Q3 2026 JPMorgan Chase & Co Earnings Call

October 13, 2026

Speaker #1: Good morning, ladies and gentlemen. Welcome to JPMorgan Chase's third quarter 2026 earnings call. This call is being recorded. Your line will be muted for the duration of the call.

Operator 2: Good morning, ladies and gentlemen. Welcome to JPMorgan Chase's Q3 2026 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. Information concerning forward-looking statements and non-GAAP financial measures included in this presentation can be found in JPMorgan Chase's earnings press release and investor presentation posted on the investor relations website. Please stand by. At this time, I would like to turn the call over to JPMorgan Chase's Chairman and CEO, Jamie Dimon, and Chief Financial Officer, Jeremy Barnum. Mr. Barnum, please go ahead.

Operator: Good morning, ladies and gentlemen. Welcome to JPMorgan Chase's Q3 2026 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. Information concerning forward-looking statements and non-GAAP financial measures included in this presentation can be found in JPMorgan Chase's earnings press release and investor presentation posted on the investor relations website. Please stand by. At this time, I would like to turn the call over to JPMorgan Chase's Chairman and CEO, Jamie Dimon, and Chief Financial Officer, Jeremy Barnum. Mr. Barnum, please go ahead.

Speaker #1: We will now go live to the presentation. Information concerning forward-looking statements and non-GAAP financial measures included in this presentation can be found in JPMorgan Chase's earnings press release and investor presentation posted on the investor relations website.

Speaker #1: Please stand by. At this time, I would like to turn the call over to JPMorgan Chase's Chairman and CEO, Jamie Dimon, and Chief Financial Officer, Jeremy Barnum.

Speaker #1: Mr. Barnum, please go ahead.

Speaker #2: Thank you very much, and good morning, everyone. The firm delivered net income of $15.3 billion EPS of $5.57 and an ROTC of 20%. These results included 658 million of net investment securities losses incorporate.

Jeremy Barnum: Thank you very much, and good morning, everyone. The firm delivered net income of $15.3 billion, EPS of $5.57, and an ROTCE of 20%. These results included $658 million of net investment securities losses in corporate. Revenue of $50.9 billion was up 8% year-on-year. Excluding the net investment securities losses, revenue was up 9% year-on-year, largely driven by markets revenue, higher deposit balances, and higher asset management fees in AWM and CCB. Expenses of $27.3 billion were up 12% year-on-year, largely driven by higher volume and revenue-related expense, as well as front office hiring and wage inflation. Credit costs were $2.7 billion, with net charge-offs of $2.2 billion and a net reserve build of $539 million.

Speaker #2: Revenue of $50.9 billion was up 8% year-on-year. Excluding the net investment securities losses, revenue was up 9% year-on-year, largely driven by markets revenue, higher deposit balances, and higher asset management fees and AWM and CCB.

Speaker #2: Expenses of $27.3 billion were up 12% year-on-year, largely driven by higher volume and revenue-related expense, as well as front office hiring and wage inflation.

Speaker #2: And credit costs were $22.7 billion with net charge-offs of $2.2 billion and a net reserve build of $539 million. In terms of the balance sheet, we ended the quarter with a standardized CT1 ratio of 13.9%, down 30 basis points versus the prior quarter, as net income was more than offset by OCI losses, higher RWA, and capital distributions.

Jeremy Barnum: In terms of the balance sheet, we ended the quarter with a standardized CET1 ratio of 13.9%, down 30 basis points versus the prior quarter, as net income was more than offset by OCI losses, higher RWA, and capital distributions. You will note that we have updated the categories on the RWA walk to make it a bit more useful. This quarter's standardized RWA increase of about $52 billion is predominantly driven by an increase in lending across banking, markets, and AWM, as well as the impact of higher energy prices and increased market volatility. Moving to our businesses, CCB reported net income of $5.7 billion. Revenue of $21.2 billion was up 9% year on year, predominantly driven by higher balances and yield in card, asset management fees, deposit balances, and auto lease income. A few points to highlight.

Speaker #2: You'll note that we've updated the categories on the RWA walk to make it a bit more useful. This quarter's standardized RWA increase of about $52 billion is predominantly driven by an increase in lending across banking, markets, and AWM, as well as the impact of higher energy prices and increased market volatility.

Speaker #2: Now, moving to our businesses, CCB reported net income of $5.7 billion. Revenue of $21.2 billion was up 9% year-on-year, predominantly driven by higher balances and yield in card, asset management fees, deposit balances, and auto lease income.

Speaker #2: A few points to highlight: debit and credit spend grew 10% year-on-year, with continued momentum across spending categories, including gas and travel, supported by consumer demand.

Jeremy Barnum: Debit and credit spend grew 10% year on year, with continued momentum across spending categories, including gas and travel, supported by consumer demand. Deposit growth of 4% year on year was stronger this quarter as we continued to grow our customer base across consumer and business banking, and we retained our number 1 position in retail deposit share based on FDIC data. Client investment assets crossed $1.4 trillion, up 15% year on year, driven by market performance and strong flows. Next, the CIB reported net income of $8.2 billion. Revenue of $22.7 billion was up 14% year on year on strong performance across the businesses. IB fees were up 14% year on year, reflecting strong performance across products, notably in advisory. While our outlook remains constructive, supported by ongoing client engagement, evolving market conditions have recently slowed activity a bit, so we will have to see how the quarter develops.

Speaker #2: Deposit growth of 4% year-on-year was stronger this quarter, as we continue to grow our customer base across consumer and business banking and we retained our number one position in retail deposit share based on FTSE data.

Speaker #2: And client investment assets across 1.4 trillion, up 15% year-on-year, driven by market performance and strong flows. Next, the CIB reported net income of $8.2 billion.

Speaker #2: Revenue of $22.7 billion was up 14% year-on-year, on strong performance across the businesses. IB fees were up 14% year-on-year, reflecting strong performance across products, notably in advisory.

Speaker #2: While our outlook remains constructive, supported by ongoing client engagement, evolving market conditions have recently slowed activity a bit, so we'll have to see how the quarter develops.

Speaker #2: In markets, fixed income was down 4% year-on-year, with lower revenues in commodities, rates, and credit, largely offset by higher client flows and currencies and emerging markets.

Jeremy Barnum: In markets, fixed income was down 4% year on year, with lower revenues in commodities, rates, and credit, largely offset by higher client flows in currencies and emerging markets. Equities was up 49% year on year, with continued outperformance across the franchise, notably in prime and derivatives. Turning to Asset and Wealth Management, AWM reported net income of $1.8 billion with pre-tax margin of 36%. Revenue of $6.9 billion was up 14% year on year, predominantly driven by growth in management fees on higher average market levels and strong net inflows, as well as higher loan balances. Long-term net inflows were $51 billion, largely driven by continued strength in fixed income. AUM of $5.2 trillion was up 13% year on year, and client assets of $7.9 trillion were up 15% year on year, driven by continued net inflows at higher market levels.

Speaker #2: Equities was up 49% year-on-year, with continued outperformance across the franchise, notably in prime and derivatives. Turning to asset and wealth management, AWM reported net income of $1.8 billion, with pre-tax margin of 36%.

Speaker #2: Revenue of $6.9 billion was up 14% year-on-year, predominantly driven by growth in management fees, on higher average market levels, and strong net inflows, as well as higher loan balances.

Speaker #2: Long-term net inflows were $51 billion, largely driven by continued strength in fixed income. AUM, a $5.2 trillion, was up 13% year-on-year, and client assets up $7.9 trillion, were up 15% year-on-year, driven by continued net inflows and higher market levels.

Speaker #2: Finally, corporate reported a net loss of $455 million, which included the net investment securities losses mentioned earlier, on revenue of $93 million. Turning to the outlook, I'm going to update the full-year guidance by giving you the fourth quarter.

Jeremy Barnum: Finally, corporate reported a net loss of $455 million, which included the net investment securities loss as mentioned earlier, on revenue of $93 million. Turning to the outlook, I am going to update the full year guidance by giving you the Q4. The implied full year numbers are on the page. We expect Q4 NII ex markets to be approximately $25.5 billion and Q4 total NII to be about $28 billion. As we have done for a couple of years, you will note we gave you a central case for 2027 NII ex markets of approximately $107 billion, which we will refine further next quarter. It is important to remember that this central case is based on a series of assumptions that are obviously highly uncertain, even under the best of circumstances.

Speaker #2: The implied full-year numbers are on the page. We expect fourth quarter NIIX markets to be approximately 25.5 billion, and fourth quarter total NII to be about $28 billion.

Speaker #2: And as we've done for a couple of years, you'll note we gave you a central case for 2027 NIIX markets of approximately $107 billion, which will refine further next quarter.

Speaker #2: It's important to remember that this central case is based on a series of assumptions that are obviously highly uncertain, even under the best of circumstances.

Speaker #2: On expense, we expect the fourth quarter to be about $27.5 billion, with the implied full-year increase reflecting higher volume and revenue-related expense, driven by continued elevated activity levels.

Jeremy Barnum: On expense, we expect Q4 to be about $27.5 billion, with the implied full year increase reflecting higher volume and revenue-related expense driven by continued elevated activity levels. Finally, we continue to expect the card net charge-off rate to be approximately 3.2%. With that, we are now happy to take your questions, so let's open the line for Q&A.

Speaker #2: Finally, we continue to expect the card net charge-off rate to be approximately 3.2%. With that, we're now happy to take your questions, so let's open the line for Q&A.

Speaker #1: Thank you. For participants dialed in on the analyst side of today's conference call, if you would like to ask a question, please press star one to be entered into the queue.

Operator 2: Thank you. For participants dialed in on the analyst side of today's conference call, if you would like to ask a question, please press star one to be entered into the queue. We kindly request that you ask one question and only one related follow-up. If you would like to ask an additional question, please press star one to be re-entered into the queue. Our first question comes from Ebrahim Poonawala with Bank of America. Your line is open.

Operator: Thank you. For participants dialed in on the analyst side of today's conference call, if you would like to ask a question, please press star one to be entered into the queue. We kindly request that you ask one question and only one related follow-up. If you would like to ask an additional question, please press star one to be re-entered into the queue. Our first question comes from Ebrahim Poonawala with Bank of America. Your line is open.

Speaker #1: We kindly request that you ask one question and only one related follow-up. If you would like to ask an additional question, please press star one to be re-entered into the queue.

Speaker #1: Our first question comes from Ibrahim Punawala with Bank of America. Your line is open.

Speaker #3: Hey, good morning. I guess maybe one question, just there's been a lot of discussion around all things AI over the last couple of months.

Ebrahim Poonawala: Hey, good morning. I guess maybe one question. There has been a lot of discussion around all things AI over the last couple of months. Maybe if there are two things that you can address specifically. One, when we think about the disruption risk to agentic AI, I know you have talked about in the past, maybe just frame that given your visibility into the technology, how you think about that, and also the challenge of implementing agentic AI inside a bank, given the emergence of all the rogue agents. Does that make it harder for a bank to actually deploy agentic AI as we think about just competitive challenges?

Speaker #3: And maybe if there are two things that you can address specifically: one, when we think about the disruption risk to agentic AI, I know you've talked about in the past.

Speaker #3: Maybe just frame that given your visibility into the technology, how you think about that. And also the challenge of implementing agentic AI inside a bank, given the emergence of all the rogue agents and does that make it harder for a bank to actually deploy agentic AI as we think about just competitive challenges.

Speaker #2: I'll start, and you want to jump in? Yeah. Okay. So on the disruption point, a couple of things. There's obviously been a lot of focus on the smart cash solution, which I think is a small piece of the overall story.

