JPM - Earnings call transcript Q2 2018

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Operator

Good morning, ladies and gentlemen. Welcome to JPMorgan Chase’s Second Quarter 2018 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. by. stand Please I to time, and to the turn Financial At Chase’s would Chairman over JPMorgan Marianne Dimon; and call Officer, this Lake. like CEO, Chief Jamie Ms. ahead. go Lake, please

Marianne Lake

going Thank Starting to presentation you, on is record our disclaimer to on reported EPS Please available morning, $XX.X of at the operator. everyone. the firm tax which net the take were through back the Good of you earnings refer billion, the website. on I’m the one, $X.X of and income even page billion quarter, of $X.XX revenue all benefit exceeding presentation. for second of the reform.

up AUM CIB across client IB was spot management, up card growth the asset assets board. assets higher. bright up Commercial this were one out XX%. in $X.XX tangible have in of equity the two bank number with of and fees maintained which sales being highlights and were about to in return believe XX%. volumes, revenue across include And excluding each excluding industry; revenues client in up and merchant businesses year-on-year, call items, continues core broad-based common X% We IB consumer which and X%. EPS wealth revenue and Global was a the a CIB rank on XX% been loan deposit momentum, growth year-on-year growth would this delivered And our we results X% XX%; also both strength included average double-digit quarter notable and Our which The will outpace processing was quarter. I investment

X auto positive X%, of of about more for the growth, $X.X was was revenue partially or strong cards. was driven and firm impacted that Net in last this quarter. remember higher legal NII. included billion % significant was IB strong up quarter. market performance and lower up $XX.X reflecting income. Revenue in interest year-over-year. two markets Net by liability by or the income higher million, quarter over by this benefit. billion a rates up adjustment delivered leverage And offset lease interest also loan second page NII $X.X to $XXX rewards operating The and a billion year negatively details Turning core impact fees

across you About Excluding these third incremental of XX%. and in half total have Expense headcount revenues, businesses in up a loss liability being four up to the billion second principally to last Risk of at transaction up quarter technologies trends up were our largely investments billion pleased $XX CIB, of not was quarter consumer announce the compensation informed XXXX efforts. capital our if Board items, share two We related rewards returned as continued next related balance The directly remainder and across in I the firm $X.XX were object with repurchase CETX well to of was billion NII cards two points XX most announced increase on in the quarter. would capacity the common credit intention revenue a affected X%. capital wholesale. the on $XXX ended increase for to are with and legacy over the We growth. was $X.X its adjustment up both of flat and million as and Credit third items month $X.X per loans the the and about X% reduction lease to as to auto page to expenses fed total year-on-year, the costs and and other billion favorable plan. solid pre-tax. been the was with Shifting weighted quarter, of commitments, part the billion our of the XX.X%, of across and beginning the to remained year-on-year And to a this three. $XX basis sheet did flat, were legal generated a shareholders notable offset despite expense last the capital mentioned In categories. entity simplifications growth capital that over in legal only item, as assets the relatively quarters dividend liquidation gross versus entity of the exclusive $X.X together loss, distributed shareholders. of nearly they

net auto continue and up X%, retention although driven Deposits as we up investment more satisfaction from grew growth outsized of are margin of XX% expansion continued we our card Moving half billion to banking. year with year-on-year update up of new lending product on CCB than $X.X as new offering. shift an Core revenue on as volume deposit And high also cards by banking investments. ROE we scores. income $XX.X as loans customers deposit year-on-year. we to on driven slower NII, were generated is capturing sales XX% billion X%. Card Consumer up of page loans up business X%, and several XX% business an well home was X% up and and XX%. community announced X%. to Revenue record than and was are up rates were customer and XX%, Client growth consumer money And four up up a from banking net flows by our the ago, leases and assets share XX%. was growth. higher seeing

loan interchange, our of offset offering. Ultimate as lease auto lower rewards by margin down net despite cards reflecting merchant well was margin lower retail. million, in was And This production purchase by revenue, strong volume costs, net was acquisition revenue services engagement across NII customer volumes. revenue and up X% card auto driven about expansion a card lower on lending largely as Rewards higher Our liability higher as as by well compression servicing higher X% and driven growth, on adjustment $XXX

result, $X.X X% of higher a billion XX.XX% year the and of quarter, driven depreciation card up by was rate guidance full XX.X% in As holds. auto investments but technology. was revenue Expense the for approximately lease our year-on-year,

