next we will go to the line of Jim Mitchell with Seaport Global Securities. Your line is open. Hey, good morning. Thanks for taking the questions. Maybe just on Jeremy, if I look at your 10Q and 10K rate sensitivity disclosures, it looks like you guys have done a lot to reduce your asset sensitivity to the short end of the curve. So can you talk about what you've been doing to change the positioning of the balance sheet, whether extending duration or hedges? And is there more you can do to desensitize the balance sheet before rate cuts begin to kick in, as I guess the markets expect later this year?

Speaker Change: Thank you next. We will go to the line of Jim Mitchell with Seaport Global Securities. Your line is open.

James Dimon: Yeah. Before he goes on, all I can expect is that it never happens. Fair enough. All right.

Speaker Change: Hey, good morning. Uh, thanks for the question, taking the questions. Um, maybe just on, um, Jeremy. If I look at your 10 q and 10K rate, sensitivity disclosures, it looks like you guys have done a lot to reduce your assets, sensitivity to the short end of the curve. So, can you talk about what you've been doing to change? The positioning of the balance sheet, whether extending duration or head? Just and is there more you can do to desensitize? The balance sheet before rate guts? Begin to kick in as I guess the markets expect later this year. Thanks.

Yeah, before we before he goes on Market, expect is almost never what happens fair enough.

Jeremy Barnum: So it's a good question, Jim. But yeah, as Jamie points out, just remember that, you know, the extent that the market is efficient, which maybe it's not, but, you know, you can't really hedge ahead of cuts that are already priced in, right? So that's, yeah. But I mean, you can decrease volatility, but it's just a question of now or later.

Jeremy Barnum: But having said that, on the question of decreasing volatility, we did in fact, at You know, with the usual mix of instruments and strategies, but primarily in the front end of the yield curve, which was designed to essentially balance out the tails a little bit, so that we were a little bit less exposed to a classic recessionary type scenario with much lower rates in exchange for accepting a little bit less good outcomes and like higher rate scenarios, at least narrowly. Um, as we've talked about a little bit over time, though, I like the way you framed it in terms of like, having the capacity.

All right, so it's a good question Jim. But yeah, as Jamie points out, just remember that, you know, because of the market is sufficient, which maybe it's not. But, you know, uh, you can't really hedge ahead of cotch that are already priced in, right? So that's what I'm saying out loud, but I mean, you can decrease volatility, but uh, it's just a question of an hour later, but having said that on the question of decreasing volatility we did, in fact, add some duration of this quarter, um, you know, with the usual mix of instruments and strategies, but primarily in the front end of the yield curve,

Speaker Change: Which was designed to essentially balance out the Tails a little bit so that we were a little bit less exposed to a classic recessionary type scenario with much lower rates. Um in exchange for accepting a little bit less, good outcomes and like higher rate, scenarios at least narrowly through the lens of knee.

Jeremy Barnum: Um, and I think the way to think about it there is that, you know, in general, it's almost impossible to get your assets for a bank like us, it's almost impossible to get your asset sensitivity or actual asset sensitivity down to zero, because you wind up constrained by other things. So, you know, we're in the corridor, and we're okay with Okay, thanks.

Um, as we've talked about a little bit over time though, I like the way you framed it in terms of like having the capacity. Um, and I think the way to think about it there is that you know, in general

Speaker Change: Um, because you wind up constrained by other things. So, you know, we're we're in the quarter and, and, uh, we're okay with where we are right now.

Jim Mitchell: And maybe just one more on the regulatory front. I think regulators look at reducing the SLR as a way to encourage banks or open up an avenue to expand your balance sheets into lower risk assets. Do you see that? Is it really just a supply issue? Or how do you think about the demand supply dynamic? And is there really opportunities for you to grow? I would imagine, I guess, with an SLR not being constrained, maybe it's better return in lower margin areas. Just your thoughts. Yeah, it's a good question. You may recall, I actually got a version of this question yesterday.

Speaker Change: Okay thanks and maybe just 1 more in the the regulatory front. Uh I think Regulators, uh look at reducing the slrs a way to encourage Banks or open up an Avenue to expand your balance sheets into lower risk assets. Do you see that? Is it really just a supply issue? Or how do you think about the demand Supply Dynamic and is there really opportunities for you to grow?

I would imagine I guess with an SLR not being constrained, maybe it's better. Return and lower margin areas just your thoughts.

James Dimon: So I'll almost repeat my answer here, which is that, as we know, fixing SLR has been on the list for a long time, it behaved very much not the way it was designed in the moment of big QE, when it became binding, and it had bad impacts on the system. It's the opposite of what we want for these backstop measures. And so, you know, we don't want regulators to need to make, you know, unusual corrections mid crisis. It's just not the right way to run the railroad. I think everyone has agreed on that for a long time.