Jeremy Barnum: I will start, and you want to jump in? Yeah. Okay. On the disruption point, couple things. There is obviously been a lot of focus on the smart cash solution, which I think is a small piece of the overall story. That is live now actually as of the last couple of weeks, very early days, and it remains kind of a targeted pilot type thing. It was interesting to learn some things about what clients care about and sort of see how it works to kind of sell a product like this in the field. So maybe more to come on that in the future. Early days. Interesting so far.

Speaker #2: But that is live now, actually, as of the last couple of weeks. Very, very early days, and it remains kind of a targeted pilot-type thing.

Speaker #2: But it is interesting to learn some things about what clients care about and sort of see how it works to kind of sell a product like this in the field.

Speaker #2: So maybe more to come on that in the future, early days, interesting so far. I think the bigger picture here is around there have been a couple of releases of personal agents this quarter, which have clearly gotten a bunch of attention in the market, and we saw a little bit of a response in bank stocks around those releases.

Jeremy Barnum: I think the bigger picture here is around, there have been a couple of releases of personal agents this quarter, which have clearly gotten a bunch of attention in the market. We saw a little bit of a response in bank stocks around those releases. I guess the way we think about that from our perspective is that, on the one hand, it is nothing new, but that does not mean that we are complacent about it. If you think about what is the nature of the competition that comes from these agents, it is really the intersection of two things that we have been talking about for a long time. One is yield-seeking flows. Obviously we deal today and have dealt with all the various rate cycles with a lot of competition from yield-seeking flows.

Speaker #2: And I guess the way we think about that, from our perspective, is that on the one hand, it's nothing new, and that but that doesn't mean that we're complacent about it.

Speaker #2: So if you think about what is the nature of the competition that comes from these agents, it's really the intersection of two things that we've been talking about for a long time.

Speaker #2: One is yield-seeking flows, so obviously we deal today and have dealt with through all the various rate cycles with a lot of competition from yield-seeking flows.

Speaker #2: And our strategy remains focusing on primary bank share, not chasing every dollar of yield-seeking money. So that doesn't mean that competitive pressure isn't real.

Jeremy Barnum: Our strategy remains focusing on primary bank share, not chasing every dollar of yield-seeking money. That does not mean that competitive pressure is not real, it just means it is not particularly new. The other piece is competition from fintechs who are innovating and providing great customer experiences. We have also been talking about that for a long time, and the criticality of ensuring that we have parity with them and that we are leaning in enough to make sure that we are giving people the experiences that they want through all the various channels, including digital. In that sense, the kind of agentic personal agents, whatever stuff, it is just the intersection of those two things, and it is not new. As I said, that does not mean we are complacent about it.

Speaker #2: It just means it's not particularly new. The other piece is competition from fintechs who are innovating and providing great customer experiences. And we've been also been talking about that for a long time.

Speaker #2: And the criticality of ensuring that we have parity with them and that we're leaning in enough to make sure that we're giving people the experiences that they want through all the various channels, including digital.

Speaker #2: And so in that sense, the kind of agentic personal agents, whatever stuff, it's just the intersection of those two things, and it's not new.

Speaker #2: As I said, that doesn't mean we're complacent about it. We're spending a lot of time on it, and it's going to be interesting to see how the space develops, and what we ourselves offer there at some point.

Jeremy Barnum: We are spending a lot of time on it, and it is going to be interesting to see how the space develops and what we ourselves offer there at some point. When you take a really big step back from a competitive position, I think we really like our hand in no small part because of the sort of multiple decades of investment in the branch network, the value proposition, and not least, trust that our customers have in us.

Speaker #2: But when you take a really big step back from a competitive position, I think we really like our hand, and no small part because of the sort of multiple decades of investment in the branch network, the value proposition, and not least trust that our customers have in us.

Speaker #4: Yeah. I understand. Internally, we use agents to do good things here, and we're going to continue to do that. And we do will use it for customers, but our focus will always be do a great job for customers.

Jamie Dimon: Yeah. I would say internally, we use agents to do good things here, and we are going to continue to do that. We will use it for customers. Our focus will always be do a great job for customers. We are not against agents or for agents, something like that. They are tools. You use them for customers. There is a defensive side, which is you got to make sure our customers are not hurt by it. That is of concern. But think of that as an AI agentic concern, which is heightened because you do not want rogue agents, and there could be thousands of them. We have always been literally on the side of the client. If people are using them, they should understand the risk. There is a liability transfer, they should understand there is a liability transfer.

Speaker #4: And so we're not against agents or for agents and like that. They're tools you use them for customers. There is a defensive side, which is you've got to make sure our customers aren't hurt by it.

Speaker #4: And so that is of concern, but that's think of that as an AI agentic concern, which is heightened because you don't want rogue agents, and there could be thousands of them, and so we've always been literally on the side of the client.

Speaker #4: If people are using them, they should understand the risk. There's a liability transfer they should understand the liability transfer. If that is being misused, they should understand it's being misused.

Jamie Dimon: If data is being misused, they should understand it's being misused. So we have to make sure we protect our customer in the right kind of way. So we're building tools to do that too. In the meantime, we're not going to allow just any outside agent to come in inside the company because that's just too risky for clients and for JPMorgan.

Speaker #4: So we have to make sure we protect our customer in the right kind of way. So we will be building tools to do that too.

Speaker #4: In the meantime, we're not going to allow just any agent to come outside agent to come in inside the company because that's just too risky for clients and for JPMORGAN.

Speaker #3: Got it. That's good color. And just separately, I think as we assess the risk of interest rates maybe moving even higher than what we saw in the third quarter, maybe your latest thoughts around how you assess the resiliency of the economy to handle maybe a 6% rate on 10-year and just the Fed hiking a few times, do you think the risk of a market event or just stress from the economy is meaningful as we kind of discount that?

Ebrahim Poonawala: Got it. That's good color. Separately, I think as we assess the risk of interest rates maybe moving even higher than what we saw in Q3, maybe your latest thoughts around how you assess the resiliency of the economy to handle maybe a 6% rate on 10-year and just the Fed hiking a few times. Do you think the risk of a market event or just stress on the economy is meaningful as we kind of discount that?

Speaker #4: I think you have to we always prepare for all different events. And that's not the same as predicting them because we want to be a strong company helping our clients our communities, countries around the world, to stick within.

Jamie Dimon: I think you have to, we always prepare for all different events. That's not the same as predicting them because we want to be a strong company helping our clients, our communities, countries around the world through thick or thin. So of course things like that could happen. I would never take that off the table. They could happen for good reason, which is a lot of demand for capital, a lot of productivity, and things are fine. It could happen for bad reason, and sticky inflation around the world. It could happen not because of what's in the United States, it could happen because of what happens overseas. We're not predicting it. I've always thought there's a higher chance than other people. I still kind of think that, but that's not a prediction. That's just think of that as cautious preparation.

Speaker #4: So of course, things like that can happen. I would never take it off the table. And they can happen for good reason, which a lot of demand for capital, a lot of productivity, and things are fine.

Speaker #4: They can happen for bad reason. And sticky inflation around the world, they can happen not because of what's in the United States. It can happen because of what happens overseas.

Speaker #4: So we're not predicting it. I've always thought there's a higher chance than other people. I still kind of think that, but that's not a prediction.

Speaker #4: That's just a thing of that is cautious preparation.

Speaker #3: Got it. Thank you.

Ebrahim Poonawala: Got it. Thank you.

Speaker #1: Thank you. Our next question comes from John McDonald with Truist, your line is open.

Operator 2: Thank you. Our next question comes from John McDonald with Truist. Your line is open.

Operator: Thank you. Our next question comes from John McDonald with Truist. Your line is open.

Speaker #5: Hi. Good morning, Jeremy and Jamie. I was hoping Jeremy, you could unpack the new outlook for 2027 NII. The central case that you gave, including some of the assumptions around the balance sheet growth, deposit pricing, and the impact of higher rates.

John McDonald: Hi. Good morning, Jeremy and Jamie. Was hoping, Jeremy, you could unpack the new outlook for 2027 NII, the central case that you gave, including some of the assumptions around the balance sheet growth, deposit pricing, and the impact of higher rates.

Speaker #2: Yeah, sure, John. No problem. So if you start with what we've given you as the NIIX markets guide for fourth quarter, which is 2025 and a half, and you annualize that, you get something like 102.

Jeremy Barnum: Yeah, sure, John, no problem. If you start with what we've given you as the NII ex markets guide for Q4, which is $25.5 billion, and you annualize that, you get something like $102 billion. So we're essentially giving you guiding to $5 billion of growth from that to the $107 billion. The $5 billion, probably about a quarter of that, I would say, is related to the yield curve. So we remain asset sensitive and probably a little bit more asset sensitive than the EAR shows, just because of the lower than modeled consumer deposit betas. So about a quarter of that is the hikes that are currently in the forward curve. I think there's one in December and then two through the H1 of the year.

Speaker #2: So we're essentially giving you guiding to 5 billion of growth from that to the 107. That 5 billion probably about a quarter of that, I would say, is related to the yield curve.

Speaker #2: So we remain asset-sensitive and probably a little bit more asset-sensitive than the EAR shows just because of the lower-than-model consumer deposit betas. So about a quarter of that is the hikes that are currently in the forward curve.

Speaker #2: I think there's one in December and then two through the first half of the year. And the rest of it, I would actually describe pretty straightforwardly as just the continuation of the balance sheet growth and mixed trends that we've seen this year.

Jeremy Barnum: The rest of it, I would actually describe pretty straightforwardly as just the continuation of the balance sheet growth and mix trends that we've seen this year. So both continued modest consumer deposit growth, continued wholesale deposit growth, probably the wholesale a bit weaker than what was very strong this year, but we don't actually know. Then card loans, which obviously can be a big driver of NII, continued at comparable levels. So actually a pretty straightforward story, I would say, on that front.

Speaker #2: So both continued modest consumer deposit growth, continued wholesale deposit growth, probably wholesale a bit weaker than what was very strong this year, but we don't actually know.

Speaker #2: And then card loans, which obviously can be a big driver of NII, continued at comparable levels. So actually a pretty straightforward story, I would say, on that one.

Speaker #2: And. Caveats, but I gave you the caveats and the prepared remarks.

John McDonald: Okay, thanks.

Jeremy Barnum: Caveats, but I gave you the caveats in the prepared remarks.

Speaker #4: I mean, on one thing, I think there's more uncertainty around that number than normal. Because of all the things going on around the world and so on.

Jamie Dimon: I mean, I will add one more thing. I think there is more uncertainty around that number than normal because of all the things going on around the world. And obviously it also relates to what we do, which we can change at any point in time.

Speaker #4: And obviously, it also relates to what we do, which we can change at any point in time.

Speaker #5: Okay. That's helpful. Thank you. And Jeremy, on expenses, if we move over to there, do you have any preliminary thoughts on your investment spend plan for next year, the other drivers of expenses, and how those might line up with the current street forecast for expenses next year?

John McDonald: Okay, that is helpful. Thank you. And Jeremy, on expenses, if we move over to there, do you have any preliminary thoughts on your investment spend plans for next year or the other drivers of expenses and how those might line up with the current street forecast for expenses next year?

Speaker #2: Yeah. So we try to draw a little bit of a distinction between NII and expenses in the sense that despite Jamie's comments, which are obviously true, that we can modify the structure of the balance sheet to change the NII.

Jeremy Barnum: Yeah. We try to draw a little bit of distinction between NII and expenses in the sense that despite Jamie's comments, which are obviously true, that we can modify the structure of the balance sheet to change the NII. In general, undisturbed, the NII is kind of a property of the balance sheet at any given point in time, and is not that sensitive to the budget cycle. Therefore, we feel like we do not have a very good excuse at this point in the year for pretending that we do not have an opinion about 2027. Expenses are a little different in the sense that they are still sensitive to the budget cycle and there are a lot of discretionary decisions to get made in there. While we have some preliminary views, we are kind of not done with that.