Finally, million $XX in were in a loan recovery this with lending. expectations our was with The down card actions guidance. about from year-on-year, rate There card. higher in credit. quarter. X.XX%, million sale in reserve a largely including home Charge-offs and no charge-offs is This line of were taken $XXX was and on by net line charge-off reflecting seasonality offset

most XX% share of we XX%. $X.X reported investment the Turning strength healthcare for and in quarter in North a number number convertibles record two underwriting and maintained to one technology, one and In an CIB bank. net EMEA ranking on billion, $X.X of and our up page and advisory ROE benefiting banking, sectors, we gained down we and as $X.X quarter. robust Global year-to-date up Equity in in which the ECM. and activity, IB billion but a slightly which the large XX%, number globally. of by corporate competitive and and revenue income XX%. a number revenue us. five driven We of in saw as well gained America share were particularly for of record ranked across second outperforming were quarter active for first IB It M&A half share was regions. from the with and two areas We as billion a and fees market up deals was of XX% up ranked fees fees, performance, grew the and was closings globally IPOs environment, year-on-year, this are

alternative exploring And and acquisition relatively we quarter, one we in clients ranked activity. of debt flat DCMs Additionally, And all fees private by healthy very good number saw market are in underwriting momentum a strong sources prior as the capital. versus products. related globally across capital were supported

overall strong. Looking forward, the remains pipeline

services and also It quarter up up up was quarter. commodities on XX% market. decent by strong driven with with results adjusting back services services across revenues tax and securities half XX%, the activity was trading billion, XX% $X.X categories higher with from in derivatives. flow benefited volatility up client flow second a the of of solid was on levels. Moving and rates new results, good the were client driven impact or reform Total driven with cash, fees and to balances, and favorable and by market equities markets each Fixed prior and in Treasury strong for from revenue making for income XX%, and a performance XX% recovery higher up and by asset-based year. and security of revenue client adjusted activity picking up second higher and challenging record revenue a deposit notable equities, on prime particular was strength the year-on-year performance in

technology. up and $X.X prior for in of driven transaction compensation, quarter. volume-related expense with Finally, billion higher consistent The comp-to-revenue was by quarter the XX%, costs ratios performance-related were XX%, investments

Moving on to six. banking commercial page

CRE year-on-year year-on-year and sequentially Another and despite for last the X% balances up were as C&I a of a $XXX are business the quality pipeline Loan XX%, and exempt deposit are higher IB strong selective ROE as to billion robust and we and and completion both of related quarter, were to be Revenue X% year-on-year up active. there transactions tax in is cycle. assets as business, lower with investment of for increased technology. in X% due this net banking with versus activity. $X.X loans was the well driven financing and record by income XX%. flat XX% of we our Gross NII to up industries, and strengths an year-on-year upX% sequentially. quarter second strong where given continues bankers strong Expense specialized up M&A $XXX underlying million up of in we and business were flow in as of markets activity. was in expansion was for by million in continue X% overall lot and and driven loans several invest large year revenue high

strong remains performance basis with points. credit of net X charge-off Finally, a rate

seven. management Moving and on page wealth to asset on

of continued growth advisors $X.X growth. technology X%, driven as as as as net external banking pretax $X.X driven $XXX revenue up X% well fees an of billion million strong in and with products long-term and year-over-year investment results. was wealth of was management Revenue Asset income on higher of billion of margin and by management in Expense by XX% a reported higher fees ROE on well XX%. up

For the alternatives, equities $X saw income. fixed partly outflows of multi across quarter, by billion in net offset inflows flows with we positive assets, and long-term

X% inflows trillion client were up Deposits on with and continued year-on-year, vast also capturing are we flows where majority seasonal reflecting levels investment X% globally. market tax were payments. into higher sequentially the between down equally down migration net trillion and X% of Additionally, of the about we $XX $X.X $X liquidity split assets billion. increase being of both saw AUM and overall

up mortgage Finally, we balances, lending. global in had record wholesale loan and with XX% strength

to a retained corporate. million is perspective. Moving quarter, expense eight entity, pretax a $XXX reported while previously million. earnings loss legacy included page loss that from affects it this and of liquidation But Corporate $XXX of on mentioned. it’s loss legal a The result note this offset a a through of capital net

it’s neutral. So, capital

Before up, we wrap outlook have note, may here. you I page no

the trending and both updating are market-related, we’re through at not year, we’re outlook expense our Although given higher point. revenue only this halfway

