JPMorgan Chase & Co. Q4 2024 Earnings Report

JPMorgan Chase & Co. EPS Results

• Actual EPS: $4.81
• Consensus EPS: $4.03
• Beat/Miss: Beat by +$0.78
• One Year Ago EPS: $3.04

JPMorgan Chase & Co. Revenue Results

• Actual Revenue: $42.77 billion
• Expected Revenue: $41.90 billion
• Beat/Miss: Beat by +$863.72 million
• YoY Revenue Growth: +10.90%

JPMorgan Chase & Co. Announcement Details

• Quarter: Q4 2024
• Date: 1/15/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, January 15, 2025
• Conference Call Time: 8:30AM ET

JPMorgan Chase & Co. (NYSE:JPM) is the 5th largest bank in the world and the largest in the U.S. The current company is the result of a series of mergers that began in the earliest days of American banking history and include more than 1,200 original banks. The oldest predecessor is The Bank Of The Manhattan Company which was founded in 1799 by Aaron Burr. At the time, The Bank Of The Manhattan Company was the 3rd oldest bank in the U.S. and the 31st oldest in the world. The Chase Manhattan Bank, a precursor to JPMorgan Chase, was later formed when The Bank Of Manhattan Company purchased Chase Bank which was established in 1877.

JPMorgan & Co came to life in 1895 in order to finance the United States Steel Corporation. Itself a result of merger, the company also financed other early American businesses as well as aided the federal government by backing a bond offering. It wasn’t until the year 2000 and after several more mergers that JPMorgan Chase & Co was born. It will be four more years before the merger with Bank One which is notable because it brings CEO Jamie Dimon into the picture.

JPMorgan Chase & Co was instrumental in aiding the US government during the 2008 financial crisis. It backed the accounts of several major banks including Bear Stearns and eventually took over their operations. Today, JPMorgan Chase & Co operates as a financial services company worldwide with operations on every continent and in more than 60 countries.

JPMorgan Chase & Co operates through four segments that are Consumer & Community Banking (CCB), Corporate & Investment Bank (CIB), Commercial Banking (CB), and Asset & Wealth Management (AWM). Services are available in branches in 48 of the 50 US states and around the world. Services are available via ATM, online, mobile, and telephone.

The CCB segment offers traditional banking services to consumers that include but are not limited to deposits, loans, mortgages, and lines of credit. The CIB segment provides investment banking products and services to businesses, institutions, and governments that range from prime brokerage, insurance, corporate strategy, and access to capital markets, to lending, cross-border financing, and derivative instruments. The CB segment provides financial services for small, medium, and large businesses including commercial real estate banking of all types.

The AWM segment provides investment management solutions to institutional and retail investors. This segment also provides retirement products, brokerage, trusts and estates, and investment management products.

JPMorgan Chase & Co. Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Good morning, ladies and gentlemen. Welcome to JPMorgan Chase's 4th Quarter 2024 Earnings Call. This call is being recorded. Your line will be muted for the duration of the call. We will now go live to the presentation.

[Operator]

The presentation is available on JPMorgan Chase's website. Please refer to the disclaimer in the back concerning forward looking statements. 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.

[Operator]

Barnum, please go ahead.

[Jeremy Barnum, CFO at JPMorgan Chase]

Thank you and good morning everyone. Starting on page 1, the firm reported net income of $14,000,000,000 EPS of $4.81 on revenue of $43,700,000,000 with an ROGCE of 21%. On page 2, we have more on our 4th quarter results. The firm reported revenue of $43,700,000,000 up $3,800,000,000 or 10% year on year. NII ex Markets was down $548,000,000 or 2% driven by the impact of lower rates and the associated deposit margin compression as well as lower deposit balances in CCB largely offset by the impact of securities reinvestment, higher revolving balances in card and higher wholesale deposit balances.

[Jeremy Barnum, CFO at JPMorgan Chase]

NIRxMarkets was up $3,100,000,000 or 30%. Excluding the prior year's net investment securities losses, it was up 21% largely on higher asset management fees and investment banking fees. And markets revenue was up $1,200,000,000 or 21%. Expenses of $22,800,000,000 were down $1,700,000,000 or 7% year on year. Excluding the prior year's FDIC special assessment, expenses were up $1,200,000,000 or 5 percent predominantly driven by compensation as well as higher brokerage and distribution fees.

[Jeremy Barnum, CFO at JPMorgan Chase]

And credit costs were $2,600,000,000 reflecting net charge offs of $2,400,000,000 and a net reserve of $267,000,000 On page 3, you can see the reported results for the full year. I'll remind you that there were a number of significant items in 2024. Excluding those items, the firm reported net income of $54,000,000,000 EPS of $18.22 revenue of $173,000,000,000 and we delivered an RoTCE of 20%. Touching on a couple of highlights for the year. In CCB, we had record number of first time investors and acquired nearly 10,000,000 new card accounts.

[Jeremy Barnum, CFO at JPMorgan Chase]

In CIB, we had record revenue in Markets, Payments and Security Services. And in AWM, we had record long term net inflows of $234,000,000,000 positive across all channels, regions and asset classes. Onto balance sheet and capital on page 4. We ended the quarter with a CET1 ratio of 15.7 percent, up 40 basis points versus the prior quarter as net income and lower RWA were largely offset by both OCI losses and capital distributions, which included $4,000,000,000 of net common share repurchases this quarter. The $24,000,000,000 decrease in RWA reflects a seasonal decline in markets activity and lower wholesale lending, which was predominantly offset by a seasonal increase in card.

[Jeremy Barnum, CFO at JPMorgan Chase]

Now let's go to our businesses starting with CCB on page 5. CCB reported net income of $4,500,000,000 on revenue of $18,400,000,000 which was up 1% year on year. In Banking and Wealth Management, revenue was down 7% year on year on deposit margin compression and lower deposits, partially offset by growth in Wealth Management revenue. Average deposits were down 4% year on year and flat sequentially as consumer balances have stabilized. Client investment assets were up 14% year on year predominantly driven by market performance and we continue to see healthy flows across branch and digital channels.