Speaker #2: In general, undisturbed, the NII is kind of a property of the balance sheet at a given point in time. It is not that sensitive to the budget cycle.

Speaker #2: And therefore, we feel like we don't have a very good excuse at this point in the year for pretending that we don't have an opinion about 2027.

Speaker #2: Expenses are a little different in the sense that they are still sensitive to the budget cycle, and there are a lot of discretionary decisions that get made in there.

Speaker #2: And while we have some preliminary views, we're kind of not done with that. And you will remember, obviously, John, last year we did point out that our preliminary read on expenses suggested that the markets consensus was a bit off.

Jeremy Barnum: You will remember, obviously, John, last year we did point out that our preliminary read on expenses suggested that the market's consensus was a bit off. That seems to be quite a bit less true this year. So we see the consensus right now for 2027 expenses being around $114 billion, and our current preliminary read is not too far from that. So kind of no news on that front, I would say. Let us see how the budget cycle finishes. As Jamie points out, I think the uncertainty is not just about the macro environment, it is also about how dynamic the investment picture is and the effects of AI, et cetera. So a lot of moving parts. But for now, the consensus does not seem too far off.

Speaker #2: That seems to be quite a bit less true this year. So we see the consensus right now for 2027 expenses being around 114 billion.

Speaker #2: And our current preliminary read isn't too far from that. So kind of no news on that front, I would say. And let's see how the budget cycle finishes and as Jamie points out, I think the uncertainty isn't just about the macro environment.

Speaker #2: It's also about how dynamic the investment picture is and the effects of AI, etc., etc., etc. So a lot of moving parts, but for now, the consensus doesn't seem too far off.

Speaker #5: Okay. Got it. Thank you.

John McDonald: Okay. Got it. Thank you.

Speaker #2: Thanks, John.

Jeremy Barnum: Thanks, John.

Speaker #1: Thank you. Our next question comes from Erica Najarian with UBS, your line is open.

Operator 2: Thank you. Our next question comes from Erika Najarian with UBS. Your line is open.

Operator: Thank you. Our next question comes from Erika Najarian with UBS. Your line is open.

Speaker #6: Yes. Thank you. Good morning. My first question just is on capital management. We were fielding a lot of inbound questions from investors in terms of the billion-dollar buyback versus the normal cadence of around 7 billion.

Erika Najarian: Yes. Thank you. Good morning. My first question just is on capital management. We were fielding a lot of inbound questions from investors in terms of the billion-dollar buyback versus the normal cadence of around $7 billion. I know that there is no normal cadence, and I know that buyback is the last priority. Perhaps, take us through how we should think about your capital priorities, particularly given that we are hearing that Basel III endgame and GSIB should be finalized at year-end.

Speaker #6: And I know that there's no normal cadence, and I know that buyback is the last priority. But perhaps take us through how you should think we should think about your capital priorities, particularly given that we're hearing that Basel III endgame and GSIB should be finalized at year-end.

Speaker #4: Yeah. So I think we've told you all that we have probably 30 billion or something of excess capital roughly. Just estimating what all those endgames are, which we don't know, but that's plenty.

Jamie Dimon: Yeah. I think we have told you all that we have probably $30 billion or something of excess capital, roughly. Just estimating what all those endgames are, which we do not know, but that is plenty. The capital hierarchy has always been the same. After you pay your dividend, which hopefully will be steady, we really like investing in organic growth. That is the highest and best use of capital for shareholders. Obviously, buyback comes after that, particularly when stock prices are up. The positive news is the main reason the buyback is down, and it has got nothing to do with AOCI or guessing about the environment or even Basel III. We believe now, which is different than we told you in the past, that we can redeploy that capital at very good returns over time.

Speaker #4: But the capital hierarchy has always been the same. I mean, after you pay your dividend, which hopefully will be steady, we'd like we really like investing in organic growth.

Speaker #4: That is the highest and best use of capital for shareholders. And obviously, buyback comes after that, particularly when stock prices are up. So deposit of news is the main reason the buyback is down, and it's got nothing to do with AOCI or guessing about the environment or even Basel III.

Speaker #4: We believe now, which is different than we told you in the past, that we can redeploy that capital at very good returns over time.

Speaker #4: And redeploying that capital at very good terms over time is far better than buying stock at a 6% or whatever the earnings yield would be if you had bought it today.

Jamie Dimon: Redeploying that capital at very good terms over time is far better than buying stock at a 6% or whatever the earnings yield would be if you bought it today. That is simple. That is good. That is good for shareholders. I will give you one example, and I think there are many more, but the Security and Resiliency Initiative, we had told you all, we deploy $1.5 trillion over 10 years. I do not think we have disclosed the number, but the first year is probably over $200 already, and we will disclose that and do some work on it. My guess, it will be considerably more than that. The world needs capital, the world needs advice, the world is becoming more complex. Assets under management around the world are bigger, and so we think that is good news in the long run.

Speaker #4: And that's simple. I mean, that's good. That's good for shares. And I'll give you one example, and I think there are many more, but the security resiliency initiative we had told you all we deploy 1.5 trillion dollars over 10 years, and we haven't I don't think we've disclosed the number, but the first year is probably over 200 already.

Speaker #4: And we'll disclose that and do some work on it. But my guess it'll be considerably more than that. And the world needs capital. The world needs advice.

Speaker #4: The world is becoming more complex. Assets are the magic around the world are bigger. And so we think that's good. We think there's good news in the long run.

Speaker #4: And we can't tell you what it means for the next six months, but that's why we're doing it. We hope to deploy it very well for our shareholders.

Jamie Dimon: We cannot tell you what it means for the next 6 months, but that is why we are doing it. We hope to deploy it very well for our shareholders.

Speaker #2: Yeah. And the only thing I would add to that, Erica, is just that if you notice what the journey has been on the C21 ratio, I want to say that we started at something like 15.7, and we're now at 13.9 during a period during which we've done a ton of internal deployment.

Jeremy Barnum: Yeah, the only thing I would add to that, Erika, is just that if you notice what the journey has been on the CET1 ratio, I want to say that we started at something like 15.7, and we are now at 13.9 during a period during which we have done a ton of internal deployment. So there has been a lot of organic growth in the RWA and some of the investments that Jamie alludes to. During that period, we have also done a bunch of buybacks. But at this point, as Jamie says, the speed with which we have been able to deploy organically relative to the amount of excess that we have and the environment just seems pretty clear that it makes sense to keep dep-

Speaker #2: So there's been a lot of organic growth and RWA. And some of the investments that Jamie alludes to. And during that period, we've also done a bunch of buybacks.

Speaker #2: But at this point, as Jamie says, the speed with which we've been able to deploy organically relative to the amount of excess that we have and the environment just seems pretty clear that it makes sense to keep dry powder.

Speaker #4: And I want to brag on the investment bank a little bit. So they've hired a tremendous amount of very talented people in SRI, and we're lucky to have Todd Combs here investing in some of the capital.

Jamie Dimon: I want to brag on the investment bank a little bit. So they have hired a tremendous amount of very talented people in SRI, and we are lucky to have Todd Combs here investing some of the capital. They have had a lot of ideas. It is not just meetings at this point. They have helped fund some interesting types of things. We have more ideas. They are doing a really great policy around it too, which is, what can you do to accelerate security and resilience in the United States around, whether it is shipbuilding or We had a big announcement in Philadelphia. So I am proud of them. We have had a bunch of people who retired, who raised their hand. They are coming back more for patriotism than anything else. It has been just a great effort for the company. As we pointed out, it is global, and the global response has also been exceptional.

Speaker #4: They've had a lot of ideas. It's not just meetings at this point. They've helped fund some interesting types of things. We have more ideas.

Speaker #4: They're doing some really great policy around it too, which is what can you do to accelerate security resiliency in the United States around what's chip building or we had a big announcement in Philadelphia.

Jamie Dimon: They are doing a really great policy around it too, which is, what can you do to accelerate security and resilience in the United States around, whether it is shipbuilding or We had a big announcement in Philadelphia. So I am proud of them. We have had a bunch of people who retired, who raised their hand. They are coming back more for patriotism than anything else. It has been just a great effort for the company. As we pointed out, it is global, and the global response has also been exceptional.

Speaker #4: So I'm proud of them. We've had a bunch of people who retired, who raised their hand. They're coming back more for patience than anything else.

Speaker #4: And so it's just a great effort for the company. And as we pointed out, it's global, and the global response has also been exceptional.

Speaker #4: I mean, I have something across my desk, which is alone over 10 or 20 billion dollars of financing in one country a lot more to come here.

Jamie Dimon: I have something across my desk which is a loan over $10 billion or $20 billion of financing in one country. So a lot more to come here. I would put in the same category, the American Dream initiative, the Innovation Economy initiative, the commercial banking initiative around the world. These things are working. We think we are doing the right kind of good business at good returns.

Speaker #4: And I would put in the same category of American Dream initiative, the innovation economy initiative, the commercial banking initiative around the world. These things are working.

Speaker #4: We think we're doing the right kind of good business at good returns.

Speaker #6: So as a follow-up here, that all sounds very positive for activity levels going forward in a very broad way. And Jamie, I know that you did some media over the past few weeks and talked about the pipeline.

Erika Najarian: So as a follow-up here, that all sounds very positive for activity levels going forward in a very broad way. Jamie, I know that you did some media over the past few weeks and talked about the pipeline. Maybe in that context, especially given market fears that the bond market rout around the world has a chilling effect on activity levels, maybe talk about what the pipeline looks like for activity levels in both "Wall Street and Main Street.

Speaker #6: And maybe in that context, especially given market fears, that the bond market route around the world has a chilling effect on activity levels. Maybe talk about what the pipeline looks like for activity levels in both the investment both "Wall Street" and "Main Street."

Speaker #4: Well, before I do that, the bond volatility, the market, the fear is not going to change what we do. We serve clients with thick or thin.

Jamie Dimon: Well, first, before I do that, the bond volatility, the market, the fear is not going to change what we do. We serve clients through thick or thin. We know that I call some of the economic winds. It is the weather. That is not exactly referred to. So the pipeline is fine, but I pointed out many times before, the pipeline is like an accordion. It can open, close pretty quick. You have seen in the United States, as Jeremy Barnum says, the word delayed probably. We do not really know. We will see. But I was in Europe recently, and the pipeline there is actually quite healthy and even more so in IPOs, than we would have thought. So we just do not know. But serving the clients and doing a good job is the most important thing. Pipelines, we always forecast the pipeline, as you call the probability.

Speaker #4: We know that I call some of the economic wins. It's the weather. That's not exactly referred to. So the pipeline is fine. But I pointed out many times before, the pipeline is like an accordion.

Speaker #4: It can open and close pretty quick. You've seen in the United States, it's been as Jeremy says, the word delayed probably. We don't really know.

Jamie Dimon: We do not really know. We will see. But I was in Europe recently, and the pipeline there is actually quite healthy and even more so in IPOs, than we would have thought. So we just do not know. But serving the clients and doing a good job is the most important thing. Pipelines, we always forecast the pipeline, as you call the probability.

Speaker #4: And we'll see. And I was in Europe recently, and the pipeline there is actually quite healthy. And even more so in IPOs, than we would have thought.

Speaker #4: So we just don't know. And but serving the clients and doing a good job is the most important thing. And pipelines, we always forecast the pipeline as we call the probability.

Speaker #2: The probability adjustment.

Jeremy Barnum: The probability.

Jamie Dimon: We know one thing for sure. It will be wrong.

Speaker #4: And we know one thing for sure. It'll be wrong.

Jamie Dimon: We know one thing for sure. It will be wrong.