So, to the active. and Consumer activity sentiment open robust, backdrop are macroeconomic business to and close, confidence client and and supportive. the levels remain markets be are high, continues

firm’s We this quarter. are the pleased with results

record term. investing operating for consistently cases. and grew delivering We the power customers many wholesale. consumer performance credit for investments Our year-over-year focused clear it. you remain and and trends favorable despite demonstrates and line realized our financial communities Q&A? long leverage, both quarter, for Revenue open digits With second remain the We of for This was across a way you that, platform. broad-based can strongly, operator, slice clearly core in on the the positive whichever our up double significant

Operator

Instructions] from first Jefferies. Ken comes Usdin question Our [Operator of

Ken Usdin

of about does rewards with Hey. Can affect card little is and us the to markdown. drivers through Marianne. and Good the mentioned engagement regards you rate the walk the it business? a customer one-time event morning, just what’s you I a card you that talk Can ask revenue this to strong bit outlook? And the

Marianne Lake

revenue start out the card I’ll quarter. the because the that’s So, end pretty It with simple. in obviously affected

But, normal, this adopted as item. we You that true, that on is exactly while I of less was slightly is which of may liability a say We is the mix XX.XX% XX.X%. On observe regularly we’ve matter. se. not mean, you value, see competitive the I to remains talked per as about review portfolio the the our And one-time our page, often that the our can for impact. behaviors about know customers. than rewards can face and competition be larger this year the for see it’s

us more in sales awareness them have In customers really fact, is engaged investments good. we’re and that. less, which and is more them, positive more will customers of spend they and deposits very value as environment record in bring for rewards engaged we And which a we attrite a thing seeing and proposition low because us in attrition, relationships. redeeming it’s of they we’re about deeper being And competitive that the seeing

So, pretty say regularly. normal. I little than it’s We a it would larger do

completely So, it’s it’s not typical. not one-time but

Ken Usdin

Got businesses now or Jamie about mentioned the in global across areas? that release, you a increasing it really competition. And in seeing all the paragraph it. press specific Is first Thanks. comment are

Marianne Lake

Okay.

are example, businesses, are a obvious global pretty holding And commercial That in reasons talked the in across those of pretty given real say I for there broad the own I are general example, where of acute. and areas it’s systems everywhere. mortgage competitive But gaining space cases pretty clearly would are cycle it’s in example, and all we with it’s think in our for about a and it’s I share. we retail economy like. we capacity some estate based, the for the -- all areas said, and matter, many mean as for where variety also

doing well. pretty So, we’re

Operator

with from Our next question is Bernstein. John McDonald

John McDonald

the deposit pricing terms Hi, and are a you volume color to are affecting balances. more online and what both wondering, of you ask of wanted and Marianne. your those on decisions? pricing I customer of seeing like yields if this beta affecting the with seeing from quarter competitors little you balances are a Kind whether in consumers being competition deposit lot towards Marcus your attracted high trends,

Marianne Lake

Okay.

some to sort slowing but am consumer bank So, customers, while manage of talked slowdown we the deposit us that retail it, moves is so, to online it the now, root and X% that year-on-year, come competitors of I moving seen seem the talking at we into investments. Consumer we net the even cause we some up haven’t yet. as -- of large the unpack expected, high you have would I And majority and really customers in look When accounts. back that. would say space, not worth, I’ll deposits, to feels the deposit seen to regional have you regional down in like case make competitors vast

second So, are at like Spending point. extent rate it doesn’t to driver even appear lesser seeking to the be and much seeking. seeing behaviors more would we rate be the a this

So, or competitors of Company migration this of point. out to the not that other seeing kind at online we’re

And into those. space, the is this to we the worth at majority said, a That of are seeing. on the higher net reprice And clearly. so, point, not vast been still And in journey recapture assets we we’ve continue happening. continue to again migration see we investment

playing third are we’re expected deposits losing and parties. en any not actually as masse things we point, this at to out have So, would

John McDonald

a you opportunity with of Can and the remind just And arena? the what to that have Finn rollout you you expect on in that. see what’s advantages Okay. us follow-up

Marianne Lake

very I as So, we’ve look Finn nationwide, I many that digital with think also we’re still although at to it now would opening. still look doing, fair account of at nascent digital learning. would of it’s we’re in And broader, one sort launched and say conjunction innovations I Finn it’s and

So, net we’re it’s score very the promoter to continue advance and going to got by -- way. high

quite young. But good. experience is customer it’s So, still

Jamie Dimon

We marketed… haven’t really

Marianne Lake

new success opened the across I digitally pretty So, getting lot seeing a is bank. account say, we’re the decent and where of existing good seeing chunk we’re those, hand new would we seeing of accounts other a story. open And money. we’re net incremental starting. a more channels are digital on we’re just opening And to accounts, customers

the wouldn’t as asset are payments quick digital broadly but I go think and we digital eye we focus our But, overly Finn So, into an more off could seeing and that focusing on pay broadly. more even than like.