[Jeremy Barnum, CFO at JPMorgan Chase]

In home lending, revenue was up 12% year on year, predominantly driven by higher production revenue. Turning to card services and auto. Revenue was up 14% year on year, largely driven by card NII on higher withholding balances. Card outstandings were up 11% due to strong account acquisition and revolver growth. And in auto, originations were $10,600,000,000 up 7%, reflecting higher lease volume on robust new vehicle inventory.

[Jeremy Barnum, CFO at JPMorgan Chase]

Expenses of $9,700,000,000 were up 4% year on year, predominantly driven by field compensation and growth in technology. In terms of credit performance this quarter, credit costs were $2,600,000,000 reflecting net charge offs of $2,100,000,000 up $428,000,000 year on year driven by card. The net reserve build was $557,000,000 predominantly driven by higher card revolving balances. Next, the Commercial and Investment Bank on page 6. CIB reported net income of $6,600,000,000 on revenue of $17,600,000,000 9% year on year and we ranked number 1 with wallet share of 9.3 percent for 2024.

[Jeremy Barnum, CFO at JPMorgan Chase]

Advisory fees were up 41% benefiting from large deals and share growth in a number of key sectors. Underwriting fees were up meaningfully with debt up 56% and equity up 54%, primarily driven by favorable market conditions. In terms of the outlook for the overall investment banking wallet, in light of the positive momentum, we remain optimistic about our pipeline. Payments revenue was $4,700,000,000 up 3% year on year excluding equity investments driven by higher deposit balances and fee growth largely offset by deposit margin compression. Lending revenue was $1,900,000,000 up 9% year on year, predominantly driven by lower losses on hedges.

[Jeremy Barnum, CFO at JPMorgan Chase]

Moving to markets, total revenue was $7,000,000,000 up 21% year on year. Fixed income was up 20% with better performance in credit as well as continued outperformance in currencies and emerging markets. Equities was up 22% on elevated client activity and derivatives amid increased volatility and higher trading volumes and cash. Security Services revenue was $1,300,000,000 up 10% year on year driven by fee growth on higher client activity and market levels as well as higher deposit balances. Expenses of $8,700,000,000 were up 7% year on year predominantly driven by higher brokerage, technology and legal expense.

[Jeremy Barnum, CFO at JPMorgan Chase]

Average banking and payments loans were down 2% year on year and down 1% sequentially. Global Corporate and Investment Banking loans were down 2% quarter on quarter, driven by paydowns and lower short term financing, primarily offset by new originations. In Commercial Banking, middle market loans were also down 2%, driven by paydowns predominantly offset by new originations. And commercial real estate loans were flat as new originations were offset by paydowns. Average client deposits were up 9% year on year and 5% sequentially driven by underlying client growth.

[Jeremy Barnum, CFO at JPMorgan Chase]

Finally, credit costs were $61,000,000 driven by net downgrade activity and the net impact of charge offs offset largely offset by a reserve release due to an update to certain loss assumptions. Then to complete our lines of business, Asset and Wealth Management on page 7. AWM reported net income of $1,500,000,000 with pre tax margin of 35%. Revenue of $5,800,000,000 was up 13% year on year, predominantly driven by growth in management fees on higher average market levels and strong net inflows as well as higher performance fees. Expenses of $3,800,000,000 were up 11% year on year, predominantly driven by higher compensation, including revenue related compensation and continued growth in our private banking advisor teams as well as higher distribution fees.

[Jeremy Barnum, CFO at JPMorgan Chase]

Long term net inflows were $76,000,000,000 for the quarter, positive across all asset classes. In liquidity, we saw net inflows of $94,000,000,000 for the quarter $104,000,000,000 for the full year $140,000,000,000 for the full year, sorry. And we had client asset net inflows of $468,000,000,000 for the year. AUM of $4,000,000,000,000 and client assets of $5,900,000,000,000 were both up 18% year on year driven by continued net inflows and higher market levels. And finally, loans were up 2% quarter on quarter and deposits were up 5% quarter on quarter.

[Jeremy Barnum, CFO at JPMorgan Chase]

Turning to corporate on page 8. Corporate reported net income of $1,300,000,000 dollars Revenue of $2,000,000,000 was up $223,000,000 year on year. NII of $2,000,000,000 was down $415,000,000 year on year, driven by the impact of lower rates, largely offset by balance sheet actions, primarily securities reinvestment activity. NIR was a net loss of $30,000,000 compared to the net loss of $668,000,000 in the prior year driven by lower net investment securities losses this quarter. And expenses of $550,000,000 were down $3,000,000,000 year on year predominantly driven by the absence of the FDIC special assessment of $2,900,000,000 in the prior year.

[Jeremy Barnum, CFO at JPMorgan Chase]

With that, let's pivot to the outlook starting with NII on Page 9. We expect 2025 NII ex markets to be approximately $90,000,000,000 Going through the drivers, as usual, the outlook assumes that rates follow the forward curve. It's worth noting that the NII decrease is driven by both the cut expected in 2025 and the impact of the 100 basis points of cuts in the back half of twenty twenty four. You can see on the page that we've illustrated the historical trajectory of card loan growth. We expect healthy card loan growth again this year, but below the 12% pace we saw in 2024 as tailwinds from revolve normalization are largely behind us.

[Jeremy Barnum, CFO at JPMorgan Chase]

Turning to deposits. Firm wide deposits have stabilized and we expect to see a more visible growth trend assert itself in the second half of twenty twenty five. It's notable that we can already see that trend in consumer checking deposits. On deposit margin, we expect modest compression due to lower rates. When you put all that together, we expect the NII trough could be sometime in the middle of the year followed by growth as we illustrated at the bottom of the bar.