Speaker #2: It's important to emphasize. Like when Jamie and I talk about not knowing, I think we mean we don't obviously know exactly what investment banking fee revenue is going to be in the fourth quarter.

Jeremy Barnum: It is important to emphasize, when Jamie and I talk about not knowing, I think we mean we do not obviously know exactly what investment banking fee revenue is going to be in Q4. I think that we do know that the overall environment is robust and supportive, and there is a lot of business that wants to get done and needs to get done. As you point out, Erika, not surprisingly, given the rate sell-off, you are going to have the market take a little bit of a breath and a pause to make sure buyers and sellers can meet on valuation terms. So we did see a little bit of that slowdown in the H2 of September, basically, and we will see how that plays out into December. I mean, sorry, into Q4, but the big picture, I think, is pretty clear.

Speaker #2: I think that we do know that the overall environment is robust and supportive, and there's a lot of business that wants to get done and needs to get done.

Speaker #2: And as you point out, Erica, not surprisingly, given the rate sell-off, you're going to have the market take a little bit of a breath and a pause to make sure buyers and sellers can meet on valuation terms.

Speaker #2: And so we did see a little bit of that slowdown in the second half of September, basically. And we'll see how that plays out into December.

Speaker #2: But I mean, sorry, into the fourth quarter. But the big picture, I think, is pretty clear.

Speaker #6: Thank you. Thank you. Our next question comes from Chris McGrady with KBW. Your line is open.

Erika Najarian: Thank you.

Operator 2: Thank you. Our next question comes from Chris McGratty with KBW. Your line is open.

Operator: Thank you. Our next question comes from Chris McGratty with KBW. Your line is open.

Speaker #5: Oh, great. Thanks. Just following up on the capital allocation. Maybe a comment or two on where your less comfortable allocating capital to. It seems like there's plenty of opportunities to deploy it.

Chris McGratty: Oh, great. Thanks. Just following up on the capital allocation. Maybe a comment or two on where you are less comfortable allocating capital to. It seems like there is plenty of opportunities to deploy it. Where are you pulling back? Where are you seeing structures or peers maybe doing something you may not want to do? Thank you.

Speaker #5: Where are you pulling back? Where are you seeing structures or peers maybe doing something you may not want to do? Thank you.

Speaker #4: I'm not going to give you very specific stuff, but we're tightening up a little bit on credit. I think some of the credit terms have gotten a little bit loose.

Jamie Dimon: I'm not going to give you very specific stuff, but we're tightening up a little bit on credit. I think some of the credit terms have gotten a little loose. You've heard us talk about that before, and other people. A little too much pay, a little too weak covenants, a little too much priming good assets, a little too much pushing on it. We just don't feel we have to chase that kind of stuff anymore.

Speaker #4: And you've heard us talk about that before. And other people, a little too much pick, a little too weak covenants, a little too much priming good assets, a little too much pushing on it.

Speaker #4: We just don't feel like we have to chase that kind of stuff anymore.

Speaker #5: Oh, great. And then secondarily, the health of the consumer is getting a lot of attention. I guess the question is durability to withstand these kind of rates.

Chris McGratty: Okay, great. Secondarily, the health of the consumer is getting a lot of attention. I guess the question is durability to withstand these kind of rates. I think you talked about 10% year-on-year spend in debit and credit. If we're a year from now and we still have rates where we are, what's your expectation for the ability for the consumer to hold on? Thanks.

Speaker #5: I think you talked about 10% year-on-year spend and debit and credit. If we're a year from now and we still have rates where we are, what's your expectation for the ability for the consumer to hold on?

Speaker #5: Thanks.

Speaker #2: I mean, obviously, if you keep real rates, very, very high for a long time, at some level, that's designed to slow down economic activity to fight inflation.

Jeremy Barnum: Obviously, if you keep real rates very, very high for a long time, at some level, that's designed to slow down economic activity to fight inflation. It's hard to imagine that that wouldn't have an impact on the consumer. So far, what we see in the current data and what's been true, I would say, for the last few years is that the consumer has been quite resilient in the face of a number of headwinds that under different circumstances you might have expected would present a challenge. But I think the conditional expectation of consumer credit health as a function of higher rates is a fairly nuanced question. But fundamentally, the picture is pretty simple. The consumer is currently very healthy, primarily because of a healthy labor market.

Speaker #2: And it's hard to imagine that that wouldn't have an impact on the consumer. So far, what we've seen in the current data and what's been true, I would say, for the last few years is that the consumer has been quite resilient in the face of a number of headwinds that under different circumstances, you might have expected would present a challenge.

Speaker #2: But I think that the conditional expectation of consumer credit health as a function of higher rates is a fairly nuanced question. But fundamentally, the picture is pretty simple.

Speaker #2: The consumer is currently very healthy, primarily because of a healthy labor market. But if the central bank needs things to cool off and that involves an aggressive extended rate cycle, almost by definition, that's going to involve higher unemployment, which will produce weaker consumer credit results.

Jeremy Barnum: If the central bank needs things to cool off, and that involves an aggressive extended rate cycle, almost by definition, that's going to involve higher unemployment, which will produce weaker consumer credit results.

Speaker #5: Thanks a lot.

Chris McGratty: Thanks a lot.

Speaker #6: Thank you. Our next question comes from Ken Euston with Autonomous Research. Your line is open.

Operator 2: Thank you. Our next question comes from Ken Usdin with Autonomous Research. Your line is open.

Operator: Thank you. Our next question comes from Ken Usdin with Autonomous Research. Your line is open.

Speaker #7: Thanks. Hi. Good morning. On the consumer side, it's nice to see the 4% year-over-year CCB deposit growth. I'm just wondering aside from agentic, just what are you seeing in terms of either rate-seeking behavior?

Ken Usdin: Thanks. Hi, good morning. On the consumer side, it is nice to see the 4% year-over-year CCB deposit growth. Just wondering, aside from agentic, just what are you seeing in terms of either rate-seeking behavior? The deposit margin has been up for the last few quarters, which is also good to see, and I am just wondering, any change in your expectations for either growth or how you are adjusting to the current marketplace and competition for deposits? Thanks.

Speaker #7: The deposit margin has been up for the last few quarters, which is also good to see. And I'm just wondering any change in your expectations for either growth or how you're adjusting to the current marketplace and competition for deposits.

Speaker #7: Thanks.

Speaker #4: Sure. Yeah. It's an important question. It's a good question. I think the simple answer is no significant change to our core expectations here. I think we've seen kind of the reassertion of consumer deposit growth over the last couple of quarters as the yield-seeking flows have faded and that continues to be our basic expectation.

Jeremy Barnum: Sure. Yeah, it is an important question. It is a good question. I think, the simple answer is no significant change to our core expectations here. I think we have seen kind of the reassertion of consumer deposit growth over the last couple of quarters as the yield-seeking flows have faded, and that continues to be our basic expectation. So that is the big picture. I do think that since that outlook was shaped, we have seen a somewhat higher rate environment, and that does raise the question of what will be the impact of that on consumer deposits. So in the normal course, you will obviously have higher rate paid from the high beta products, from CDs and premium deposits. And all else equal, you would probably expect some amount of additional internal migration out of checking and savings into CDs, for simplicity, resulting in higher weighted average rate paid.

Speaker #4: So that's the big picture. I do think that since that outlook was shaped, we have seen a somewhat higher rate environment. And that does raise the question of what will be the impact of that on consumer deposits.

Speaker #4: So in the normal course, you will obviously have higher rate paid from the high beta products, from CDs and premium deposits. And all else equal, you would probably expect some amount of additional internal migration out of checking and savings into CDs for simplicity, resulting in higher weighted average rate paid.

Jeremy Barnum: So in the normal course, you will obviously have higher rate paid from the high beta products, from CDs and premium deposits. And all else equal, you would probably expect some amount of additional internal migration out of checking and savings into CDs, for simplicity, resulting in higher weighted average rate paid.

Speaker #4: And maybe you see a little bit of additional outflow pressure, which results in therefore slightly weaker deposit growth. So that's all totally speculative. And it's very much a function of which side of the argument you land on in terms of some people believe, well, all the cash sorting that's going to happen has already happened, and therefore these things are relatively insensitive to slightly higher rates.

Jeremy Barnum: And maybe you see a little bit of additional outflow pressure which results in therefore slightly weaker deposit growth. So that's all totally speculative, and it's very much a function of which side of the argument you land on in terms of some people believe, well, all the cash sorting that's going to happen has already happened, and therefore, these things are relatively insensitive to slightly higher rates. I don't personally believe that. I think it's probably a little bit more on a continuum than that, and therefore I would expect a little bit of additional pressure. But in the end, it's a matter of degree. No one really knows. And the good news, I would say, is that the core franchise performance is exceptionally strong, driven in no small part by the net new checking account acquisition, which I think we had like 650 this quarter or something.

Speaker #4: I don't personally believe that. I think it's probably a little bit more on a continuum than that. And therefore, I would expect a little bit of additional pressure.

Speaker #4: But in the end, it's a matter of degree. No one really knows. And the good news, I would say, is that the core franchise performance is exceptionally strong driven no small part by the net new checking account acquisition, which I think we had like 650 this quarter or something.

Speaker #4: So it's really been very, very strong. And it's proof of kind of the value proposition and the engagement that we're seeing through our marketing efforts and the power of the brand.

Jeremy Barnum: So it's really been very, very strong, and it's proof of kind of the value proposition and the engagement that we're seeing through our marketing efforts and the power of the brand. So from a long-term perspective, that's the most important thing, and the impact of rates in the near term will just be what it is.

Speaker #4: So from a long-term perspective, that's the most important thing. And the impact of rates in the near term will just be what it is.

Speaker #7: Excellent. Thanks, Jeremy. One follow-up on the markets business. Obviously, we're seeing quite a bifurcation of just the continued strength in equities. And as you mentioned earlier, just there's some tougher comps, I guess, and the impact of higher rates on FIC.

Ken Usdin: Excellent. Thanks, Jeremy. One follow-up on the markets business. Obviously, we're seeing quite a bifurcation of just the continued strength in equities, and as you mentioned earlier, just some tougher comps, I guess, and the impact of higher rates on FICC. Any change to just client demand for balance sheet usage? Is it kind of insatiable as it seems to be in the equities business? Just the state of things in the markets business in terms of activity and kind of your willingness to, we'll provide balance sheet, but more so the demand side, too. Thanks.

Speaker #7: Any change to just client demand for balance sheet usage? Is it kind of insatiable as it seems to be in the equities business? Just the state of things in the markets business in terms of activity and kind of your willingness to we'll provide balance sheet, but more so the demand side too.

Speaker #7: Thanks.

Speaker #4: Yeah. So at a high level, I think the simple answer is no real change. So I like your yeah, I like your insatiable. Yeah, exactly.

Jeremy Barnum: Yeah. So at a high level, I think the simple answer is no real change. So I like your-

Ken Usdin: It is high.

Jamie Dimon: It is high.

Jeremy Barnum: Yeah, I like your insatiable.

Ken Usdin: It is high across the street.

Jamie Dimon: It is high across the street.

Jeremy Barnum: Yeah, exactly. I like your insatiable demand for capital point. That feels about right. I have not heard anything to the contrary, frankly, recently. But to Jamie Dimon's point about tightening up credit, that is a little bit of a overall point about just making sure we are really scrubbing everything. In this moment where AI is such an overwhelming theme, it is producing so much innovation in so many different pockets. There is capital being tapped through all kinds of different mechanisms. We just need to be really, really on top of things, to make sure that nothing slips through.

Speaker #4: I like your insatiable demand for capital. Point that feels about right. I haven't heard anything to the contrary, frankly, recently. But to Jamie's point about tightening up credit, that's a little bit of a overall point about just making sure we're really scrubbing everything.