Operator

next Mitchell Jim Buckingham question of Our is Research. from

Jim Mitchell

little Maybe data indicator a guys for or it’s -- on growth. think maybe the What it last bit Hey, just good you seeing up the And we’ve ground? do so seen the to about seems have sustained two. loan growth? month Obviously, you picked far fed what good over a in in talk a more morning. are is pickup

Marianne Lake

it has of I would on my use exclusively of but and bellwether. demand. C&I environment. partly Yes. There mentioned that loans And been active back say the I the we demands, a the M&A would decent kind commercial as remarks, very bank in robust decent not

is is tailwinds. growth through in full our demand flow expectations the as and growth of to to other say, and see And may see in flow. I with hope free to so, there the cash we be there, the And we tax yet through go We’ve line will year. would continue solid, profitability that effect reform

And would expectations from and solid, environment. benefitting to for active the as remain so, capital our growth very characterize outlook I loan solid markets

Jim Mitchell

maybe follow-up, how a XXX loan of level Okay. you think you NIM the -- mean, as a need of there rate? have, How NIM a couple And or to being going going deposit forward? to XXX you to XXX I would somewhat was now. we we you to trying maybe about normalized forward, think talked just or when I think think think ratio through about range Is certain years ago it about that

Marianne Lake

Yes. yet normal rates. we to at XXX of right anywhere to -- are I XXX now, we’re funds close but mean fed not

liquidity new else. think NIM, thinking and you more about about rules it about for are adjusting we the And normalizing we when cycle talk so, through what everything

and a market sizeable balance point. expectations But, are we we fairly sheet, rate we see have number in before a a expansion -- that on to moving further towards that. reach basis up continuing So, go hikes but with core on a core and basis we remember, of NIM are line to have we

So, we to level towards but not expect that would see there getting year-over-year expansion yet. moving

Operator

next Erika Bank is Our of from of Najarian America. question

Erika Najarian

in year period I new were marked how also receptive the is in the not not us comment you’ve the CCAR processes Whether process regulators the with there on year the or or this there’s that regulatory observable and leadership. am of during the change. was terms any Was question process? that anything under observed years? during SEB My change -- share could the if it for versus this previous you wondering or

Marianne Lake

Yes.

I during commentary obviously the regulators So, would on the SEB, say the quiet. of are comment the period,

been proposal of their number on they were feels deal. sent not have we’re is that than similar large way, feedback say the it was done sausage if So, intention but back out period this it comment to to going during been submitted. wasn’t which that say, a now made asking that take the dialogue two-way those comments. willingness understanding did a expect very dialogue like I’ve it I actual you letters questions the making proposal have is still the And back was previously was a the will We about fair industry pay start period. a I for the go to the only over and would I bilateral that the speeches to that attention look remain what constructive comments, and in that think that we to have at current is and for comments leadership the on rather two-way

GSIB. spades test, can am And through very evident will. We be they I in -- will volatility go this sure them, was And optimistic board. taken so that opaqueness, are we the on we’re in comments

now. would not basically discussions comments years. say -- years. it’s CCAR, like say So, now. to start that the on the we just It prior not constructive, it to would bilateral prior optimistic start I -- will that say will discussions is close -- felt industry not I remain as it it’s

Erika Najarian

that am is, otherwise. because an are suggest it’s the tooth And to is stocks bank would to you posted activity getting posted investors my wondering, in economic in both Jamie from and that in levels cycle. lot how banks a and the And are the not of just long strong on Clearly, Marianne, pushback am game invest would quarter you we this that late economic from in respond pushback question that I I metrics is follow-up we standpoint? that now the the the credit that you there time

Marianne Lake

things, would lower than while mean, older Yes. I cycle the growth which I this say been have recovery. potentially been, is last the is typically over has two cycles decade through

yield room also at data, potentially And globally, there the but people perspective curve flattening embedded a some to there of and So, as to in know, here and are just fragility. recession staring economic real look is U.S. that we that it. curve not flat would signs we the are good bear not in at no play. all say And a yield flat is the plenty looming of profitability risk of flattening, I compared