[Jeremy Barnum, CFO at JPMorgan Chase]

For completeness, we expect firm wide NII to be approximately $94,000,000,000 as a function of markets NII increasing to about $4,000,000,000 which you should think of as being primarily offset in NIR. Finally, I want to point out that starting this quarter, we are including an estimate of earnings at risk in the earnings supplement, so you no longer have to wait for the K or the Q to get that number. Now let's turn to expenses on Page 10. We expect 2025 expense to be about $95,000,000,000 Looking at the chart in the middle of the page, I'll touch on the drivers of the year on year change, which you'll note are very consistent with what you've been hearing from us recently. The largest increase is volume and revenue related expense, which is primarily driven by expected growth in auto leasing as well as capital markets.

[Jeremy Barnum, CFO at JPMorgan Chase]

As a reminder, this comes with higher revenues. We continue to hire bankers and advisors to support business growth as well as expand our branch network. The increase in tech spend is primarily business driven as we continue to invest in new products, features and customer platforms as well as modernization. Marketing remains a driver of spend as we continue to see attractive opportunities resulting in strong demand and engagement in our card business. And finally, while we haven't explicitly called it out in each bar, inflation remains a source of some upward pressure.

[Jeremy Barnum, CFO at JPMorgan Chase]

And as always, we are generating efficiencies to help offset it. Now let's turn to Page 11 to cover credit and wrap up. On credit, we expect the 2025 card net charge off rate to be in line with our previous guidance of approximately 3.6%. So in closing, 2024 was another year of record revenue and net income and we're proud of what we accomplished. As we look ahead to 2025, we still expect NII normalization, although to a lesser extent than we previously thought.

[Jeremy Barnum, CFO at JPMorgan Chase]

And taking a step back, we think it's important to acknowledge the tension in the risks and uncertainties in the environment and the degree of optimism embedded in asset prices and expectations. In that context, we remain upbeat about the strength of the franchise, but we are focused on being prepared for a wide range of scenarios. Finally, let me say a few words about the wildfires in Los Angeles. While we don't expect much of a financial impact from it, we have a presence in the area across all three lines of business, so we're keeping in close contact with our customers, clients and employees. We are offering support in a variety of ways, including waiving consumer and business banking fees as well as making a contribution to local relief organizations, offering employee donation matching and supporting employee volunteer efforts.

[Jeremy Barnum, CFO at JPMorgan Chase]

With that, I'll turn it over to Jamie before we open up the line for Q and A.

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

Good morning, everybody. I just want to point out that Daniel Pinto is not leaving the company yet. So it's premature. I'm about to do it. I just want to say I'd be remiss not to say that here's a young man who joined the company at 20 years old in Argentina.

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

He ran trading in Argentina, then he ran trading for Latin America, then he ran global emerging markets trading, then he ran fixed income trading and then became co head of the Investment Bank and then sole head of the Investment Bank for 10 years. Over that whole time, helping build one of the great investment banks in the world. And so and then obviously, he was President for 5 years or more, a great partner of mine, trusted by everyone at the company. So we're thrilled to have his skills and talents going forward, but I just wanted to recognize the contributions he made.

[Jeremy Barnum, CFO at JPMorgan Chase]

Great. All right. So let's go to questions.

[Operator]

Thank you. Please stand by. Our first question comes from John McDonald with Truist Securities. You may proceed.

[John McDonald, Senior Research Analyst at Truist Securities]

Hi, good morning. Jeremy, I wanted to ask about capital and I know you get this question a lot about the kind of high class dilemma of your growing capital base and your perspective of that is earnings in store. So I guess what's the framework for thinking about the opportunity cost of sitting on the growing base of capital and how high you might let that go versus your patience in waiting for more attractive deployment opportunities?

[Jeremy Barnum, CFO at JPMorgan Chase]

Yes. Good question, John, and welcome back by the way.

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

Welcome back, John.

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

I read your team the other day. It took me quite a while, but it was good work.

[John McDonald, Senior Research Analyst at Truist Securities]

Thanks.

[Jeremy Barnum, CFO at JPMorgan Chase]

So, yes, you've noted all the points that we always make, so I won't repeat them. And I think the way we're thinking about it right now is that we feel very comfortable with the notion that it makes sense for us to have a nice store of extra capital in light of the current environment. We believe there's a good chance that there will be a moment where we get to deploy it at better levels essentially in whatever way than the current opportunities would suggest. And so that feels like a correct kind of strategic and financial decision for us.

[Jeremy Barnum, CFO at JPMorgan Chase]

Having said that, having studied it quite extensively over the last 6 months and have all these debates that you would expect, we've concluded that we do have enough. We have enough access. And given that, we would like to not have the access grow from here. So when you think about the implications of that given the amount of organic capital generation that we're producing, it means that unless we find in the near term opportunities for organic deployment or otherwise, it means more capital return through buybacks all else being equal in order to arrest the growth of the excess. And that is our current plan.

[Jeremy Barnum, CFO at JPMorgan Chase]

Although I'll give the caveat that as you know is in our disclosure, which is we don't want to get into the business of guiding on buybacks and we reserve the right to change the trajectory at any time for any reason, but that is our current thinking.

[John McDonald, Senior Research Analyst at Truist Securities]

Okay. Thanks, Jeremy. And then just as a follow-up, we think about the investment spend agenda this year, how does it differ from say last year or last couple of years across lines of business and this kind of certainty of return spectrum you've talked about? And then what kind of efficiencies are baked into the outlook as well? Thanks.

[Jeremy Barnum, CFO at JPMorgan Chase]

Sure. I mean, the truth is and I guess this is a good thing that the themes are remarkably consistent. So we are seeing the results of our kind of high certainty investment choices across all the categories that you know very well and that we highlighted on the outlook page for expenses and those continue to be the main areas of focus. The execution gets tweaked at the margin as we pursue different opportunities. In the Commercial and Investment Bank.