James Dimon: And in that context, it's been sort of disappointing that, you know, something as obvious as this has taken as long as this to get fixed, but it's a good sign that it's now out there. And, you know, we certainly support the proposal, there are some nuances that are common have been requested, but at a high level, it's a good proposal, it's the right thing to do. And it's the right thing to do from the perspective of the resilience of the system for the next time that we've got, you know, that type of expansion in the size of the system that could make it binding in the long way forward.

Speaker Change: Yeah, it's a good question you may recall. I actually got a version of this question an investor that I so I'm more or less repeat my answer here, which is that um, as we know fixing SLR has been on the list for a long time, it behaved very much not the way it was designed in the moment of big QE when it became binding and it had bad impacts on the system. So the opposite of what we want for these back stop measures and so you know we don't want Regulators to need to make, you know, unusual corrections made crisis. It's just not the right way to run the railroad. I think everyone has agreed on that for a long time. And in that context it's been through a disappointing that, you know, something as obvious as this has taken as long as this to get fixed. But it's a good sign that it's

James Dimon: But yeah, as you know, as we've said, we're not really bound by it. I think other actors in the market may be a little bit more bound by it. There are also some nuances about impact on portfolio activity, which I would expect to be very small, versus impact on low risk intermediation in the market making businesses, which is maybe where you would hope to see the effect. So you know, it's a good thing. Hopefully it will help. Obviously, it's pretty fully priced in at this point. So I don't think you're gonna see a big pop on one or the other as a function of it's eventually being finalized, because I think everyone's assuming it'll go in roughly in its current form.

Speaker Change: Now out there. Um, and you know, we we've certainly support, uh, the proposal. There are some nuances that a common have been requested but at a high level. Um, it's a good proposal, it's the right thing to do. And it's the right thing to do from the perspective of the resilience of the system, for the next time that we've got, you know, that type of expansion and the size of the system that could make it binding in the wrong way for the wrong reasons. But yeah, as you know, as we've said, we're not really Bound by it. Um I think other actors in The Market may be a little bit more Bound by it. There are also some nuances about impact on portfolio activity which I would expect to be very small versus impact on low-risk intermediation in the market making businesses, which is maybe work.

James Dimon: And I'm like a broken record.

James Dimon: It's not SLR, it's LCR, it's GSIFI, it's CCAR, it's Basel IV, the gold plating, you really got to step back and look at all of them. And you know, how you use the discount window, etc. And even how you measure liquidity, which is different in one measure than it is in resolution recovery. They should look at all of that, they really want to fix the system.

Speaker Change: See the effect. So you know um it's a good thing. Hopefully it will help obviously it's pretty fully priced in at this point. So I don't think you're going to see a big problem or the other as a function of its eventually being finalized because I think everyone's assuming it'll go in roughly in its current form and I'm like a broken record, it's not SLR, it's LCR, it's, it's a car, it's Basel 4, the gold plating. You really got to step back and look at all of them.

And you know, how you use the discount window uh uh, Etc. And even how you measure liquidity, which is different in 1 measure than it is in resolution recovery. They should look at all of that. They really want to fix the system.

Unknown Executive: Thanks for the call, everyone.

Speaker Change: Right. Thanks for the caller.

Thanks.

Ken Usdin: Thank you. Next we will go to the line of Ken Utson from Autonomous. You may proceed. Thanks, good morning.

Speaker Change: Thank you next. We will go to the line of Ken utzon from autonomous. You may proceed

Unknown Executive: First question is I just wanted to ask you about the recent Sapphire price changes and just what you're seeing in terms of initial response and just how that fits in strategically with the, you know, with the competitive landscape on card and your growth opportunities. Yeah, sure. So let me dispense with the question of how it's going for us so far. I'm fine. We're happy. In terms of strategic aspects of this and the competitive landscape, I think the way we think about this is as a normal course refresh of one of our important products and the way that all of our products get refreshed periodically.

Uh, thanks. Good morning. Um. Hey. Um, first question is, I just wanted to ask you about the recent, uh, Sapphire price changes and just what you're seeing in terms of initial response and just how that fits in strategically with the, uh, you know, with the with the, with the competitive landscape on card and your and your growth opportunity.

Unknown Executive: Obviously, this is a relatively high profile product. Many of us have the card. We see the ads everywhere. So, you know, it sort of punches above its weight in that respect in terms of visibility. In terms of the competitive landscape, I think, you know, a thing that we feel really great about is the dramatic increase in the customer value proposition. And in particular, one of the things that we look at is the ratio of the customer value to the annual fee, which is clearly market leading. So, I've got a lot of comments that people, from friends of my kids and stuff like that, that, man, you're going to raise the corporate, you have to keep it for the LaGuardia Lounge.