So, zero, I am credit still still policy negative. no in benign. saying very is we doubt. rate cyclical Real is at That it’s businesses, are said,

preparing and our and no will produce are impact will best-in-class be turns But we’ve among I will so, ready the be that. there returns performance. through from doubt think and strong proven cycle, the when cycle model shareholder business we And we

Operator

Mayo of question Fargo next Securities. from Wells comes Our Mike

Mike Mayo

I you respond very that macro on said to wanted could sound very if Marianne, Jamie is to. question, the last positive. follow mean, up I you supportive,

other the warning of the to On a XX-year treasury has flashed variety some signs yield hand, parties.

boost to to you flatter it’s the And the manage we the about do the economy, whatever. how slowing the you how whether maybe we’ve about how So, think on it’s curve? waiting Jamie, think XX-year, steady yield expenditures down? it’s should think capital economy for accelerating, we a you do been XX-year? and And same the or still extra the it’s have footing, or cut, tax Do is

Jamie Dimon

Yes.

the to to going years XX%. almost that years, said, workforce. Mari of is compared over is up, their balance at good space, is banking very system and in in building our the XX consumer the high, some people business the are lot trade. expenditure highs, real healthy the albeit just been capital closer Consumer home is finally -- is growth averaging formation X%, supply, So, XX% The back a is X because it’s There evidence slack of going up, being XX or confidence it to have really quickly, short confidence of very, past. is probably sheet household of very off in going system should

XX-year So, if you’re out say there, think the out a and I looking way lot is not to that there time every happen things growth little I is XX-year. time. of My always potholes accelerating. happened of are wouldn’t balance for reversing it’s it a are mistake. is bit the has a fed different. things is course, last that’s the there, And just view sheet. own personal The

I up very can bad. can easy In going up not history, where that XX-year we’ve always a that think XX-year It’s you in go the healthy had up up, true is it’s rates a rates going healthy the rates go environment. environment. had

Marianne Lake

say funds would the a shape we’re that cycle of correlated seeing. is and Right. fed what also tightening is I in to the curve that

And there in while pensions ECB of us rates are bumps, into been still you And is are not time. it the economic tightening fundamentally, point. terms to factors do obviously terms it’s levered steepen are we concern to on are potentially a of terms accompanied cycle. constructive the with where going from Japan expect just toward and seeing curve long accommodative out, pointing of this of at policy, a central as fact, particularly doesn’t But XX-year pretty very in weighing growth, the there some and typical perspective, technicals. underfunded the in necessarily what is as short-term as profitability we of So, still the other trade narrative, and in over fund banks in solid we’ve the strong bank flattening

Operator

question of is Glenn Evercore from ISI. next Schorr Our

Glenn Schorr

was I the to to goal. decelerated with it growth want line on X% your see, loan your follow-up in X% competition one Just conversation. but just

what given bit deposit loan capture, little is on Your than the better pricing up actually you’ve getting the a you’re beta on side sign. what

goal? about strongly. to in I’m all with this the add-on competition remember part the that with of first seems to the credit you has an that, anything time do fine, to seems the So, Are X% if growing putting to but be comment private okay X% I maybe just still competition. the the curious pretty market just that is And

Marianne Lake

correction. I would tiny a say just little

growth Our core outlook the CIB. was loan excluding X% to X%

ahead now. point at still with target. a out moving an just are would We’re also line it that. in I X% that not Things is outlook,

So, going while private right that the upon obviously at feel our are the we Competitively market we’re still in. outlook that is decisions, environment like credit make we to based the this point, access for commercial are the for get just trying estate, environment the is It’s the to competitive, real constructive leverage, everybody competitors. it’s also high-quality to assets. mainstream lending, but pretty so is and

the right So, pressure. margins risk the are taking. getting return for we’re we’re under And we sure will make

Glenn Schorr

on follow-up the the And side. expense Okay. then,

XX be you did XX. X would times If

those don’t lot focus is track overhead dollar amount. I Are you goals? expenses outlook a on volumes. want were overly on Your in but ratio XX, your better of for mind good to the on a still

Marianne Lake

of a It’s couple things.