[Jeremy Barnum, CFO at JPMorgan Chase]

We continue drilling down and analyzing into the relative pockets of weakness that you might see if you go a level or 2 below the very significant significantly strong share positions that you see on an aggregate level. Daniel always talked about the reds and the ambers that are behind the greens and that's embedded in the culture of the company. So we do that everywhere and continue analyzing and iterating and we throw resources against that stuff as we do that. But broadly the themes are very consistent. I think in terms of efficiency a couple of things to say which you know well.

[Jeremy Barnum, CFO at JPMorgan Chase]

One is when we think about efficiency and how we've generated at this company, it's organic, it's BAU, it's evergreen, it happens every day in all the teams everywhere. And so that is sort of part of the bottoms up culture and that remains the case. We do have a few top down areas of focus. I think if I go for example into technology for starters, we're putting a lot of effort into improving the sort of ability of our software engineers to be productive as they do development and there's been a lot of focus on that the development environment for them in order to enable them to be more productive. So all else equal, that generates a little bit of efficiency.

[Jeremy Barnum, CFO at JPMorgan Chase]

We also have a lot of focus on the efficiency of our hardware utilization. And so that's embedded in there as well. And another thing that's worth noting, you'll recall that at Investor Day, I talked about how we had probably reached peak modernization spend. As Jamie always says, we're always modernizing. So the fact that we've gotten to a peak and that it might come down a little bit from here still means we're going to be constantly modernizing.

[Jeremy Barnum, CFO at JPMorgan Chase]

But at the margin that means that inside the tech teams there's a little bit of capacity that gets freed up to focus on features and new product development and so on, which is also in some sense a form of efficiency. Finally though, what I would say is that, if you look at the headcount trajectory of the company over the last few years, we have grown a lot. And it's been for very good reasons and it has contributed quite a bit to our growth and to our ability to run the company efficiently. But any time you have that quantum of headcount growth as well as that rate of headcount growth, you have to believe all else equal that some amount of inefficiency has been introduced. And so this year as we went through the budget cycle, we asked people at the margin to try to support the growth of the company while living within their means on the headcount front.

[Jeremy Barnum, CFO at JPMorgan Chase]

So we're going to try to run things with some important exceptions that I'll highlight in a second on roughly flat headcount and how that lead to people generating internal efficiencies as they get creative with their teams and we consider more efficient exceptions are the ongoing areas of high certainty investment and growth, so obviously branches and bankers and so on. And also critical non negotiable areas of risk and control like cyber or whatever independent risk management needs to ensure that we're running the company safely. So that's how we're thinking about efficiency in the current moment.

[John McDonald, Senior Research Analyst at Truist Securities]

Very helpful. Thank you.

[Operator]

Thank you. Next we will go to the line of Mike Mayo from Wells Fargo Securities. You may proceed.

[Mike Mayo, Managing Director at Wells Fargo]

Hi. Simple and then more difficult, I guess. Jamie, who's your successor? And then the second question is, I know I asked the question at Investor Day. Why not stay as CEO a little bit longer?

[Mike Mayo, Managing Director at Wells Fargo]

I think what I'm hearing from investors now it goes up and down, but I think investors would like you to stay. So why say you're going to stay less than 5 years? You're finally getting what you wanted, 15 years of your spaghetti chart about the regulatory structure and the unpredictability of capital requirements and the regulatory costs and it seems like you're finally getting what you've been playing for. So, why not stay around a bit longer if investors want you to do so? And what would you do otherwise anyway?

[Mike Mayo, Managing Director at Wells Fargo]

You don't play golf. You aren't going to be Treasury Secretary. Seems like your work is your hobby, right? So, how much longer would you stay around?

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

I do love what I do and answering the second question first. Look, we're on a path. The path is not just about me. It's about the other senior people, the company, it's about the Board. If I'm here for several more years and I may or may not be Chairman of that, it's going to be up

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

to the Board, does it

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

really fit the new CEO and stuff like that. Now you're talking potentially 4, 5 years or more, I'm 60 I'll be 69 in March. I think it's the rational thing to do. I've had a couple of health problems you know. I just think it makes a lot of sense.

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

And so and what was your first question at the end?

[Mike Mayo, Managing Director at Wells Fargo]

Who's your successor? I mean,

[Mike Mayo, Managing Director at Wells Fargo]

it's a similar question.

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

Yes. I mean, this is unfortunate thing for any big company like this where these people have to be in the spotlight all the time and all the toing and froing. We have several exceptional people. You guys know most of them.

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

There's maybe 1 or 2 you don't know. The Board reviews and meets with them all the time. I think it's wonderful that Jim Piecyk, who does not want to be the CEO, will be here as Chief Operating Officer and stay after that. So obviously, she's willing to work with those people, which I think is great for a company, just having continuity of management and leadership and it'll be one of those people. And obviously, we're not going to tell the press, but it's not determined yet.

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

And of course, at the last minute, a couple of years from now, people get sick, they change their mind, they have family circumstances. So even if you thought you knew today, you could be completely sure.

[Mike Mayo, Managing Director at Wells Fargo]

So you'll

[Mike Mayo, Managing Director at Wells Fargo]

stay around maybe for a few more years base case right now?

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

Yes, basic case, yes.

[Mike Mayo, Managing Director at Wells Fargo]

All right. Thank you.

[Operator]

Thank you. Our next question comes from Jim Mitchell with Seaport Global Securities. You may proceed.

[James Mitchell, Senior Equity Analyst at Seaport Global Securities]

Hey, good morning. Maybe just on regulation, we have a new administration coming in. We have a new soon to be, I guess, a new Head of Regulation at the Fed. So maybe just talk about, again, what areas of the regulatory structure, if it were to change, would be most impactful for you? And is there any areas where you think capital requirements could actually go down?

[James Mitchell, Senior Equity Analyst at Seaport Global Securities]

Or is this more of a story of requirements just simply stop going up? Thanks.