Yeah, sure. So, uh, let me dispense with the question of how it's going for so far going fine, we're happy. Um, in terms of the Strategic aspects of this and the competitive landscape, I think the way we think about this is as a, normal course, refresh of 1 of our important products. And the way that all of our products get refreshed, periodically, obviously, this is a relatively high-profile product, many of us half of the card. We see the ads everywhere. So, um, you know, it, it, it sort of punches above its weight in that respect, in terms of visibility, in terms of the competitive landscape, I think. Uh, you know, a thing that we feel really great about is the dramatic increase in,

Speaker Change: The customer value proposition associated with the card and in particular, 1 of the things that we look at is the ratio of the customer value to the annual fee, which is clearly Market leading at this point.

So I've got a lot of comments that that people, they're from Friends of my kids and stuff like that, that man, you know, the reason the car, but they have to keep it for the guadie lounge.

Unknown Executive: That's a value-added. And then some. There's a lot of value-added. And then some. Yes, exactly. Yeah, so yeah, you know, and obviously, I mean, we're not going to talk too much about competitors. But as you know, the card space is very competitive and very dynamic. So, you know, this is this, we exist in a competitive landscape.

Speaker Change: That's the value added and then some there's a lot of stuff. Yeah, exactly. Yeah.

James Dimon: And this is our best foot forward on this product, this Good question. I honestly, I think it's kind of all of the above, basically. No question that the tone shifted. Obviously, it shifted in investment banking. I think I personally was a little bit surprised by the resilience of the market's revenues in the second half of the quarter because I was sort of expecting a little bit of an offset between the two. I was not surprised. Okay, there you have it. But, you know, it's not like I thought it would do badly, but it sort of did quite well in the volatility in the first half of the quarter.

Speaker Change: Of landscape. And this is our best foot forward on this product, at this moment in time,

got it. It is quite nice Lounge. Um, on the, on the trading side, just wondering, um, just, uh, just wondering how much, you know, the strong results this quarter, uh, the quarter changed a lot from April to June and I'm just wondering, you know, how much do you think that was environmental? Has it calmed down at all? And also, how much is just your ability to kind of use the balance sheet to boost results? Also, you know, if that make it more sustainable, regardless of what the environment is doing, thanks a lot.

Good question. Um, I honestly I think it's kind of all the above basically, um, no question that the tone shifted. Obviously, it shifted in investment banking

Jeremy Barnum: And then it got quiet. But despite that, we still did nicely. And I think the point actually, sort of to your question is that, yes, you know, we are seeing opportunities to deploy capital and other resources. And yeah, maybe at the margin, that does contribute a little bit to durability. We've talked over time about the market's revenues and the dramatic increase, I mean, obviously, 2019 is a long time ago at this point, and we expect those revenues to grow with GDP anyway, but we worried a lot in certain moments about the revenues dropping back to some old run rate, and then we kind of stopped worrying about that, and now, of course, they've gone up to new highs, so maybe we should be worried again, but a thing I like to remind myself of, to your point, is that while the revenues have gone up a lot, the resource usage has also gone up a lot, so we are deploying a lot of capital and other resources in this business, and we're earning good returns on it, but the revenue growth is not coming for free, so it's, you know, it's us running the place, basically.

I think I personally was a little bit surprised by the resilience of the markets revenues in the second half of the quarter, because I was sort of expecting a little bit of an offset between the 2. I was not surprised. Okay, there you have it. Um, but, uh, you know, it's not like I thought it would do badly, but it sort of did quite well in the volatility in the first half of the quarter, and then it got quiet. But despite that we still did nicely and I think the point actually sort of to your questions that yes, you know, we we are seeing opportunities to to deploy capital and other resources and yeah, maybe at the margin that does contribute a little bit to durability, you know?

We talk, we we've talked over time about the markets, revenues and dramatic increase. I mean,

Speaker Change: obviously 2019 is a long time ago at this point and we expect those those revenues to grow with GDP anyway. But you know we worried a lot in certain moments about the revenues dropping back to some old run rate and then we kind of stopped worrying about that. And now of course they've gone up to new highs so maybe we should be worried again. But the thing I like to remind myself of to your point is that while the revenues have gone up a lot, the resource usage has also gone up a lot so we are deploying a lot of capital and other resources in this business and we're earning good Returns on it, but the revenue growth is not coming for free. So it's you know it's us running the place basically.

Unknown Executive: Okay, thank you. Thanks a lot. Thank you.

Jeremy Barnum: Okay, thank you. Jeremy

Speaker Change: Thanks a lot.