up. the XX the expense of remember, gross impact before XX, So, was

actual billion So, them. including about about billion, $XX outlook full-year $XX the was

item, that, This about obviously. the $XXX included million one-time liquidation. We on quarter knew entity legal

annualize it So, in you you our times it was number, but it, can’t by four. can’t of sort

you’re right. So, absolutely

with are risk, the but that anticipated -- that As potentially third revenues, would in is the driven, be or middle FDIC waiting only year, degree driven, for other fourth are out above caveat that outlook that our higher largely if exclusively the you I’m we know, into our you for we out now would the probably performance-related the of would moving the is compensation full surcharge year, on the by as as when The billion, not year FDIC $XX higher we be sure is away. be quarter. look taken to at this it some

could an have that answer to year, overhead our ratios? your for impact while we broader on are So, this Yes. question, on expense track still

Operator

is Our question from of Martinez UBS. next Saul

Saul Martinez

concerns, it’s geopolitical see do how economics the on risk growth And -- impact following client just to global or whether things you what friction, as sentiment, extent of do clients? and that to trade gauge those and corporate or So, U.S. that policy, a ultimately, you you being institutional theme starting to see do growth?

Marianne Lake

Yes.

I narrative. so the is is So, of where firmly would say, trade are that part risk we far,

as that people. on global to lead causing than to But or business conversation. market is part a not but and macroeconomic but because the that can’t of it’s But clearly growth psyche change cycle ultimately outlined, them challenges that So, really they’re outlook. it’s the real actions at impact definitely, making, to sort point say has the just And important also that of more said, financial of as part strategic uncertainty this of isn’t confidence of decisions but Jamie the currently it investment stability. it’s slower not the a to more is

of driver. the it’s off an actual is point, this at So, taken more But, important it it risk table. a is uncertainty is that narrative that than

Saul Martinez

of the of flattish suggested Okay. in just his overall. in And a Can you this better lot did us the a sense if of on morning, earlier, the you quick than addressed terms I side, update changed multitasking a in I could what but last if what month just Daniel year-on-year give quarter? being much market it apologize ask you and of follow-up,

Marianne Lake

But some going bouts you there this quarter, that the And I’m you’ll as better. ended cautious. quarter. recall, first In clients more yes. context. we give over got the carried the is as volatility nutshell, Yes. of a The to of were into and context just say it became part first me let

the And or And volatility of volatility And trade more Italy was quarter, or part the market activity catalysts. is strong. vol more were the that; of vol, catalysts ironically, say sovereign client would the thinking generally, of idiosyncratic levels while there wasn’t In so, trading emerging you’re just catalysts about events market participation. faded, one so, in as and of second half when generally more up. fine, it more there’s The intraday of picked I part activity are just that European situation, that.

Operator

next question is… Our

Marianne Lake

Sorry.

half second trades. consistent It quarter. one-off that pretty to make finish that the no it large the It broad of to wasn’t based. is was Just confused. of lot sure pretty a was And one throughout

Operator

Graseck our question from comes Betsy next Stanley. And of Morgan is

Betsy Graseck

over this that’s quarter ask Jamie, is China. year the you you investment could et or a just the from there you for in put five-year? release timing. next how to understand needing regulatory more press wanted I folks something about I that versus your much three to China investment. Is longer-term is I approval this wanted over in this us a control as a cetera? the if to know to sense that the And give announced plans significant in

Jamie Dimon

Right.

just going there recession think like make one. guessing recession. clients, That’s run a I’ll about blame We Mayo’s know broader -- accounts, when priced don’t a run we there’s we how because the don’t run a to comment might I for question. We easily because So, be second. through business business Mike bankers, cards, we already answered to the be We services. business. products, We

portfolio are decisions. Some decisions you of the make

can you or your to it. sell mortgage portfolio add can You

is still if And You the that credit be course, the we’ll loans when can your you accounts. reduce time think we growth the comes, but or adding will do of bad.

I products these more it’s China, me, services. risks. we’re We to almost good a those or to job We don’t or want can in business for every so, in a as in clients things. worry much want do story. all long-term them and XX-year manage bond And very the about various

is to We’re XX will States not United a China. market close we in can’t but We Shanghai. do lot of do any in today, of -- In equal internal the of maybe Hong can America. size Therefore, stock looking we to next probably in do China bond that the do their here immediate for years or it able markets, everything be thing. we -- very so, Kong markets, the want

So, from we’ve their regulators. applied for need licenses. regulators our obviously, permission we and ultimately And from

get by these Eventually, a at it So, around licenses. we control. are be may in in Hong the lot business not what do Chinese into lot large trade, people it’s a China. companies be we’ll going as It a in companies with look in I Chinese hopefully, is competitor world, of Kong. it is. we’ll mean, with Remember, of a their Shanghai. but already that And or may I Eventually, point totally affected this time. there

good need issues, do company we’re have So, what full companies. China licenses governance for transparency, like China. looking it’ll be to JP equity, to Ultimately, for a we set to for do debt, the of Chinese Morgan think credit, I inside