[Jeremy Barnum, CFO at JPMorgan Chase]

Hey, Jim. I mean, it's obviously something we're thinking about a lot. But I could go down some pretty deep rabbit hole speculating on all the different parts of the framework and how they could evolve. And I just don't really think that's productive right now. But let me make some time to answer your attempt

[Jeremy Barnum, CFO at JPMorgan Chase]

to answer your question.

[Jeremy Barnum, CFO at JPMorgan Chase]

So backing up a

[Jeremy Barnum, CFO at JPMorgan Chase]

second, you read Jamie's quotes, they're very consistent with what we've been saying as a company for a long time, which is that all we want is a coherent, rational, holistically assessed regulatory framework that allows banks to do their job supporting the economy that isn't reflexively anti bank. It doesn't default to the answer to every question being more of everything, more capital, more liquidity, that uses data and it balances the obvious goal that we all share of the safe and sound banking system with actually recognizing that banks play a critical role in supporting growth. And the hope is that we get some of that. And that also while we're at it, some aspects of the supervisory framework get a little bit less bureaucratic and a little bit less adversarial and a little bit more substantive, so that at the margin, management can focus its time on the things that matter the most. So whether capital goes up, down, stays flat is really so complicated because it's not just puzzle 3: Endgame, it's also G SIB, it's also a number of other factors and that's why we keep hammering away on the importance of doing all of this holistically, properly with the right analysis and if that takes time so be

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

Great. Jeremy gave it all. Just add 3 quick things. Liquidity is also equally important. There's been a lot of recognition that what counts for liquidity and discount windows and how else here are done, I think is very important.

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

2nd is competition. All these things should be done in light of looking at what kind of public markets you want, what kind of private markets you want, what do you want in the banking system, what do you want out of the banking system. And the third is, I think most people realize there is a huge need to take a step back and look at the Byzantine bulk and IS system we built, which has negatives and even the regulators tell you that. So at one point, just take a deep breath. As Jeremy said, do the right thing and continue to have the best financial system in the world.

[James Mitchell, Senior Equity Analyst at Seaport Global Securities]

Yes. That makes sense. And maybe just as a follow-up, just on loan growth, have you since the election, it seems like CEO confidence, business confidence has increased. So are you starting to see any improvement in demand on lending? Just any thoughts there would be great.

[Jeremy Barnum, CFO at JPMorgan Chase]

Yes. It's a good question. And I think given the significant improvement in business sentiment and the general optimism out there, you might have expected to see some big open loan growth. We are not really seeing that. I don't particularly think that's a negative.

[Jeremy Barnum, CFO at JPMorgan Chase]

I think it's probably explained by a combination of wide open capital markets. And so many of the larger corporates accessing the capital markets and healthy balance sheets and small businesses and maybe some residual caution. And maybe there are some pockets in some industries where some aspects of the policy uncertainty that we might be facing are making them a little bit more cautious than they otherwise would be about what they're executing in the near term. But we'll see what the New Year brings as the current optimism starts getting tested with reality one way or the other and maybe if it materializes with tangible improvements and things one way or the other, you'll actually see that come through C and I loan growth in particular.

[James Mitchell, Senior Equity Analyst at Seaport Global Securities]

Okay, great. Thanks.

[Operator]

Thank you. Next, we will go to the line of Erika Najarian from UBS. Your line is open.

[Erika Najarian, Managing Director & Equity Research Analyst at UBS Group]

Yes, hi. Good morning.

[Erika Najarian, Managing Director & Equity Research Analyst at UBS Group]

I wanted to follow-up on the

[Erika Najarian, Managing Director & Equity Research Analyst at UBS Group]

questions on capital and maybe ask about some of, Jeremy, the crosscurrents in terms of the denominator. So if we look at the Q3 regulatory data for your GSIB surcharge score, that would imply that your score would put you in a range of a 5% G SIB. So obviously, from what we understand, if you print that somewhere near that score at the end of this year, then your G SIB surcharge goes up by to 5% or by 50 basis points 2 years and one day from now. At the same time, around the holidays, we did get the press release from both the Federal Reserve and the lawsuit from the banks. In terms of the transparency, it looks like the transparency is going to be focused on perhaps being improved as soon as this year's stress test.

[Erika Najarian, Managing Director & Equity Research Analyst at UBS Group]

So as we think about the definition of excess, right, because part of this is like 15.7 is clearly a huge number. So as we think about your returns going forward, the definition of excess also continues to shift. So how should we think about those crosscurrents in terms of 2 big components clearly, one is your GSIB surcharge and the other is your stress capital buffer?

[Jeremy Barnum, CFO at JPMorgan Chase]

Right, Erika. Okay. You are tempting me with many rabbit holes that are very deep. But let's try to address this not at too much great length. First of all, G SIB.

[Jeremy Barnum, CFO at JPMorgan Chase]

So yes, it was a high print in the Q3, but we had normal seasonality Q3 and Q4. So while our current view of the G SIB number is an estimate, we're quite confident that we wound up comfortably in the 5% bucket just as a result of normal seasonality. It was actually a relatively quiet December in terms of the types of year end things that sometimes create pressures in various types. So that is more or less what you might otherwise expected in terms of our typical seasonal pattern, so not much to see there. And the obvious point also being that even under the existing proposed GISA rule, which is obviously a little bit hung up, with the smaller buckets and some recalibration and so on.

[Jeremy Barnum, CFO at JPMorgan Chase]

It's not even sort of obvious that it would have mattered one way or the other. But anyway, for now, we're managing to the current rules and normal seasonality took us back under 5. Okay. You mentioned the lawsuit. I think the only thing to say about that is that we are happy to see the clear recognition on the part of the Fed that many of the things that we have been talking about for a long time in terms of transparency and volatility and some of the non substantive bureaucratic burden associated with the CCAR process needs improvement.