Matt O'connor: Next we will go to the line of Matt O'Connor with Deutsche Bank. Your line is open. Give it a shot. Can you hear me better now? Not really. Let's try.

Speaker Change: Thank you next. We will go to the line of Matt o'conor, with Deutsche Bank. Your line is open

Speaker Change: And I don't know if we're going to be able to hear you.

Speaker Change: Get give it a shot. Give it a shot.

Speaker Change: Can you hear me better now?

Not really, but let's try. Let's try.

Jeremy Barnum: I just wanted to ask about any pressure from commercial and corporate customers to try to offset the tariff impact from regional banks who have pointed to deposit pricing pressure on the commercial side, and if you're seeing any signs of that, or more broadly speaking. Thank you. I think if I heard the question correctly, you were asking, do you exceed tariff pressure with pressure on loans or deposits? The answer is no. Okay, thank you. I wish we could say more. We think the answer is no. There's always pressure. It's a competitive market, right? There is ongoing.

I just wanted to ask about any pressure from commercial and corporate customers to try to offset the Tariff impact. Some, uh, Regional banks have pointed to deposit, pricing pressure on the commercial side and if you're seeing any signs of that or more, broadly, speaking thank you.

I think I've heard the question correctly. You were asking what's the interior pressure with pressure and Loans or the answer is no.

Okay, thank you. All right. I wish we could say more. We think the answer is no.

James Dimon: Deposits are very, very competitive, and there are always pricing conversations as there should be. Hard to know in any given moment what's driving it, but I haven't heard anything to support the tariff.

Speaker Change: It's a competitive market right there is ongoing. It's deposits are very, very competitive and there are always pricing conversations as there should be hard to know in any given moment, what's driving it? But I haven't heard anything to support but tariff link to narrative.

Unknown Executive: Thank you.

Glenn Schorr: Next we will go to the line of Glenn Schorr with Evercore. Your line is open. Hi, thanks, just two quick follow-up. On the conversation about the noticeably upbeat, robust pipelines, I know we've been here before and markets can give it and take it away, but there is a time value in there, meaning corporates and, more importantly, sponsors need to get stuff done. There is a ton of dry powder, so I'm curious if there's a higher level of confidence, meaning if the market doesn't take from us, is it really happening this time? We've been kind of waiting for these pipelines to come through in fuller force for a couple of years now.

Speaker Change: Thank you next. We will go to the line of Glenn. Shore with evercore your line is open.

Glenn Shore: Hi, thanks. Just 2 quick follow-ups.

Speaker Change: On the con-vers.

James Dimon: Does it feel more confident now than it did a couple of years ago? It's doable as long as the market doesn't take the rug out. I think it separates sponsor owned companies from IPO. They're companies going public, they're in the pipeline, they want to go public, etc. Sponsors are still, at least from what I can tell, you know, anecdotally, still reluctant to use the public market. There may, obviously, be maybe more of it, but it hasn't been a mountain of stuff coming out. Yeah, I think that's right in the IPO space, at least for now.

About the the noticeably upbeat robust pipelines. I know we've been here before and markets can give us and take it away, but but there is a Time Value in their meaning corporates and more importantly, sponsors need to get stuff done. There is a ton of dry pattern. So I'm curious if that if there's a higher level of confidence, meaning if the market doesn't take from us, is it really happening? This time we we've been, you know kind of waiting for these pipelines to come through and Fuller Force um for a couple of years. Now, it does it, it is it feel more

Um, doable. As long as the markets does doesn't take the rug out from under us.

Speaker Change: I think it separates sponsor your own companies from IPOs or companies going public. They're in the pipeline, they want to go public, Etc. Sponsors are still at least from what I can tell, you know. Anecdotally is still reluctant to use the public markets.

Jeremy Barnum: But I have heard some things to support some elements of your narrative, Glenn, the effect of the, you know, there is pressure to kind of recycle capital and get things done. And, you know, yeah, sure, after the initial shock of the tariff policy changes, everyone kind of went on hold. But as we've noted in our comments a few times today, at a certain moment, you just have to move on. and it does feel like some of that is happening.

Jeremy Barnum: and Deloitte. Um, the follow-up on the capital conversation. You know, obviously impressive. There's more to come, and I think Trend is your friend on Twitter. The question is, you keep making a lot of money, about arresting the growth of CET1 in the past. My blunt question is, is there any valuation limitation towards that arresting of CEOs?

Speaker Change: Yeah, I think that's that's right in in the IPO space at least for now, but I have heard some things to support some elements of your narrative fund the effect of that. You know, there is pressure to kind of recycle capital and get things done and you know yeah sure. After the initial shock of Tara policy changes, everyone kind of went on hold but as we've noted in our comments of your time today at a certain moment, you just have to move on with life and it does feel like some of that is happening just because you can't delay forever.