Betsy Graseck

to Shanghai? today, now, in ability right operate But the

Jamie Dimon

No. Look, and we of already do do can’t is we deposits, we equity do certain banking. What debt, trading equity, debt. and

in make be trading, able underwriting, Hong that to do they these can debt license do can trading. York. full the all debt it get to if Okay? and could can Chinese remember, Shanghai, equity basic do licenses, in at New do in one we’ll We want So, and equity just in they But research, or underwriting, with it -- Hong able this sales and We do we’ll today Kong, day XX%, they it or or it London, sales of they can be we Kong. capability. in companies,

Operator

is next Gerard question from of Our Cassidy RBC.

Gerard Cassidy

past me you that over the with I’m dollars share some the correct Marianne, color update fed it balance in their have by can down a of impact of stands impact us, given years you sheet five the where taking of if guys us you to think today? next sheet. and give an balance about wrong, the that the us deposit trillion side three will your Can I couple

Marianne Lake

that would its the balance look share you about pretty of $XX the it of out be of And as $X.X fact grown -- that ultimately XX%. So, quarter. if on has about well-telegraphed you We the impact take about has sheet, been our deposits. balance a fed trillion the system, at here, talked by will reducing fed sheet a path half billion their if

of that to primarily of that. years limited potentially talked reduce kind and take about outflows operating $XX therefore, it So, not to the -- but not $XX on exclusively, impact deposit they billion we several would basis. liquidity be over billion But would primarily

now. playing right it’s out so, And textbook

Gerard Cassidy

And details just maybe more loan us Can mortgage some touched competition. you on give further as area, Is residential loan-to-values, there? or it is it know any seeing? the estate actually you’re now what this it and pricing, follow-up, is covenants, color Okay. increased I then, you’ve a in the real commercial

Marianne Lake

correspondence pricing. So, residential in particular pricing, pricing, pricing; mortgage is

I In share will space, be pricing. see so, sufficient the pricing goes to primarily if to what to we commercial would return real not is we estate And it say, shareholder value. consider

under shift So, commercial we seeing lot robust, spreads credit it’s the GSEs, a companies, are terms said, as albeit non-bank a bit insurance but it’s are that in LTVs. pretty institutions. a of right It’s pressure. competition, And to tiny the less still little it’s I

going not call the there, by pretty I We’re modest. way, would but it

generally quite I’d So, well. say terms up are holding

Jamie Dimon

competition the On issue.

There competitors fully have a card, It’s good think, I in banking, it for sales thing. management, That’s competitive banking, investment mortgage, all commercial it’s the strong It’s that. that good retail, trading. just recognizing a field States country, asset is. United capitalism. are we called everywhere. It’s and

Operator

of Our next Al HSBC. question from is Alevizakos

Al Alevizakos

Thank you question. question of one do geographical speed a care IB and for my follow-up. about I’ve I performance. taking got the

You catalysts, situation mentioned the market. but and Italian niche both mentioned, that there were the also you certain also

do or that kind difficulty] or driven then, know up… is strength were to feel whether it some U.S. there you areas was want And whether the is of by weaker stronger. picking follow-up that my [technical the were I specific So,

Marianne Lake

I am sorry.

Jamie Dimon

helpful really on if be would weren’t guys you your cellphones. It

Marianne Lake

But really actually really, breaking sorry. were you am I up.

And I that catch question. most of so, didn’t

Jamie Dimon

IB well or the USA is doing Where Italy? internationally,

Marianne Lake

Okay.

say would Equities, strong across regions. performance I regions. across So,

you While None were think. there I of particular were those more catalysts drivers. this quarter, mentioned Italy, but

all on I of those, fine did as we mentioned. as So, well

we in at And But say And prime would investment FICC say I in I cash in solid would one spectrum. own some share in gaining equity, gaining performance elsewhere. broad-based, our and quarter. can’t across you particular, the and share obviously, banking. think yes, So, investment, holding any areas look

Al Alevizakos

about And that. second Thanks that. the sorry for part -- and

the before. market ones that deleveraging? picking listen from couldn’t you you’ve are the feel the started U.S., European competitors they in share especially Do that You

Marianne Lake

I of mean, I back some prime if banks couple particularly In prime it’s it’s to would share last share, I European incumbents seen banks go you U.S. over that new just some not the not have of shift gaining would but say a trend. dominant you trend the the are the broadly. U.S. course say space, years, from and

Operator

Deutsche Matt of next O’Connor Our from Bank. is question

Matt O’Connor

markets wondering if you margin, magnitude interest markets. could net the on still you was linked up mentioned the business the ex increase follow a quarter And on it I the NIM basis, core size To ex was of increasing.