Speaker #4: And in this moment where AI is such an overwhelming theme, it's producing so much innovation and so many different pockets. There's capital being tapped through all kinds of different mechanisms.

Speaker #4: We just need to be really, really on top of things to make sure that nothing slips through.

Speaker #6: Thank you. Just that concludes your question. Thank you. Our next question comes from Mike Mayo. Thank you. Our next question comes from Mike Mayo with Wells Fargo Securities.

Operator 2: Thank you. Does that conclude your question? Thank you.

Operator: Thank you. Does that conclude your question? Thank you.

Ken Usdin: Yeah, I think so.

Operator 2: Our next question comes from Mike Mayo. Thank you. Our next question comes from Mike Mayo with Wells Fargo Securities. Your line is open.

Operator: Our next question comes from Mike Mayo. Thank you. Our next question comes from Mike Mayo with Wells Fargo Securities. Your line is open.

Speaker #6: Your line is open.

Speaker #7: Hi. Can you say the degree that AI helps out JPMorgan? I saw you were ranked highly in a recent AI and bank poll. But I squint and I look at the earnings release.

Mike Mayo: Hi. Can you say the degree that AI helps out JPMorgan? I saw you were ranked highly in a recent AI and bank poll. But I squint, and I look at the earnings release, and I am trying to find the benefits, and I am not sure if I can. I think, and you can update these numbers, you spend, what, $2 billion in AI, and you have, like, $2 billion of benefits? Or maybe that is stale if you could update that. Then also address the risk that AI agents will take deposits out of JPMorgan. As far as that answer, maybe you can talk about that value proposition and the trust and the way you protect customers' privacy and the value they place on that.

Speaker #7: I'm trying to find the benefits. And I'm not sure if I can. I think, and you can update these numbers you spend, what, $2 billion in AI, and you have like $2 billion of benefits or maybe that's stale if you could update that.

Speaker #7: And then also, I would address the risk that AI agents will take deposits out of JPMorgan and as far as that answer, maybe you can talk about that value proposition and the trust and the way you protect customers' privacy and the value they place on that.

Speaker #4: Yeah. So Mike, let me just tie you up a couple of things. So first of all, on the AI expense, you're right. I think we did say that in some media setting at some point.

Jeremy Barnum: Yeah. Mike, let me just tidy up a couple of things. First of all, on the AI expense, you are right. I think we did say that in some media setting at some point. I think it is not exactly right, and I think we corrected it later. I think at the time, and I think it is a little stale at this point, the AI expense number was significantly less than that. I want to say something like $700 annually or something like that. But more importantly, there is a lot of counting effects there, right? If you sort of price out the amount of time we are all spending thinking about it, you would probably get a higher number, too. So it is, at this point, not really something that you can ring-fence. It is pretty well diffused inside the whole institution, and it is obviously a very, very high priority.

Speaker #4: I think it's not exactly right. And I think we corrected it later. I think the at the time, and I think it is a little stale at this point, the AI expense number was significantly less than that, I want to say, something like 700 annually or something like that.

Speaker #4: But more importantly, there's a lot of counting effects there, right? If you sort of price out the amount of time we're all spending thinking about it, you probably get a higher number too.

Jeremy Barnum: But more importantly, there is a lot of counting effects there, right? If you sort of price out the amount of time we are all spending thinking about it, you would probably get a higher number, too. So it is, at this point, not really something that you can ring-fence. It is pretty well diffused inside the whole institution, and it is obviously a very, very high priority.

Speaker #4: So it's at this point, not really something that you can ring-fence. It's pretty well diffused inside the whole institution. And it's obviously a very, very high priority.

Speaker #4: On the question of benefits, you're right. We have quantified that in the past. I'm really trying to move away from that. I think that old quantification was accurate and correct as far as it went.

Jeremy Barnum: On the question of benefits, you are right. We have quantified that in the past. I am really trying to move away from that. I think that old quantification was accurate and correct as far as it went, but it included a lot of what you might call generative AI, machine learning type stuff that is particularly significant in consumer fraud prevention and so on. While that is relevant, I think when you and others ask about AI in the current moment, you are really asking about the impact of generative and agentic AI on productivity, on the expense line across a range of places, especially software engineering, but also other places. Maybe you are asking about new exciting revenue opportunities at the margin.

Speaker #4: But it included a lot of what you might call regenerative AI, machine learning type stuff that's particularly significant in consumer fraud prevention and so on.

Speaker #4: And while that's relevant, I think when you and others ask about AI in the current moment, you're really asking about the impact of generative and agentic AI on productivity, on the expense line across a range of places, especially software engineering, but also other places.

Speaker #4: And maybe you're asking about new exciting revenue opportunities at the margin. And so that, I think, is the more relevant focus right now. And I'm just very reluctant to spend a lot of energy quantifying it because it winds up wasting a lot of people's time inside the institution when we actually need to get them to focus on doing things.

Jeremy Barnum: That, I think, is the more relevant focus right now, and I am just very reluctant to spend a lot of energy quantifying it because it winds up wasting a lot of people's time inside the institution when we actually need to get them to focus on doing things. On that point, and in terms of the visibility of the benefits, I think you are right to point out that the benefits are not observable in our current quarterly earnings. I think that is probably not that surprising because as important and dramatic and exciting as this theme is, it takes a long time to really do things that are visible at an institution of our size.

Speaker #4: So on that point, and in terms of the visibility of the benefits, I think you're right to point out that the benefits aren't observable in our current quarterly earnings.

Speaker #4: And I think that's probably not that surprising because as much as important and dramatic and exciting as this theme is, it takes a long time to really do things that are visible at an institution of our size.

Speaker #4: I can tell you that just anecdotally for me personally, the types of use cases and benefits that I'm starting to see even in my own technology organization that supports finance are increasingly exciting.

Jeremy Barnum: I can tell you that just anecdotally, for me personally, the types of use cases and benefits that I am starting to see, even in my own technology organization that supports finance, are increasingly exciting. We have done some experiments of some minor legacy tools that needed to be rewritten and trying to see if we could essentially one-shot the rewrite in a couple of weeks, and it did not work perfectly, but you are starting to see some really exciting opportunities for acceleration and productivity change. So how long it is going to take for that to show up, we will see. Obviously some of those benefits are going to be offset with token costs, which is a whole other conversation. But we are excited. There is a lot going on. I guess your other question was the agentic question and the trust question. I think I addressed some of that earlier already.

Speaker #4: We've done some experiments of some minor legacy tools that needed to be rewritten and trying to see if we could essentially one-shot the rewrite and a couple of weeks.

Speaker #4: And it didn't work perfectly, but you're starting to see some really exciting opportunities for acceleration and productivity change. So how long it's going to take for that to show up, we'll see.

Jeremy Barnum: So how long it is going to take for that to show up, we will see. Obviously some of those benefits are going to be offset with token costs, which is a whole other conversation. But we are excited. There is a lot going on. I guess your other question was the agentic question and the trust question. I think I addressed some of that earlier already.

Speaker #4: And obviously, some of those benefits are going to be offset with token costs, which is a whole other conversation. But we're excited. There's a lot going on.

Speaker #4: And I guess your other question was the agentic question and the trust question. I think I addressed some of that earlier already. But at a high level, as Jamie pointed out, the true north here is protecting the client.

Jeremy Barnum: But at a high level, as Jamie pointed out, the true north here is protecting the client.

Speaker #4: So and the company obviously. But narrowly focusing on agents giving customers access to money movement in their accounts, I think right now, some of the services that offer that do it through credential sharing.

Jamie Dimon: And the company.

Jeremy Barnum: And the company, obviously. But narrowly focusing on agents giving customers access to money movement in their accounts. I think right now some of the services that offer that do it through credential sharing, and we have a long record of being against that way of doing things, screen scraping, et cetera. It is not secure. And so to the extent that we are able to block those, we are blocking them to protect customers and protect ourselves. And it is important that customers understand that if they give up their credentials to the agent and the agent does something that they do not want, that is going to be on them. And that is sort of not an ideal state of things. We are working on being able to do this correctly, so that is a piece of the puzzle. And in the big picture, trust is clearly an asset, and we have spent decades building it.

Speaker #4: And we have a long record of being against that way of doing things, screen scraping, etc. It's not secure. And so to the extent that we're able to block those, we are blocking them to protect customers and protect ourselves.

Speaker #4: And it's important that customers understand that if they give up their credentials to the agent and the agent does something that they don't want, that's going to be on them.

Jeremy Barnum: And it is important that customers understand that if they give up their credentials to the agent and the agent does something that they do not want, that is going to be on them. And that is sort of not an ideal state of things. We are working on being able to do this correctly, so that is a piece of the puzzle. And in the big picture, trust is clearly an asset, and we have spent decades building it.

Speaker #4: And that's sort of not an ideal state of things. We are working on being able to do this correctly. So that's a piece of the puzzle.

Speaker #4: And in the big picture, trust is clearly an asset. And we've spent decades building it. And as I said previously, we like our hand in that respect.

Jeremy Barnum: And as I said previously, we like our hand in that respect. But we need to be clear that the fact that we are trusted is not an excuse for complacency or a reason to provide mediocre customer experiences. So we really need to do both at the same time.

Speaker #4: But we need to be clear that the fact that we're trusted is not an excuse for complacency or a reason to provide mediocre customer experiences.

Speaker #4: So we really need to do both at the same time.

Speaker #7: And one short follow-up on the token costs. Do you get a benefit from scale with the token cost, say, versus a small bank? And are you also transitioning more toward kind of open model AI systems that can cost a lot less?

Mike Mayo: And one short follow-up on the token costs. Do you get a benefit from scale with the token costs, say versus a small bank? Are you also transitioning more toward kind of open model AI systems that can cost a lot less?

Speaker #4: It's a little bit of everything. I would say our strategy is quite focused on minimizing lock-in and maximizing optionality and the ability to manage costs.

Jeremy Barnum: It's a little bit of everything. I would say our strategy is quite focused on minimizing lock-in and maximizing optionality and the ability to manage costs. Part of the strategy is model agnosticism, harness agnosticism, and ability to run both proprietary models but also open weight and open source models, some of which would run on our data center. So it's very much an all-of-the-above strategy designed to get the best of what's available at the best price and control our own destiny.

Speaker #4: So part of the strategy is model agnosticism, harness agnosticism, and ability to run both proprietary models but also open weight and open source models, some of which would run on our data center.

Speaker #4: So it's very much in all of the above strategy designed to get the best of what's available at the best price and control our own destiny.

Jamie Dimon: Yeah, there are tools coming that call model routing, which send it to the best, quickest, cheapest. You don't need the most expensive thing for every query you have. Very often people just use the one they're comfortable with. So that's all coming to have that, of course, under control.

Speaker #2: There are tools coming that call model routing, which send it to the best, quickest, cheapest, where you don't need the most expensive thing for every query you have.

Speaker #2: And very often, people just use the one they're comfortable with. So and that's all coming to have those costs under control.

Speaker #7: Great. All right. Thank you.

Mike Mayo: Great. All right. Thank you.

Speaker #4: Thanks, Mike.

Jeremy Barnum: Thanks, Mike.

Speaker #1: Thank you. Our next question comes from Gerard Cassidy with RBC. Your line is open.

Operator 2: Thank you. Our next question comes from Gerard Cassidy with RBC. Your line is open.

Operator: Thank you. Our next question comes from Gerard Cassidy with RBC. Your line is open.

Speaker #5: I'm Jeremy. I'm Jamie.