Speaker Change: I hear you.

Speaker Change: Um, the, the follow up on the capitol conversation, you know, obviously impressive to see big Returns on even higher Capital bases.

Speaker Change: Um, but there's more to come, and I think trend is your friend on, on, on dreg. Uh, so, so the question is, you keep making a lot of money? Your Capital base keeps Rising. You've talked about arresting the growth of C1 in the past, but I guess my blunt question is, is there any valuation limitation towards that arresting of C1?

Jeremy Barnum: Okay, wait, I want to say a couple things. And then I want to clarify an aspect of your question, Glenn. So first, on arresting the growth, what I actually said, not to nitpick on you, but I said arresting the growth of excess capital, which I agree is reasonable to interpret as keeping a roughly constant CT1. As it happens this quarter, you know, you see the CT1 actually dropping about 40 basis points. And that was no small part a function of, you know, significant late quarter growth in RWA usage, which we were frankly, like very happy to see, in fact.

Speaker Change: Okay, wait, I want to say a couple things and then I want to clarify an aspect of your question Glenn. So first on, arresting the growth, what I actually said not to nitpick on you, but I said they're rusting the growth of excess Capital which I agree is reasonable to interpret as keeping a roughly constancy to 1 as it happened.

James Dimon: So that's all to the good. Now, the other part of your question, can you just repeat it? I want to make sure I understand. I'm just curious if there's Evaluation Limitation. So, meaning, as valuation goes up, do you keep buying back stocks? So, meaning, would we go back to a moment of reducing buybacks and starting to build again if the stock gets even more expensive? I mean, I think that's the question for the boss, but I don't know. I guess we always reserve the right to do whatever we want on buybacks, basically. We reserve the right.

This quarter. Um, you know you see the seeds you want to actually dropping about 40 basis points and that was no small part of function of um you know, significant late quarter growth in rwa usage which we were frankly like very happy to see in fact so that's all to the good in some sense. Um, now the other part of your question, can you just repeat it? I want to make sure I understand it.

James Dimon: We're not going to tell you, but obviously, as far as prices, I mean, I don't like buying back the stock at almost three times tangible book. No one's going to convince me that's a brilliant thing to do, but it is wise to use our balance sheet for customers, which we're doing, and we can possibly do more, and it is probably wise to not increase the excess capital anymore since we have plenty and it's going to be going up. But look, I'm completely convinced if you take out of your mindset 12 months, we will use the capital wisely for shareholders.

Speaker Change: I'm just curious if if there's evaluation limitation to to the thinking, meaning, as valuation goes up, you're just going to do you keep buying back. So, meaning, would we go back to a moment of reducing BuyBacks and starting to build again, if the stock gets even more expensive. I mean, I think that's the question for the boss, but uh, I don't know, I guess we always reserve the right to do whatever we want on BuyBacks. Basically, I reserve the right, we're not going to tell you, but he obviously is the price. I mean, I don't like buying back the stock it almost 3 times tangible book. You know, 1's going to convince me that that's a brilliant thing to do, but it is wise to use our balance sheet for customers which we're doing, and we can make possibly do more. And it is probably why to not increase the excess Capital anymore since we have plenty. And it's going to be going up. And but I I look I'm completely convinced if you take out of your mindset, 12 months,

We will use the capital wisely for shareholders.

James Dimon: Alright, thank you. Thanks, Glenn.

James Dimon: The best way is organic growth, which I wouldn't rule out that we can find more ways to grow, you know, clients, basically. Thank you.

Speaker Change: The best way is organic growth, which I wouldn't rule out that we can find more ways to grow. You know, clients basically,

Gerard Cassidy: Our next question comes from Gerard Cassidy with RBC Capital Markets.

Gerard Cassidy: Your line is open. Hey, Jeremy. Hey, Jamie. I'd like to circle back to the return on tangible common equity topic that you guys have discussed. Obviously, you had a very strong number this quarter, 20% when you adjusted for the one-time effect. And you go back to your investor day and you pointed out 17% is what the targeted level is. And if we turn back the clock and go back to 2020, you had the same 17% goal for the ROTCE, but your CET1 ratio back then was guided, excuse me, guidance was 11.5% to 12%.

Speaker Change: thank you. Our next question comes from Gerard Cassidy with RBC Capital markets. Your line is open.

Hi, Jeremy. Hi Jamie.

Jeremy Barnum: So my question is, has the business for you folks changed so much that now it's just inherently a more profitable business? Or are there some one-time, not one-time items, but are there some tailwinds that are artificially, I hate to use that word, but are they inflating the ROTCE, which is why you guys are very cautious about lifting that goal from 17%?