[Jeremy Barnum, CFO at JPMorgan Chase]

So that's great. I think I won't speak for the industry bodies that were the actual litigants, but it seems to me if you just read what they said publicly in their press releases, this is as much as anything about preserving rights in light of the statute of limitations deadlines that were coming up. So let's just hope that we see some significant progress on that front. And then taking a step back at a high level what you're really asking me is what is our core view about and I think probably the best way to think about this is just through the lens of the numerator actually. What is our core view about if you just for the sake of argument and assume modest growth in the normalized amount of economic denominator like actual need for capital organically, what will be the likely additional numerator that will be needed or not as a function of the environment?

[Jeremy Barnum, CFO at JPMorgan Chase]

And the

[Jeremy Barnum, CFO at JPMorgan Chase]

way we're increasingly thinking about that is just doing different scenario analysis of like flat numerator, up 5 numerator, up 10 numerator, up 20 numerator. I guess there could be some versions of the world where the numerator is a little less. And then guessing about our central case and comparing our projected capital amount to that number to determine the excess. As you point out at 15.7 and I think the actual quantum in the numerator is something like 275,000,000,000 dollars through pretty much any reasonable lens, it's a ton of access, which is why we've concluded that it doesn't need to grow anymore.

[Erika Najarian, Managing Director & Equity Research Analyst at UBS Group]

And just a follow-up question, follow-up to John's line of questioning. As a placeholder, as we think about what you said trying to arrest the growth of CET1, for now, should we just assume that anything that you don't need for organic growth and your dividend obligations in terms of that $15,700,000 we bought back by the company as we think about? I know you don't want to predict the buyback, but is that sort of just a placeholder for now as we think about what can return back to shareholders in the form of repurchase?

[Jeremy Barnum, CFO at JPMorgan Chase]

Yes. I mean you've quoted our capital hierarchy and your conclusion flows naturally from my statement that we do want to arrest the growth of the excess.

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

But we are never going to tell the market what we're going to do. I mean you all know that everybody's out there modeling these things, trading against these things. So steady consistent buyers in the marketplace were so predictable are making a mistake.

[Operator]

Does that conclude your question, Aaron?

[Jeremy Barnum, CFO at JPMorgan Chase]

All right, guys. We can go to the next question. Thanks.

[Operator]

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

[Operator]

open.

[Matt O'Connor, Analyst at Deutsche Bank]

Good morning. It seems like you guys have backed off the view that you're materially over earning on net interest income. And is this all because of the higher rate environment that's expected now? Or is it also partly a different view on deposit pricing specifically in the consumer side, which I think you had assumed it would reprice a bit more than we've seen?

[Jeremy Barnum, CFO at JPMorgan Chase]

Yes. It's a good question, Matt. I guess maybe let me try to frame that from a couple different perspective. So on the one hand, you're right. If you look at the NII guidance that we're giving you, including the notion that subject to the yield curve planning out in line with the current forwards, which as we know is the one thing that we know won't happen.

[Jeremy Barnum, CFO at JPMorgan Chase]

But if you want to assume something, if you assume the forwards, we're sort of telling you that we might return to sequential growth in the back half of the year, again, based on all of our current assumptions, all else being equal. And you could draw the conclusion that that means that the over earning narrative is no longer applicable. I think if you take a big step back by historical standards, the difference between the policy rate and the weighted average rate paid on consumer deposits remains quite elevated. For a variety of reasons and subject to the fact that in the end deposit pricing is always going to be a response to the competitive environment that we experience in the field. The current structure of the yield curve is such that for the time being anyway, when we do the math, that's what we see.

[Jeremy Barnum, CFO at JPMorgan Chase]

Do we think that's truly, truly, truly sustainable through the cycle? Unclear. But I guess, we'll cross that bridge when we come to it. For now, this is the outlook for the coming year.

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

We've gotten closer to normalized NII and normalized credit.

[Jeremy Barnum, CFO at JPMorgan Chase]

Yes. It is worth noting that NII ex market is down year on year. So there's some amount of normalization.

[Matt O'Connor, Analyst at Deutsche Bank]

Okay. And then just separately a strategic question. There's been some reports about you further expanding the consumer banking business globally. And I guess I just want to push on that where we really haven't seen other banks do it in a successful way. Obviously, your approach is kind of coming from a position of strength, leading digitally.

[Matt O'Connor, Analyst at Deutsche Bank]

But I guess I'm just wondering like, is it worth it? Is there enough upside to justify maybe some of the increased regulatory and execution risk, of doing global consumer banking?

[Jeremy Barnum, CFO at JPMorgan Chase]

Yes. I mean, I think you kind of answered your own question in the sense. Like we talked about this a lot when we first launched the initiative. And I just think that the comparison to other players is not apt in the current moment. And that's not to say that like we're special or anything.

[Jeremy Barnum, CFO at JPMorgan Chase]

It's just that, the strategy is very different and it's a very different moment. So it's a new initiative. It's obviously not risk free, but it's going pretty well. And pointing out the obvious, if we didn't think it was worth it, we wouldn't be doing it. But we have obviously considered all of the risks and opportunities associated with the decision.

[Jeremy Barnum, CFO at JPMorgan Chase]

And that's one of our strategic initiatives and those get scrutinized quite aggressively through all of our management processes.

[Matt O'Connor, Analyst at Deutsche Bank]

Okay. Thank you.

[Operator]

Thank you. Our next question comes from Betsy Graseck from Morgan Stanley. You may proceed.

[Betsy Graseck, Managing Director at Morgan Stanley]

Hi, good morning.

[Jeremy Barnum, CFO at JPMorgan Chase]

Hi, Betsy. Hi, Betsy. Hi, Betsy. Hi, Betsy. Hi, Betsy.

[Jeremy Barnum, CFO at JPMorgan Chase]

Hi, Betsy. Hi, Betsy. Hi, Betsy. Hi, Betsy. Hi, Betsy.

[Jeremy Barnum, CFO at JPMorgan Chase]

Hi, Betsy. Hi, Betsy. Hi, Betsy. Hi, Betsy. Hi, Betsy.