Gerard Cassidy: Hi, Jeremy. Hi, Jamie. Can you guys share with us the deposit beta outlook? Obviously, interest rates are starting to go up. The Fed funds futures are suggesting more rate increases over the next 3 to 6 months. With your growth in your consumer deposit base since the last tightening cycle in 2022, 2023, how are you guys thinking about what you might see this time around? Also, obviously, we're starting from a much higher interest rate level than we did in 2022. Could that mean deposit betas may not be as high this time around for you folks?

Speaker #3: Can you guys share with us the deposit beta outlook? Obviously, interest rates are starting to go up. The Fed fund futures are suggesting more rate increases over the next three to six months.

Speaker #3: And with your growth and your consumer deposit base since the last tightening cycle in '22, '23, how are you guys thinking about what you might see this time around?

Speaker #3: And also, obviously, we're starting from a much higher interest rate level than we did in '22. So could that mean deposit beta may not be as high this time around for you folks?

Speaker #4: So it's a very good question, Gerard, actually. And I think it is an important thing for people to be thinking about because this particular rate cycle, this latest rate cycle is arguably even more unprecedented than the last one.

Jeremy Barnum: Well, it's a very good question, Gerard, actually, and I think it is an important thing for people to be thinking about because this particular rate cycle, this latest rate cycle, is arguably even more unprecedented than the last one. We just don't have a lot of historical data about how people behave when you see rate hikes from the launch point that we've seen this cycle. It's been an unusual 10-plus years, I would say, and I think it's quite important for people to realize, especially people who are doing this by training models on historical data, that the historical data set's just not that rich. It's very important to be thinking out of the box.

Speaker #4: We just don't have a lot of historical data about how people behave when you see rate hikes from the launch point that we've seen this cycle.

Speaker #4: So it's been an unusual 10-plus years, I would say, and I think it's quite important for people to realize, especially people who are doing this by training models on historical data, that the historical data set is just not that rich.

Speaker #4: So it's very important to be kind of thinking out of the box. In that context, though, I think locally, our beta story is pretty easy, actually, in the sense that you can almost think about the franchise as pretty barbelled between a bunch of very high beta deposits, like most of wholesale, as well as CDs and premium deposit and consumer.

Jeremy Barnum: In that context, though, I think locally, our beta story is pretty easy, actually, in the sense that you can almost think about the franchise as pretty barbelled between a bunch of very high beta deposits, like most of wholesale, as well as CDs and premium deposit in consumer, then a stack of very low beta deposits. The question is probably less the pricing of any given product, although that is always going to respond to competition and to market conditions, and more the sort of migration behaviors across products in this cycle. I do not think we have our local expectations are that it is going to behave roughly the way it has been behaving. I do think it is right to note that this is a different cycle and therefore we have to be thinking about all scenarios as we always do.

Speaker #4: And then a stack of very low beta deposits. And the question is probably less the pricing of any given product, although that's always going to respond to competition and to market conditions, and more the sort of migration behaviors across products in this cycle.

Speaker #4: And I don't think we have our local expectations are that it's going to behave roughly the way it has been behaving. But I do think it's right to note that this is different cycle and therefore we have to be thinking about all scenarios as we always do.

Speaker #3: Very good. And then pivoting over to a different question, the IMF came out very recently this month with the global stability report. And they've talked about how the hedge fund industry has grown dramatically and it's now, in their eyes, a systemic risk.

Gerard Cassidy: Very good. Then pivoting over to a different question. The IMF came out very recently this month with the Global Financial Stability Report, and they have talked about how the hedge fund industry has grown dramatically, and it is now, in their eyes, a systemic risk. Leveraged finance, in particular, was highlighted as another high risk. Obviously, that is your guys' wheelhouse, as with your peers and competitors. Can you share with us your insights on how you are managing these risks and what do you worry about since these businesses now are so much bigger today than they were 10 or 15 years ago?

Speaker #3: Leverage finance, in particular, was highlighted as another high risk. Obviously, that's your guys' wheelhouse, as with your peers and competitors. Can you share with us your insights on how you're managing these risks and what do you worry about since these businesses now are so much bigger today than they were 10 or 15 years ago?

Speaker #4: Interesting. We worry about a lot of stuff, not with the IMF thinks about it. But I mean, they aren't wrong because there's a lot of leverage in some of that stuff, so.

Jamie Dimon: We worry about a lot of stuff, not what the IMF thinks about it.

Gerard Cassidy: Got it.

Jamie Dimon: They are not wrong because there is a lot of leverage in some of that stuff.

Speaker #3: Yeah, yeah. I mean, it's not wrong, but it's also a little bit obvious. And I would also say it's not really new, right? I mean, the hedge fund industry has been relevant to our franchise for decades now.

Jeremy Barnum: Yeah. It is not wrong, but it is also a little bit obvious, and I would also say it is not really new. The hedge fund industry has been relevant to our franchise for decades now and a source of risk for the system for a long time now. Everyone knows that, including the hedge funds themselves, that are increasingly institutionalized with very professional risk management and control over their margin relationships and stuff like that. So there is risk. Obviously, that is the business, is knowing it and managing it and preparing for the unknown. But I would say that hedge fund leverage as a contributor of risk to the system is very much in the category of known unknowns. It does not mean it is riskless, but we kind of know what it is.

Speaker #3: And a source of risk for the system for a long time now, and everyone knows that, including the hedge funds themselves that are increasingly institutionalized with very professional risk management and control over their margin relationships and stuff like that.

Speaker #3: So there is risk, obviously. That's the business is knowing it and managing it and preparing for the unknown. But I would say that hedge fund leverage as a contributor of risk to the system is very much in the category of known unknowns.

Speaker #3: It doesn't mean it's riskless, but we kind of know what it is.

Jamie Dimon: There are a couple of unwinds that happened recently, not huge. Some of the equity side, some of the fixed income arbitrage type of side, and they were handled pretty easily by the Street.

Speaker #2: There are a couple of unwinds that happened recently, not huge. Some of the equity side, some of the fixed income arbitrage type of side.

Speaker #2: And they were handled pretty easily by the street.

Gerard Cassidy: Mm-hmm. Very good. Thank you.

Speaker #3: Very good. Thank you.

Speaker #1: Thank you. Our next question comes from Glen Shore with Evercore ISI. Your line is open.

Operator 2: Thank you. Our next question comes from Glenn Schorr with Evercore ISI. Your line is open.

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

Speaker #6: Hi. One quickie follow-up on the whole agentic and AI impact across the deposit portfolio. My question is, your comfort level and ability to protect from the standpoint of how you and the regulators thinking about liquidity stress testing and liquidity risk management and just by the nature of the technology existing, do things change?

Glenn Schorr: Hi. One quickie follow-up on the whole agentic and AI impact across the deposits portfolio. My question is, your comfort level and ability to protect from the standpoint of how you and the regulators thinking about liquidity stress testing and liquidity risk management, and just by the nature of the technology existing, do things change? I do not know if I am being too much into the future here, but

Speaker #6: I don't know if I'm being too much into the future here, but curious.

Jeremy Barnum: Yeah, no, I understand the question, Glenn. You can argue that it is sort of downstream of the narrative that the SVB run was a sort of social media phenomenon. We were never big buyers of that idea. I think the better way to understand that situation was as an extremely concentrated and undiversified deposit base that was wholesale non-op and kind of monoculture in terms of who was shaping the thinking around that. Arguably, in a world with TV and fax machines, I think you probably would have gotten essentially the same answer in terms of the speed of the run. It might have been the processing of the fax machines into wires might have taken an additional 8 hours, but the core ingredients there were the same. So I think everyone is pretty eager to tell a sort of fast deposit run story in this new technology-enabled world.

Speaker #3: Yeah, no, I understand the question, Glen. I mean, you can argue that it's sort of downstream of the narrative that the SVB run was a sort of social media phenomenon.

Speaker #3: And we were never big buyers of that idea. I think the better way to understand that situation was as an extremely concentrated and undiversified deposit base that was wholesale non-op.

Speaker #3: And kind of a monoculture in terms of who was shaping the thinking around that. And so, arguably, in a world with TV and fax machines, I think you probably would have gotten essentially the same answer in terms of the speed of the run.

Speaker #3: It might have been that the processing of the fax machines into wires took an additional eight hours. But the core ingredients were the same.

Speaker #3: So I think everyone's pretty eager to tell a sort of fast deposit run story in this new, technology-enabled world. I'm just a little bit less persuaded that you really have cliff effects there.

Jeremy Barnum: I am just a little bit less persuaded that you really have cliff effects there. Sure, therefore, in a world with agentic consumer cash movement, it is easy to create a story where it becomes even easier to move cash under certain types of crises. But I think the right way to ensure that your deposits are stable is to run the company with fortress principles so that people are confident in you. The ease, you are probably not supposed to be hoping that your deposits are stable because the money is difficult to move, I guess, is what I would say.

Speaker #3: And sure, therefore, in the in a world with agentic consumer cash movement, it's easy to create a story where it becomes even easier to move cash under certain types of crises.

Speaker #3: But I think the right way to ensure that your deposits are stable is to run the company with Fortress principles so that people are confident in you.

Speaker #3: And you’re probably not supposed to be hoping that your deposits are stable because the money is difficult to move, I guess, is what I would say.

Speaker #6: I think that's fair. I appreciate that. One.

Glenn Schorr: I think that is fair. I appreciate that.

Jamie Dimon: You take a big step back. First of all, we have $1.5 trillion of cash and marketable securities, so we are not worried about JPMorgan liquidity. You take a big step back. Banking services are necessary, credit cards and debit cards and movement of money and insured deposits, and you need the branches. One of the ways you earn that is NII from money that sits there idle. If you could not do it that way, over time, you would do something different. Subscription, of course, you are getting investment accounts combined with checking accounts. Over time, it will adjust. We want to do a great job for our clients. It costs a lot of money to run these banking systems. Most of it is a fixed cost.

Speaker #2: You take a big step back. First of all, we have 1.5 trillion of cash and marginal security. So we're not worried about JPMorgan liquidity.

Speaker #2: But you take a big step back. Banking services are necessary—credit cards and debit cards, moving money, insured deposits, and the need for branches.

Speaker #2: And one of the ways you earn that is NII from money to sister idle. But if you couldn't do it that way, you would, over time, you'd do something different.

Speaker #2: Subscription, of course, you're getting investment accounts combined with checking accounts. And so over time, the it will adjust. We want to do a great job for our clients.

Speaker #2: Of course, it takes a lot of money to run these banking systems. Most of it is a fixed cost, so I'm not worried about it over time. But in the short run, of course, you have to figure out how you want to handle that kind of stuff.

Jamie Dimon: I am not worried about over time, but in the short run, of course, you got to figure out how you want to handle that kind of stuff. I do think you raise an issue which is different, which is should regulators be thinking about what they are going to do with some of these things? Yeah, of course, they should. It is a new world and with all these bots and agents and stuff like that, could someone get hurt and cause a problem? Maybe. If I was a regulator, I would try to be prepared for that.

Speaker #2: And I do think you raise an issue, which is different, which is, should regulators be thinking about what they're going to do with some of these things?

Speaker #2: Yeah, of course they should. It's a new world. And with all these bots and agents and stuff like that, could someone get hurt and cause a problem?

Speaker #2: Maybe. But if I were a regulator, I'd try to be prepared for that.

Speaker #6: Gotcha. I have one question on concentration risk. The public equity markets don't know anything about that and don't care, but bank loan books and bond books and insurance portfolios do.

Glenn Schorr: Got you. I have one question on concentration risk. The public equity markets do not know anything about that and do not care, but bank loan books and bond books and insurance portfolios do. I guess my question is this amazing hyperscaler race to expand compute power, and everybody wants to finance it. The money and capital is there, but from your vantage point, can we finance it without breaking some concentration limit issues? Can the market digest what the compute pattern suggests for the spend?