Gerard Cassidy: I'd like to Circle back to the return on tangible. Common Equity topic that you guys have discussed, um, obviously you had a very strong number, this quarter 20% when you adjusted for the 1-time effect and you go back to your investor day and you pointed out 17% is what, you know, the targeted level is and if you turn back the clock and go back to 2020, you had the same 17% goal for the rotce, but your cet1 ratio back then was the guidance. Excuse me, guidance was 11 and a half to 12%. So my question is, has the business for you folks change. Um, so much that now it's just inherently a more profitable business or is, are there some 1 time, not 1 time. I there's some Tailwinds that are artificially, I hate to use that word. But are they inflating the rotce, which is why, you know, you guys are very cautious about lift.

Speaker Change: I think that goal from 17%.

James Dimon: Jerry, you can answer this one. This would really be an important point. The value to shareholders is that we can not just earn 70% RRTC, that we can reinvest money at 70% RRTC. That's the value. If you're just going to earn 70%, you're a bond. You will trade it, you know, three times, tangible book, but that's it for the rest of your life. And so the goal is to find opportunities to grow and expand your franchise, which we are doing. If you look at it, we are doing that with branches and bankers and internationally. And we look at the mid cap business we're doing in Europe is, you know, it's been great.

Speaker Change: Joe, you can answer this 1 will be an important point. The value to shareholders is that we can not just earn 70%. RTC is that we can reinvest money to 70% RTC.

James Dimon: Innovation economy has been great. We're gaining shares in a lot of places, Chase Wealth Management, you know, and the private bank, the international private, those payment systems, we're investing in all those things to grow our franchises. And that's the best way to use your capital. And forget the timetable of that, that is the best way to use it.

Speaker Change: I mean that with branches and bankers and internationally and I mean look at the the midcap uh business we're doing in Europe is you know, it's been great. Innovation economy has been great. The, you know, we're gaining shares in a lot of places a Chase World management. You know, we and the private bank, the International Private, those Payment Systems would would invest in all those things to grow our franchises. And that's the best way to use your capital and forget the timetable of that. That is the best way to use it.

Jeremy Barnum: Um, yeah, and Gerard, I guess on your other question, it's an interesting question, I don't think the answer is really knowable. And I feel like it's kind of all of the above. And let me let me say what I mean, like, on the one hand, I think if you look at the current market environment, It's hard to imagine a set of conditions that would be any better. Right? Rates are at a good level for us. Deal activity is high. Capital markets are very strong. Consumer credit is excellent. Wholesale credit is excellent. Wealth management, asset management.

Um, yeah and Gerard, I guess on your other question. It's an interesting question. I don't think the answer is really knowable and I feel like it's kind of all of the above. And let me, let me say what I mean. Like, on the 1 hand, I think, if you look at the current market environment,

James Dimon: I mean, You know, essentially every part of the company is firing, we're essentially firing on all cylinders with some very minor exceptions. So when you see that, you're like, well, that's not normal, you know, normally you would have some pockets doing a little better, some pockets doing a little worse, and that's part of what makes you think that, you know, some aspects of this are On the other hand, it's also true that core elements of the strategy are working very well, and we've been investing for a long time, very successfully, and kind of leaning in, even in moments where, from the outside, there wasn't that much appetite for us to be investing in all of the things that Jamie's talking about.

Speaker Change: It's hard to imagine a set of conditions that would be any better for us, right? Rates are at a good level for us. Deal activity. Is high Capital markets are very strong consumer, credit is excellent. Wholesale credit is excellent wealth management Asset Management. I mean

Speaker Change: You know essentially every part of the company is is firing. We're essentially firing on all cylinders with some very minor exceptions of certain businesses that are extremely rare sensitive like home lending. Where there's still doing a great job and what is a very tough Market.

So when you see that you're like well that's not normal, you know? Normally you would have some pockets in a little better or some Pockets doing a little worse and that's part of what makes you think that that you know, some aspects of this are maybe not sustainable.

Speaker Change: on the other hand, it's also true that

James Dimon: Some of those investments, in various ways, are paying off. So... I appreciate that. You have all of our major bank competitors are back and growing and expanding. You have the fintech folks, who are quite capable and quite smart, who want to take big chunks of your business. Everything we do is kind of competitive around the world. But the notion that somehow we're not going to deal with competitors, which protects JP Morgan Chase, we don't get complacent, we don't get arrogant, we don't get bureaucratic. And we keep on realizing, we keep on finding that you got to have to fight for it every day.