[Jeremy Barnum, CFO at JPMorgan Chase]

Hi, Betsy. Hi, Betsy. Hi, Betsy. Hi, Betsy. Hi, Betsy.

[Jeremy Barnum, CFO at JPMorgan Chase]

Hi, Betsy. Hi, Betsy. Hi, Betsy.

[Betsy Graseck, Managing Director at Morgan Stanley]

Hi, can

[Betsy Graseck, Managing Director at Morgan Stanley]

with a lot of robust questions here. You're like, what else is there to ask? Here's my question. As we think about the NII outlook and you highlighted the NIM pressure, but loan, but basically balance is increasing here, right? Maybe you could just speak to the could you help me understand the order of the drivers?

[Betsy Graseck, Managing Director at Morgan Stanley]

Is it QT going away, deposits going up, punch it into securities? Is it loan growth inflecting? Is there any place in the franchise where you see loan growth opportunities for inflection this coming year? And then lastly, as I think about your comments around, you've got the green market share number 1, you've got the yellow, you've got the red places maybe we can't see. Could you help us understand where those yellows and reds are where they are?

[Betsy Graseck, Managing Director at Morgan Stanley]

Are they just scattered everybody every single business has 1? Or are there some that have more than others and therefore more opportunities? And is it more balance sheet or fee generative? That's kind of what I'd like to just discuss if you have a minute. Thanks.

[Jeremy Barnum, CFO at JPMorgan Chase]

Sure. Yes. Let me take a crack at that Betsy. So loan growth, I think looking for areas where it might inflect, the only thing I can think of frankly that would be in that category, certainly in terms of being meaningful to the company's performance, would be acquisition finance, because that's been relatively muted as a function of the M and A environment. And if that picks up, you could see more there.

[Jeremy Barnum, CFO at JPMorgan Chase]

Now that's those aren't loans that we necessarily keep on the balance sheet for that long. So whether that shows up in fees or NII or whatever is a separate issue. But as we as you can see like on our presentation page for the NII outlook, you know that card loan growth and revolve normalization has been a significant tailwind. And while that is also a driver of growth in 2025, again based on our current guess about the future, it will be it's decelerating a little bit rather than the opposite. So growing above trend obviously, which is great and it's a sign of the strength of the franchise and the amount of engagement that we're getting from our card clients.

[Jeremy Barnum, CFO at JPMorgan Chase]

But the big normalization tailwinds there are You know well the state of the mortgage market given rates. Rates are also a headwind in some other pockets like our multifamily lending business at the margin. So yes, I think a higher growth

[Jeremy Barnum, CFO at JPMorgan Chase]

environment, a little bit more optimism. Could you see a bit more loan growth in Business Banking? Could you see a bit more

[Jeremy Barnum, CFO at JPMorgan Chase]

growth in loan growth in Business Banking? Could you see a bit more growth in C and I at the margin? Yes. But I think the place where you might see inflection is more on the areas that are deal driven, I would say. So we'll see what happens there.

[Jeremy Barnum, CFO at JPMorgan Chase]

And in terms of the reds and the ambers under the greens, I think you know them, right? And they're aligned with our big long standing investment strategies. The biggest single one arguably is that in the what you might call the affluent section of the wealth management space, we are significantly underpenetrated relative to the number of households that we bank in the country and our capabilities and our brand and what we think we bring to the table. So that's why we're pushing so hard on that front because I think we can get more share there and it completes the franchise very nicely. There are a bunch of examples elsewhere, but we talk a lot about drilling down inside the markets business, inside Investment Banking and finding the places where even where at the aggregate global sector level we look great any given region and any given subsector we can do better.

[Jeremy Barnum, CFO at JPMorgan Chase]

And as I mentioned, we continue to look at that as aggressively as ever.

[Betsy Graseck, Managing Director at Morgan Stanley]

Thank you.

[Operator]

Thank you. Next we will go to the line of Ebrahim Poonawala with Bank of America Merrill Lynch. Your line is open.

[Ebrahim Poonawala, Managing Director - Head of North American Banks Research at Bank of America Merrill Lynch]

Hey, good morning. I guess just two questions. In terms of areas of vulnerability, so I heard you, Jeremy, on the lending side, but lots of crosscurrents like a fee anchor to the fact that you have a administration that's taking place, your take office with a focus on domestic CapEx. Even if we don't get any rates cuts, when you look through your customer base, where do you see areas of vulnerability, be it because of tariffs, be it because of just lack of any additional relief from the Fed? Yes, I would love to hear just from a credit quality perspective what no rate cuts might mean?

[Jeremy Barnum, CFO at JPMorgan Chase]

I see what your question is. That took me a second. Yes, I mean, look, wholesale credit is pretty hard to predict. It tends to be very idiosyncratic. You obviously know that we were coming out of a 10 plus year period of an exceptionally low charge off rate.

[Jeremy Barnum, CFO at JPMorgan Chase]

And so at some point that has to normalize to a slightly more reasonable level to move it to Jamie's comments earlier about how some things are still not fully normalized and arguably wholesale credit could be one of those. We do on extensive trust us on the sensitivities to the portfolio of the portfolio to rate shock. A lot of what we do from an underwriting perspective is designed to protect us from that frankly. So you can rest assured that we're running the relevant analysis, but I'm not inclined to go into detail on any given sector or whatever. Jamie, did

[Jeremy Barnum, CFO at JPMorgan Chase]

you want to add?

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

Yes. I would just point out the biggest driver of credit has been and always will be unemployment. That's both in the consumer side and it bleeds into the corporate side. It bleeds into mortgages, subprime, credit card.

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

So really it's your forecast of unemployment, which you're going to have to make your own, which will determine that over time. And so the second thing that you said vulnerabilities, it's unemployment, but the worst case would be stagflation. Higher rates with higher unemployment will drive higher credit losses literally across the board. I'm not we're not predicting that, but you just ask for the vulnerabilities as to the vulnerabilities.