Speaker #6: So I guess my question is, this amazing hyperscaler race to expand compute power and everybody wants to finance it, the money and capitals there, but from your vantage point, can we finance it without breaking some concentration limit issues?

Speaker #6: Can the market digest what the compute power suggests for the spend?

Speaker #3: Yeah, it's a really good question, right? Because, I mean, we think a lot about our current exposure to that. But arguably, the more important question is our appetite for future exposure, in light of the kind of announced amount of CapEx that needs to happen in this ecosystem and the associated demands or requirements for capital.

Jeremy Barnum: Yeah, it's a really good question, right? Because we think a lot about our current exposure to that, but arguably the more important question is our appetite for future exposure, in light of the kind of announced amount of CapEx that needs to happen in this ecosystem and the associated demands or requirements for capital from the financial system. I guess a couple things. One, clearly single issuer concentration is a thing that's going to get managed. Clearly, given the nature of these structures, you have to be sophisticated about assessing both your indirect exposure, your direct exposure, where you sit in a capital structure, the value of the collateral. There's a lot of nuanced credit analysis that needs to be done correctly to assess your individual issuer exposure across the ecosystem. You can assume that institutions are going to contain that.

Speaker #3: From the financial system. So I guess a couple of things. One, clearly, single issuer concentration is a thing that's going to get managed. And clearly, given the nature of these structures, you have to be sophisticated about assessing both your indirect exposure, your direct exposure, where you sit in the capital structure, and the value of the collateral.

Speaker #3: There's a lot of nuanced credit analysis that needs to be done correctly to assess your individual issuer exposure across the ecosystem. And you can assume that institutions are going to contain that.

Speaker #3: And I guess one thing that we've seen over the last year is just increasing usage of different parts of the capital markets ecosystem to get as much diversified financing of this build-out as possible.

Jeremy Barnum: I guess one thing that we've seen over the last year is just increasing usage of different parts of the capital markets ecosystem to get as much diversified financing of this build-out as possible. There is a lot of capital out there waiting to be deployed. Some of it'll be from the banking system, some of it'll be from elsewhere. I think at the system level, I don't know. Some people are talking about crowding out effects, so that'll be interesting to see. Anyway, I think for us, we need to focus on our institutional risk appetite and institutional exposure. I think there, in addition to the obvious single name focus, the other thing to be very careful about is just the AI theme. Because the AI theme is so broadly diffused into the marketplace. It's not just traditional construction lending.

Speaker #3: And there is a lot of capital out there waiting to be deployed. Some of it will be from the banking system; some of it will be from elsewhere.

Speaker #3: But I think at the system level, I don't know. Some people are talking about crowding-out effects, so that'll be interesting to see. But anyway, I think for us, we need to focus on our institutional risk appetite and institutional exposure.

Speaker #3: And I think there, in addition to the obvious single-name focus, the other thing to be very careful about is just the AI theme. Because the AI theme is so broadly diffused into the marketplace, it's not just traditional construction lending; now, increasingly, it's working capital revolvers.

Jeremy Barnum: Now, increasingly it's working capital revolvers. You also see it in the equity markets. It's kind of everywhere. You really need to be running stresses that test your resilience to a meaningful change in the overall theme across the entire enterprise. That's something that we spend a lot of time thinking about. Currently, our exposures are still quite modest in the context of our overall wholesale exposure, but that's not the same as saying that we would be immune to a major change in sentiment in the AI space. I think I would be surprised if anyone, frankly, was immune to that at this point.

Speaker #3: You also see it in the equity markets; it's kind of everywhere. And so you really need to be running stresses that test your resilience to a meaningful change in the overall theme across the entire enterprise.

Speaker #3: And that's something that we spend a lot of time thinking about. Currently, our exposures are still quite modest in the context of our overall wholesale exposure.

Speaker #3: But that's not the same as saying that we would be immune to a major change in sentiment in the AI space. I think I would be surprised if anyone frankly was immune to that at this point.

Speaker #6: That's great. Thanks so much, Jeremy.

Glenn Schorr: That's great. Thanks so much, Jeremy.

Speaker #3: Thanks, Glenn.

Jeremy Barnum: Thanks, Glenn.

Speaker #1: Thank you. Next, we will go to the line of Manan Ghazaliya from Morgan Stanley. Your line is open.

Operator 2: Thank you. Next, we will go to the line of Manan Gosalia from Morgan Stanley. Your line is open.

Operator: Thank you. Next, we will go to the line of Manan Gosalia from Morgan Stanley. Your line is open.

Speaker #7: Hi, good morning. I wanted to check in on the commercial banking side. What are you seeing with your core middle market client? Is there an insatiable demand for capital there too, or as short end rates move higher, the belly of the curve moves higher?

Manan Gosalia: Hi, good morning. I wanted to check in on the commercial banking side. What are you seeing with your core middle-market client? Is there an insatiable demand for capital there too, or as short-end rates move higher, the belly of the curve moves higher, are you seeing any pullback in demand there?

Speaker #7: Are you seeing any pullback in demand there?

Speaker #3: Yeah, I don't think that when we talk about the insatiable demand for capital, we're talking about our core middle markets clients. I think the theme for some time now has been people worried about other people while doing fine themselves.

Jeremy Barnum: Well, I don't think that when we talk about the insatiable demand for capital, we're talking about our core middle-market clients. I think there the theme for some time now has been people worried about other people while doing fine themselves. The theme is always like, oh, we run these surveys and they're always like, "Oh, I'm worried about this, I'm worried about that." And it's like, "How are you doing?" "Oh, I'm doing great." So it's kind of an interesting dynamic there. No question that higher rates, I think input costs, inflation, the diesel narrative, these things are tough for middle-market clients. So we see them trying to manage that to the best of their ability. And I think it does create a little bit of caution in that space. But I think balance sheets are strong.

Speaker #7: The theme is always like, "Oh, we run these surveys, and they're always like, 'Oh, I'm worried about this. I'm worried about that.'" And it's like, "How are you doing?" "Oh, I'm doing great."

Speaker #3: So it's kind of an interesting dynamic there. No question that higher rates, input costs, inflation, the diesel narrative—these things are tough for middle-market clients.

Speaker #3: And so we see them trying to manage that to the best of their ability. And I think it does create a little bit of caution in that space.

Speaker #3: But I think balance sheets are strong. People have been through a lot over the last few years, and so they're well prepared. But, yeah, I don't think insatiable demand for capital applies to that subset of the client base.

Jeremy Barnum: People have been through a lot over the last few years, so they are well prepared. But, I don't think insatiable demand for capital applies to that subset of the client base.

Speaker #7: Got it. And then separately, Jeremy, on the liquidity side and the past, you've noted that you need to see changes in the liquidity rules to fully realize the impact of freeing up excess capital.

Manan Gosalia: Got it. Separately, Jeremy, on the liquidity side, in the past you have noted that you need to see changes in the liquidity rules to fully realize the impact of freeing up excess capital. As we get closer to the regulators coming out with new liquidity proposals, if you do get more credit for discount window readiness, how would that change how you manage the balance sheet, and over what timeframe?

Speaker #7: As we get closer to regulators coming out with new liquidity proposals, and if you do get more credit for discount window readiness, how would that change how you manage the balance sheet, and over what time frame?

Jamie Dimon: I think it is right for the regulators to look at all these things again. It is not just the discount window, it is FHLB, the inconsistencies between resolution and recovery. It is what counts as HQLA to start with, how you do LCR. I think they should look at all of that because the view that I think you can create safer banks with more deployed capital and more liquidity you can use intermediate markets. That should be the goal. But it is hard to answer the question because this is going to be up to them. Either way, JPMorgan will serve our clients and do a good job and take care of, do what we are supposed to do, but I think they should be doing that. So we will see. We don't have to speculate what they are going to do.

Speaker #2: Can I just first of all, I think it's right for the regulators to look at all these things again. And it's not just the discount window.

Speaker #2: It's FHLB, the inconsistencies between resolution and recovery, it's what counts as HQLA to start with, how you do LCR. I think they should look at all that, because with the view that I think you can create safer banks with more deployed capital and more liquidity you can use to intermediate markets.

Speaker #2: And that should be the goal. But really, it's hard to answer the question, because this is going to be up to them. Either way, JPMorgan will serve our clients, do a good job, and take care of—do what we're supposed to do.

Speaker #2: But I think they should be doing that, so we'll see. We don't have to speculate what they're going to do, with a lot of proposals out there.

Jamie Dimon: There is a lot of proposals out there, part of it is international rules. But I applaud them for looking at it.

Speaker #2: Part of it is international rules, but I applaud them for looking at it.

Speaker #3: Yeah, no, I think that I agree with everything Jeremy said. And it's really particularly complicated across a range of dimensions. I will note that at the company update, we actually talked about this.

Jeremy Barnum: Yeah. No, I agree with everything Jamie said, and it's really particularly complicated across a range of dimensions. I will note that at Company Update, we actually talked about this, and in some sense kind of gave you the answer. Because what we said at the time was that the problem with the situation where the system has a healthy amount of capital but is relatively liquidity constrained, is that just at the margin, it leads you to have your asset deployment be in much higher risk density instruments, essentially. And so a place where you're a little bit more balanced would tend to move you towards lower risk density, and it just enables you to serve a broader part of the economy including mortgages, consumer lending, but also some of the more secured C&I type structures.

Speaker #3: And, in some sense, that kind of gave you the answer. Because what we said at the time was that the problem with a situation where the system has a healthy amount of capital but is relatively liquidity constrained is that, just at the margin, it leads you to deploy assets in much higher risk-density instruments, essentially.

Speaker #3: And so, a place where you're a little bit more balanced would tend to move you towards lower risk density. It just enables you to serve a broader part of the economy.

Speaker #3: Including mortgages, consumer lending, but also some of the more secured C&I-type structures.

Speaker #2: Yeah, if they want to reduce the size of the Fed balance sheet, they're going to have to make some changes.

Jamie Dimon: If they want to reduce the size of the Fed balance sheet, they're going to have to make some changes.

Speaker #3: Yeah.

Jeremy Barnum: Yeah.

Speaker #7: Got it. Thank you.

Manan Gosalia: Got it. Thank you.

Speaker #1: Thank you. Our next question comes from Matt O'Connor with Deutsche Bank. Your line is open.

Operator 2: Thank you. Our next question comes from Matt O'Connor with Deutsche Bank. Your line is open.

Operator: Thank you. Our next question comes from Matt O'Connor with Deutsche Bank. Your line is open.

Speaker #5: Good morning. I was hoping you could talk more about how you're growing non-interest-bearing deposits, when a number of peers aren't, and then just how you're thinking about that specific bucket of deposits.

Matt O'Connor: Good morning. I was hoping you could talk more about how you are growing non-interest bearing deposits when a number of peers are not, and then just how you are thinking about that specific bucket of deposits in a higher rate environment if you can continue to grow them.

Speaker #5: And in a higher rate environment, if you can continue to grow them.

Speaker #3: Yeah, I mean, I think I've sort of addressed that point to some degree in connection with I think my answer to John's question on the 2027 NII outlook and how we're feeling about consumer deposit growth.

Jeremy Barnum: Yeah, I think I have sort of addressed that point to some degree in connection with, I think my answer to John McDonald's question on the 2027 NII outlook and how we are feeling about consumer deposit growth. But I guess just to reiterate a couple of points, like number one, our net new checking account growth has been exceptionally strong, 650,000 this quarter. So people are reacting. They are responding well to the marketing. They are responding well to the brand, to the value proposition, to the sort of multi-decade investment in the product bundle that we offer our consumers. So I think that is really good news and has been a contributor to the kind of reassertion of consumer deposit growth.