Speaker Change: Poor elements of the strategy are working very well and we've been investing for a long time, very successfully and kind of weaning in even in moments, where from the outside there wasn't that much appetite for us to be investing. In all of the things that Jamie is talking about some of those investments in various ways are paying off. So that you have all of our, major Bank competitors are back.

James Dimon: And so we're quite cautious to just declare victory, like if you could compound at 17%, actually, I had Jeremy do this number one point, you compounded at 17% for 20 years, you probably would have a good chunk of the GDP of the United States of America. 40 years, maybe. Yeah. I always have to go put new batteries in my HP-12C when I ask that question. All right. Yeah. Jeremy, I'm glad you still use an HP-12C. That's good.

Speaker Change: And growing and expanding, you have the fintech folks who are quite capable and quite smart. And when you want to take big chunks of your business, everything we do is kind of competitive around the world, but the notion that somehow we're not going to deal with of competitors, you know? I've, which protects JP Morgan Chase, if you don't get complacent, we don't get arrogant. We don't get bureaucratic and we keep on realize you keep on finding that you got to have to fight for it every day. And so we're quite cautious to just declare Victory. Like somehow, you know, we're entitled to these returns forever. I also pointed out. If you could compound a 17% because I had Jeremy do his number 1 point, you compounded a 17% for 20 years, you probably would have a good chunk of the GDP of the United States of America, 40 years, maybe, or

Jeremy Barnum: Just as a follow-up. He just uses his big brain. He doesn't need the 12C. Okay. Thanks, Roy. As a quick follow-up, Jeremy, you touched on... Some people said it's the 40, but it's not true because...

Jeremy Barnum: Yeah. Yeah. I always have to go put new batteries in my HP. So, I'll see another question. Um, all right. Yeah. It's Jeremy. I'm glad you're still using hp12c. That's, that's good. Uh, just as a follow, he just uses his big brain, he doesn't need the 12C.

Speaker Change: Okay.

Speaker Change: Thank you.

Jeremy Barnum: Can we not do that? Just as a quick follow-up, Jeremy, in the markets comment that you made, you said that there were fewer opportunities than securitized products and fixed income financing. Can you expand upon that or give us any color there? Thank you. Yeah, sure. I mean, it's just normal diversification inside the markets business. Those businesses are doing great. But like at the margin, you know, in the second half of the quarter, stuff was a little quieter relative to emerging markets and the macro space. Thank you. Nothing too dramatic. Thank you.

As a quick follow-up. Jeremy um you you touched on the 40th of it, it's not true because can we not do that. Just as a quick follow-up. Jeremy in the markets, comment that you made, you said that there were fewer opportunities than securitized products and fixed income financing. Can you expand upon that or give us any color there? Thank you.

Yeah, sure. I mean, it's just normal diversification, it's either Marcus business. Those businesses are doing great but like at the margin, you know, in the second half of the quarter, you know, stuff was a little quieter relative to emerging markets and the macro space which was a little bit better.

Thank you, nothing. Nothing, nothing to dramatic.

Speaker Change: Thank you.

Saul Martinez: Our next question comes from Saul Martinez with HSBC. Your line is open. Hey, good morning. Thanks for taking my question. I just just one for me. I just want to follow up on Ken's question about sales and trading. And I think you kind of addressed this, Jeremy, but I just, you know, you had a another strong quarter there on the back of, you know, a pretty exceptional Q1 on the back of a really strong 2024. I mean, how are you thinking about how much of this is, you know, the result of an exceptional trading environment versus something that's more durable and presumably less volatility?

Speaker Change: Thank you. Our next question comes from Sal Martinez with HSBC, your line is open.

Ken's question about sales and trading and, and I think you, you kind of addressed this Jeremy. But I, I just, you know, you had a, a another strong quarter there on the back of, you know, a pretty exceptional q1 on the back of a really strong 2024. I mean, how are you thinking about how much of this is, um, you know, the result of an exceptional trading environment versus something

Jeremy Barnum: Good for investment banking, but do you see, would you see some sort of normalization in sales and trading as a result? Or do you think there's still opportunities to, you know, grow certain businesses and take share?

Jeremy Barnum: I'm just curious how much, how you think about what's exceptional versus, you know, what's more durable here? Yeah, I mean, one thing I'll say is that, you know, there's no like weird exceptional thing happening in this particular quarter driving the results. So it's pretty broad based. And, you know, it's not, it's not like particularly lumpy. And as I said, I think it, you know, is true. And I think we've shared some of this in different ways, including in my slide at investor day. that, um, you know, uh, we are deploying quite a bit of capital and other resources like use of capacity, uh, and liquidity.