[Ebrahim Poonawala, Managing Director - Head of North American Banks Research at Bank of America Merrill Lynch]

And I guess, thanks for that. Just sticking with that, as far as QT is concerned, when you talk to experts like no one knows where the right level for the Fed to end is. I'm just wondering if you have any thoughts there on how when the Fed should end, the pressure on the system and what it may imply for deposit growth?

[Jeremy Barnum, CFO at JPMorgan Chase]

Yes. I mean, I think the conventional wisdom on QT, and I'm not pretending to add to the conventional wisdom one way or the other, is that the tapering should sort of complete and therefore we might see an end sometime in the middle of the year. Of course, they may change that, but that seems to be the current market consensus. And when we sort of take a step back and look at the data and our kind of flow of funds models and that type of stuff, when you look at the way our peers behaving, evolution of QT, expectations for economy wide loan growth etcetera and what the impact of that might be on the growth of system wide deposits, it's kind of consistent with the story that we're telling about our sort of the background growth in our NII outlook plus or minus what happens with the policy rate and stabilizing and growing deposit balances through the second half of the year.

[Ebrahim Poonawala, Managing Director - Head of North American Banks Research at Bank of America Merrill Lynch]

Got it. Thank you.

[Operator]

Thank you. Our final question is comes from Jared Gerard Cassidy from RBC Capital Markets. Your line is open.

[Gerard Cassidy, Managing Director at RBC Capital Markets]

Hi, Jeremy. Hi, Jamie.

[Gerard Cassidy, Managing Director at RBC Capital Markets]

Jeremy,

[Gerard Cassidy, Managing Director at RBC Capital Markets]

you mentioned in your comments about the overall fermoid deposits have stabilized. And in the second half, you could see some growth in your earnings. I think you said you started to see maybe some of that in the consumer checking deposits. We noticed in the industry data from the regulators, household checking deposits pre pandemic for the industry you were running about $1,000,000,000,000 Now they have remained elevated post pandemic at $4,000,000,000,000 Can you based on what you're seeing in your customer base, what can you attribute the strain to in this consumer checking account deposits?

[Jeremy Barnum, CFO at JPMorgan Chase]

That's fascinating, Gerard. I'll have to take a look at that data. I don't actually recognize those numbers. But I can speak for ourselves, which is that when we look at the encouraging growth that we see in our checking franchise, it's a couple of things. So of course, there was some access and there was some yield seeking behavior.

[Jeremy Barnum, CFO at JPMorgan Chase]

And so you did see people moving money out of checking into higher yielding alternatives over the course of the last couple of years in the rate cycle. It feels to us as if we're in the final innings of that. We're just not seeing nearly as much yield seeking pressure as we had seen. In the meantime, as you well know, we are aggressively engaging with clients and acquiring all the new clients and deepening in a lot of different markets as part of our branch expansion strategy and the deepening in all of those markets. So the combination of the tail end of the yield seeking flows and excellent client engagement and success in the sort of organic build out of that franchise is starting to show up in checking account growth, which we see as a very healthy indicator for the franchise.

[Gerard Cassidy, Managing Director at RBC Capital Markets]

Very good. And then as a follow-up, circling back about the capital levels, you guys have been very clear about where you want them to be. Can you share the pros and cons from JPMorgan's perspective, not so much from an investor, but we understand, of course, you can do a share repurchase. Obviously, you can do non depository acquisitions with the excess capital. But what are the pros and cons of a special dividend to reduce that excess capital?

[Gerard Cassidy, Managing Director at RBC Capital Markets]

If you continue with these incredible profitability levels of 20% return on tangible common equity, you're growing your income and capital very nicely every year. But what are those pros and cons again from JPMorgan's perspective?

[Jeremy Barnum, CFO at JPMorgan Chase]

Yes. So we made some public comments on this at a conference sometime back, so he wants to

[Jeremy Barnum, CFO at JPMorgan Chase]

go.

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

Jeremy, go ahead.

[Jeremy Barnum, CFO at JPMorgan Chase]

No, no, no.

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

I was just going to say we're not going to do one. We have looked at it.

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

If you all have any great insights for us, let us know, but most people don't want it. Doesn't have shareholder value. And I've never thought of having cash in your pocket is a bad thing. I think it's a huge mistake to look at life, but you have to deploy capital. So we want to be very, very patient, but special dividends, if you look at the history of special, they really basically don't work.

[Jeremy Barnum, CFO at JPMorgan Chase]

Got it.

[Jeremy Barnum, CFO at JPMorgan Chase]

But if anyone has a different opinion, we're always interested.

[Gerard Cassidy, Managing Director at RBC Capital Markets]

Sounds good. Thank you, gentlemen.

[Jeremy Barnum, CFO at JPMorgan Chase]

Thanks, Gerard.

[Operator]

Thank you. And we have no further questions at this time.

[Jeremy Barnum, CFO at JPMorgan Chase]

Thanks very much.

[Jamie Dimon, Chairman and CEO at JPMorgan Chase]

Thanks very much.

[Jeremy Barnum, CFO at JPMorgan Chase]

See you next quarter.

Participants

Analysts

• Jeremy Barnum, CFO at JPMorgan Chase
• Jamie Dimon, Chairman and CEO at JPMorgan Chase
• John McDonald, Senior Research Analyst at Truist Securities
• Mike Mayo, Managing Director at Wells Fargo
• James Mitchell, Senior Equity Analyst at Seaport Global Securities
• Erika Najarian, Managing Director & Equity Research Analyst at UBS Group
• Matt O'Connor, Analyst at Deutsche Bank
• Betsy Graseck, Managing Director at Morgan Stanley
• Ebrahim Poonawala, Managing Director - Head of North American Banks Research at Bank of America Merrill Lynch
• Gerard Cassidy, Managing Director at RBC Capital Markets