Speaker #3: But I guess just to reiterate a couple of the points: number one, our net new checking account growth has been exceptionally strong—650,000 accounts opened.

Speaker #3: So people are reacting. They're responding well to the marketing. They're responding well to the brand, to the value proposition, to the sort of multi-decade investment in the product bundle that we offer our consumers.

Speaker #3: So I think that's really good news and has been a contributor to the kind of reassertion of consumer deposit growth. As I noted, the question a little bit in this rate hiking cycle is going to be how those balances behave, and how pricing pressure behaves, and how much migration we see to higher beta products, and so on.

Jeremy Barnum: As I noted, the question a little bit in this rate hiking cycle is going to be how those balances behave and how pricing pressure behaves, and how much migration we see to higher beta products and so on. We will see. I think we are relatively optimistic right now. We would not expect radical changes for small local moves. But we do think a lot about the different rate regimes and how that can affect deposit beta. I think that is part of just being prepared for everything.

Speaker #3: And we'll see. But I think we're relatively optimistic right now, and we wouldn't expect radical changes for small, local moves. But we do think a lot about the different rate regimes and how that can affect deposit beta.

Speaker #3: I think that's part of just being prepared for everything.

Speaker #5: Okay. And I guess I was thinking more specifically the non-interest-bearing deposits, which I think are more kind of in the commercial corporate side of things.

Matt O'Connor: Okay. I guess I was thinking more specifically the non-interest bearing deposits, which I think are more kind of in the commercial corporate side of things. So I was just trying to see if there is any color there in terms of cash management products, things that have been a key driver.

Speaker #5: So I was just trying to see if there's any color there in terms of cash management products—things that have been a key driver.

Speaker #2: Most of the non-interest-bearing is consumer, and that's just because we're growing the business. You have different products for different types of consumers.

Jamie Dimon: The cash, most of the non-interest bearing is consumer, and that's just because we're growing the business, and you have different products for different types of consumers, and I think the wholesale side, commercial side is much more competitive than that.

Speaker #2: And I think the post-sale side—the commercial side—is much more competitive in that.

Speaker #3: Yeah, no, I think, to be honest, the reporting is a little confusing in part because of the famous ECR product that sometimes makes it look like, on the wholesale side, there are more non-interest-bearing deposits than there actually are.

Jeremy Barnum: Yeah. No, I think to be honest, the reporting is a little confusing in part because of the famous ECR product that sometimes makes it look like on the wholesale side, there are more non-interest bearing deposits than there actually are. That's just an artifact of the rules for how we have to report. So if you want a bit more color on that, Matt, you can follow up with IR. But at a high level, I would say that wholesale deposits have been, continue to be, and in fact, at the margin are a little bit more competitive. But the way to think about that is not that the product offering allows us to grow non-interest bearing deposits.

Speaker #3: That's just an artifact of the rules for how we have to report. So if you want a bit more color on that, Matt, you can follow up with IR.

Speaker #3: But at a high level, I would say that wholesale deposits have continued to be, and in fact, at the margin, are a little bit more competitive.

Speaker #3: But the way to think about that is not that the product offering allows us to grow non-interest-bearing deposits. There's an overall margin that you earn on your deposits as part of the bundle of products.

Jeremy Barnum: It's there's an overall margin that you earn on your deposits as part of the bundle of products, and that's a function of how good your service offering is, and we have quite a good track record there of winning share and winning mandates as a function of the quality of our products.

Speaker #3: And that's a function of how good your service offering is. We have quite a good track record there of winning share and winning mandates as a function of the quality of our products.

Speaker #5: Okay. Understood. Thank you.

Matt O'Connor: Okay, understood. Thank you.

Speaker #3: Thanks, Matt.

Jeremy Barnum: Thanks, Matt.

Speaker #1: Thank you. Our next question comes from David Chavarini with Jefferies. Your line is open.

Operator 2: Thank you. Our next question comes from David Chiaverini with Jefferies. Your line is open.

Operator: Thank you. Our next question comes from David Chiaverini with Jefferies. Your line is open.

Speaker #6: Hi, thanks for taking the question. So, JPMorgan's ROTC target through the cycle is 17%, versus the 21% today. Is there anything you're seeing, either in the macro environment or the competitive environment, that could accelerate the path to 17%?

David Chiaverini: Hi. Thanks for taking the question. JPMorgan's ROTCE target through the cycle is 17% versus the 21% today. Is there anything you are seeing either in the macro environment or competitive environment that could accelerate a path to 17%, or is that not anywhere on the horizon?

Speaker #6: Or is that not anywhere on the horizon?

Jamie Dimon: We have always targeted the 17% being through the cycle. Times are pretty good now with high volumes and high asset prices and fairly low credit losses and all that. So if you could earn 17% consistently for a long period of time, that is a really good return for shareholders, and that is our goal. I do not want to change every time something happens in the marketplace and so on.

Speaker #2: We've always talked about the 17% being through the cycle. Times are pretty good now, with high volumes and high asset prices, and fairly low credit losses and all that.

Speaker #2: So, if you could earn 17% consistently for a long period of time, that's a really good return for shareholders. And that's our goal. I don't want to change it every time something happens in the marketplace.

Speaker #2: And so far, so good. And hopefully, we'll enjoy this good environment for a while. We just don't know when it's going to stop.

Jamie Dimon: Yeah.

Jeremy Barnum: Yeah.

Jamie Dimon: But so far so good, and hopefully we will enjoy this good environment for a while. We just do not know when it is going to stop.

Speaker #3: And we don't want to be pointlessly negative. And I won't sort of bore you with the speech, but if you just look across the entire franchise, every single business is performing exceptionally well.

Jeremy Barnum: We do not want to be pointlessly negative, and I will not sort of bore you with the speech, but if you just look across the entire franchise, every single business is performing exceptionally well. The conditions have just been exceptionally favorable.

Speaker #3: The conditions have just been exceptionally favorable.

Jamie Dimon: So has every company.

Speaker #2: So it's every company.

Speaker #3: Yeah. It's not just us. And that hasn't historically been true. Historically, you've tended to see a bit more internal diversification in high-rate environments.

Jeremy Barnum: Yeah. It is not just us. So, that has not historically been true. Historically, you have tended to see a bit more internal diversification. In high rate environments, some businesses do better than others and vice versa. So the conditions that we have had recently where essentially every part of the franchise is beating records are not typical by historical standards.

Speaker #3: Some businesses do better than others, and vice versa. So, the conditions that we've had recently were essentially that every part of the franchise is beating records or performing in ways not typical by historical standards.

Speaker #6: Makes sense. Thanks for that. And then, shifting to credit quality, you addressed the consumer side. Could you talk about the corporate credit health? It looks like you built some reserves on the wholesale side.

David Chiaverini: Makes sense. Thanks for that. Then, shifting to credit quality, you addressed the consumer side. Could you talk about the corporate credit health? It looks like you built some reserves on the wholesale side. Curious on your comments there.

Speaker #6: Curious on your comments there.

Speaker #3: Sure. Yeah, the wholesale build is actually just from new activity. So it's not downgrades or change in the outlook or anything like that. So I would say that the corporate credit outlook is currently pretty stable.

Jeremy Barnum: Sure. The wholesale build is actually just from new activity, so it is not downgrades or change in the outlook or anything like that. So I would say that the corporate credit outlook is currently pretty stable. But obviously there are issues out there, and we will have to see how those flow through the performance of our borrowers. Energy prices, fuel inputs, higher rates, these are all things that will create challenges in different pockets of the economy in the C&I space as well as the CRE space for that matter. So we will see. But so far, it is very early obviously, but in general, we think corporate balance sheets are in quite good shape, and so there has been resilience, but there are a lot of pressures building up, so we will have to see what happens.

Speaker #3: But obviously, there are issues out there, and we'll have to see how those flow through the performance of our borrowers. Energy prices, fuel inputs, higher rates—these are all things that will create challenges in different pockets of the economy and the C&I space, as well as the CRE space, for that matter.

Speaker #3: So we'll see. But so far, I mean, it's very early, obviously. But in general, we think corporate balance sheets are in quite good shape.

Speaker #3: And so there's been resilience. But there are a lot of pressures. Building up. So we'll have to see what happens.

Speaker #6: Great. Thank you.

David Chiaverini: Great. Thank you.

Speaker #1: Thank you. Our final question comes from Kunpeng Ma from China Securities. Your line is open.

Operator 2: Thank you. Our final question comes from Kunpeng Ma from China Securities. Your line is open.

Operator: Thank you. Our final question comes from Kunpeng Ma from China Securities. Your line is open.

Speaker #7: Hi. Good morning. Good morning, Jeremy and Jeremy. This is Kunpeng, China Securities. I have a question on the revenue of the market business because we've seen some volatilities in the market revenue across quarters.

Kunpeng Ma: Hi, good morning. Morning, Jamie and Jeremy. This is Kunpeng with China Securities. I have a question on the revenue of the market business because we have seen some volatilities in the market revenue across quarters.

Speaker #7: So I don't know whether we have a meaningful estimate of the through the quarter. Market business revenue. And also, if we can if you can provide us with some of your thoughts on the key business momentum supporting such kind of estimates, that will be very helpful.

Kunpeng Ma: I do not know whether we have a meaningful estimate of the through the quarter markets business revenue. Also, if you can provide us with some of your thoughts on the key business momentum supporting such kind of estimates, that will be very helpful. Thank you.

Speaker #7: Thank you.

Speaker #2: Yeah. So I had trouble exactly applying your question. But I think you're asking me for a fourth quarter outlook for the market's revenue. And so as you know, we don't actually guide to that.

Jeremy Barnum: Yeah. I had trouble exactly applying your question, but I think you are asking me for a Q4 outlook for the markets revenue. As you know, we do not actually guide to that. It is obviously very hard to predict and essentially a function of outside forces. Just a reminder that you do tend to see significant seasonal decline between Q3 and Q4. Also, a reminder that in recent years, we have had some slightly unusual seasonal patterns between Q3 and Q4. Our base case assumptions right now, all else being equal, are normal seasonal declines between Q3 and Q4. Make sure that you interpret normal with the right amount of historical context, and all the usual caveats apply. We have seen a lot of volatility, there is a lot going on, and anything can happen.

Speaker #2: It's obviously very, very hard to predict, and essentially a function of outside-in forces. But just a reminder that you do tend to see significant seasonal decline between the third and fourth quarter.

Speaker #2: And also, a reminder that in recent years we've had some slightly unusual seasonal patterns between the third and fourth quarters. So our base case assumptions right now, all else being equal, are normal seasonal declines between the third and fourth quarter.

Speaker #2: And make sure that you interpret "normal" with the right amount of historical context. All the usual caveats apply. We've seen a lot of volatility.

Speaker #2: There's a lot going on, and anything can happen. I think the fourth quarter will not have the same seasonal decline, personally.

Jamie Dimon: I think Q4 will have not the same seasonal decline, personally.

Speaker #7: Interesting.

Jeremy Barnum: Interesting.

Speaker #2: There's too much going on in the world.

Jamie Dimon: There is too much going on in the world.

Speaker #7: Thank you. Thank you so much.

Kunpeng Ma: Thank you. Thank you so much.

Speaker #2: Thanks very much.

Jeremy Barnum: Thanks very much.

Speaker #1: Thank you. That's all the time we have for questions today.

Operator 2: Thank you. That is all the time we have for questions today.

Operator: Thank you. That is all the time we have for questions today.

Speaker #2: Great. Thank you very much, everybody.

Jamie Dimon: Thank you very much, everybody.

Speaker #3: Thank you very much. See you all next quarter.

Jeremy Barnum: Thanks so much. See you all next quarter.

Operator 2: Thank you all for participating in today's conference. You may disconnect at this time, and have a great rest of your day.

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

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