Marianne Lake

Yes.

So, core X NII billion; and basis linked X market points. points of up down quarter, lower basis markets because higher reported assets, $XX

Matt O’Connor

the up. Is little there that get you to a and of CIB, you some to but I in mentioned just a That’s know, I Okay. energy, color just related then, cleanup some helpful. charge-offs in that And separately charge-offs the on within went the had that. release there wanted reserve net blip energy? was just

Marianne Lake

Steinhoff reserve that by names CIB, we sold quarter. was charge-offs larger. in this of was the the one So, principal were remaining a the driven two it and We the piece release against loan had

Operator

Our next question is from Gerard RBC. Cassidy of

Gerard Cassidy

you. Thank

follow-up, Just Marianne. a

more the Is it evenly On be terms the over the that quarters were or in you four capital return going spread frontend approved of to for be share will next loaded? that out repurchase. guys

Marianne Lake

So, we even. haven’t disclosed pretty at that. But, it’s if you pattern, historical our look

Operator

of is question Graseck from Morgan next Betsy Our Stanley.

Betsy Graseck

on Just question CECL. a

deal and work you that as you kind guys, are about years? work you you mentioned Jamie is could not past of CECL and the the in what next for maybe and big think, what why of over I that prep adopt thinking couple a to explain

Marianne Lake

Sure. I we’re we insofar complicated, lined And think. to look, everything up ready you not are it. I that mean, modeling than for get it deal number the you the we as an working will CECL through getting disclosed is might still adjustment big haven’t more operationally and that a tell the is perhaps basis on data.

parallel next some We’re going intend to be year. to in running stuff

be of these would more speaking, reserves life NPV commitments. then, have by loss notable, adjustment cash through our goes be will context change… that card lesser to able of driven the give it extent likely loan it’ll color portfolios most shock firm, doesn’t will to life versus be an much loans of to the that But, unfunded Generally next won’t to longer you as wholesale and the average it weighted models, you have through most we’ll be of It you we manageable a we any the to economics move equity. flows, year. about the And So, think if incurred equity. in know the the losses,

Jamie Dimon

what relates is to. this So, my comment

Marianne Lake

of change economics Yes. It the loans. doesn’t the

over play you paid reserves little the get that dynamics. for out. fundamentally You it’s don’t bit think will But time. We upfront a going to of shift

Jamie Dimon

economic make don’t upon decisions You accounting. based

Betsy Graseck

under any there shorter CECL Are under model? it’s the classes than asset where incurred loss

Marianne Lake

hard it’s life of It’s because loan.

of So, could it’s loss. an be loan it’s a have imagine life a shorter that shorter difficult -- to than hard to incurred

it’s but limited why the not there’s no, for it’ll really. not no areas mostly reason -- the reason by be why I us, driven impact, the say pretty So, other But to wholesale in close this our and most many products, our for not multiple so at life space covered other to we years, are if loan of of because is point. mentioned of

Operator

of next of Our Erika America. Bank from question Najarian is

Erika Najarian

on question, follow-up retention. quick A card

not redeem the You if be to rewards could number sign the wondering number a hits with points redemption retention you mentioned that of level us, I’m of of once level engagement. so, share What or then? terms a a trip of redemption points, the remaining is in enough is may certain whatever.

Marianne Lake

question… not follow I totally the sure am that I

Jamie Dimon

constantly still using points. basically, use rewards we points. time. those little when kind cost it’s economics the over us expect of more And other use they’re creating bit. change they points points, rewards -- They’re pace than of will And already what constantly the But points some they’re a and

Marianne Lake

universe, oversimplified very, extraordinarily very And of level would remember of run an high redemption. a model we in that the

because We great we these and customers that in to perceiving are -- are, giving think rewards indeed value are they them. they

just to And so, the continuing mix we’re that changes. as observe

Operator

no time. And have further we at questions this

Marianne Lake

bye. Bye, very guys. you much Thank you

Jamie Dimon

for Thanks joining.

We will real soon. talk

Operator

concludes call. This today’s conference

disconnect. now may You

JPMorgan Chase & Co. (JPM) 13 Jul 182018 Q2 Earnings call transcript