Speaker Change: That's more durable and and presumably less volatility. Good for investment banking. But do you see, would you see some sort of normalization in sales and trading as a result, or do you think there's still opportunities to, you know, grow certain businesses and or and take share? Just curious how much, how you think about what's exceptional versus, you know, what's more durable here?

Speaker Change: Yeah, I mean, 1 thing I'll say is that, you know, there's no like weird exceptional thing happening in this particular quarter or driving the results. So it's pretty broad-based. Um, and, you know, it's not, it's not like particularly lumpy and as I said, I think it, um, you know, is true, and I think we've shared some of this in different ways including in my slide an investor today that um,

Jeremy Barnum: to generate that revenue and we're happy with the return. But it's sort of, you know, it's not just like growing without any input. Um, so I guess on the one hand, you might say that that's, um, you know, a bit more durable for that reason. Um, but it is important to realize that it's coming with that, with that So, you know, I mean, we've gotten over time a little bit more relaxed about talking about the markets business as something that has relatively uncorrelated and reasonably recurring revenues. It's obviously extremely client-centric. There's a lot of financing of various types that's being supplied, and it seems to, if anything, more often than not, be counter-cyclical rather than pro-cyclical.

Speaker Change: You know, uh, we are deploying quite a bit of capital, and other resources, like G7 capacity, uh, and MCL in some cases, um, to generate that revenue and we're happy with the returns.

Jeremy Barnum: But it's still markets, right? Things can happen. It's volatile. There's risk-taking involved. That's part of the point that.

Unknown Executive: Sorry to hedge the answer, but that's kind of how it works. That's fine. Thanks. Thanks a lot, guys.

Speaker Change: But it's sort of, you know, it it's not just like growing without any inputs essentially. Um, so I guess on the 1 hand, you might say that that's um you know a bit more durable for that reason. Um but it is important to realize that it it's coming with that with that use of resources essentially. So, you know, I mean, we've gotten over time a little bit more relaxed about talking about the Market's business as something that has relatively uncorrelated and reasonably recurring revenues. It's obviously extremely client Centric. There's a lot of financing in various types, that's being supplied. Um, and it seems to if anything more often than not be counter-cyclical rather than Pro cyclical. Um, but it's still markets right? Things can happen. It's volatile, there's risk taking involved. That's part of the point that we build, you know.

Uh, sorry to hedge the answer, but, um, that's kind of how we think about it.

Speaker Change: No, that's fine. Thank thanks a lot guys.

Unknown Executive: Thank you.

Unknown Executive: Our final question comes from Chris Katowski with Oppenheimer. Your line is open. Yeah, good morning and thanks. Kind of an old school bank analyst question. You know, after a long time of kind of bemoaning slow C&I loan growth, you had this extraordinary growth this quarter, $33 billion in average and more than 6% quarter over quarter. But then when we look at the P&L in the commercial and investment bank, net interest incomes down 2% and lending incomes down 4%. And I know there's hedges and other complicated things, but it just kind of doesn't compute that you'd have such strong loan growth.

Speaker Change: Thank you. Our final question comes from Chris katowski with Oppenheimer. Your line is open.

Jeremy Barnum: did not have revenue growth associated. Yeah, I mean, the hedges are definitely part of it. And a lot of the assets came on the balance sheet quite late in the quarter. So I don't know, I might be missing something.

Yeah, good morning and thanks. Uh, kind of an old school Bank analyst question. Um you know after a long time we've kind of bemoaning, slow cni loan growth. You had this extraordinary growth, this quarter 33 billion dollars in average and more than 6% quarter over quarter. But then when we look at the uh, p&l and and the commercial and Investment Bank, net interest income is down 2% and lending in comes down 4% and I I know there's Hedges and other complicated things but it just kind of doesn't compute that you'd have such strong, loan growth and and not have Revenue, growth associated with that.

Speaker Change: Yeah, I mean uh the hedges are definitely part of it and a lot of the assets came on the balance sheet, quite late in the quarter. So, um, I don't know, I might be missing something.

Unknown Executive: And there's probably some Markets and AI piece of it too, so, I don't know, Michael can follow up with you, but I think the launch thing was part of it, Markets and AI was part of it, and late quarter balance sheet, Okay, alrighty, thank you.

Speaker Change: Oh, and there's probably some markets, there's been markets and there's markets on AI piece of it too. So uh, I don't know. My goal, my goal can follow up with you but um that that I think the, the longest thing is part of it and markets and I as part of it and late quarter balance is not just for sure. Yeah.

Speaker Change: Yeah. Okay. All righty. Thank you.

Speaker Change: Thanks.

Unknown Executive: Thank you, we have no further questions. Thanks very much. Thank you.

Speaker Change: Thank you, we have no further questions.

Speaker Change: Thanks very much. Thank you.

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