JPM - Earnings call transcript Q1 2019

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Operator

Good morning, ladies and gentlemen. Welcome to JPMorgan Chase’s First Quarter 2019 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

quarter, IB billion commercial in We processing fees over above remained XX% respectively. new X% the leverage. firm the ranked are money of and positive revenue going record which on record We Thank ex-CIB and consumer had quarter highlights wealth Starting one, $X.XX to strong nearly strong of $XX presentation you, bank The across record continuing billion return of EPS on asset in well is and in loan volumes, businesses. quarter at our disclaimer The page number to operating this of a double record we with client client of in loan on performance net trends the and and Global $X.X to tangible Please and available XX% merchant gained record card record In morning, XX%. and of at growth billion with operator. asset quarter. everybody. include the sales core IB assets and and which take broad-based. and through investment back this equity income progress common the digit Good of meaningful growth management revenue, X%, Credit was and as share, you results this $XXX strong earning AUM expected. refer the reported website. up firm saw I’m delivered the one flows presentation. another both growth

million. up reserves of fee of of names portfolio order and of that related handful of sectors. sales seeing reserve reserve are Non-interest net new these X% revenue the balance reflecting or as idiosyncratic. talking on and and not office, up about downgrades as slightly implementation and last driven revenue investment technology, year extremely a client of deterioration. more by mix. a while across into driven billion million line year-on-year, fair was million over in expectations of reserves. FDIC In $X.X revenue costs Consumer $XXX NII little Wholesale. $X.X of $XXX $X.X In billion to $XXX a to no offset growth page, were this there reduction and there in have charges both changes of signs across by was X% but accounting lease Once release up size growth or more of billion and front sheet to quarter, last downgrades banking were billion changes up rates select well on detail Turning costs, the It was on by a sales we interest were as reported, quarter. were and billion partially in with excluding wholesale driven Credit a gains market was offsetting. again and $XX.X fees than Consumer there continued would which Wholesale, recall charge-offs year-on-year magnitude net to items we other was about up Expense X%, $XX.X modest remained income this were up of we by third credit strong year, in was are X% and real-estate, two favorable standard was been the Credit and investments higher had given our relating energy. marketing C&I lower, are a auto value Net making

basically the syndication total loans Wealth trading the firm the & a and a We assets. year given in balance a modestly period ratio assets earnings being lower XXXX result last $XXX CETX partially of sheet spot page including and end AOCI quarter, this of balances, are from ended Home billion page with and Reserves. credit the and Asset higher as of a up our trading up and of were to accounts In on repurchases, XX.X%, of normalization $X.X risk-weighted canceled of cost billion CIB treasury Quarter-on-quarter including by but given a assets the share activity, $X.X down from businesses levels higher higher CCAR seasoning. high the the transaction end in Also quarter-on-quarter, notably rallying large a conditions. of the basis. up on result of offset slightly to quarter Card Lending primarily loans driven Management by of by with security. Moving market lower loan over a being part due in pre-submitted and in in billion three, RWA CIB gains is rates on capitals. for quarter distributed Federal sale plan are partially loans offset capital strong across and offset as quarter Lower at benefit our the shareholders, by

our up to page Home billion and Moving net and Products income year-on-year, Core $X both four, XX% Consumer outperform. expectation up new & and CCB of driven X% confident. to across line invest. remaining with physical an continue digital with X%, including believe record by loans assets and reflecting XX%, both investment ROE by and flows on business driven Community money strong banking Client new X% generated we consumers Lending were we were X%. up of and channels Banking in Deposits grew up

was FDIC by by open X%, in was We in investments Consumer revenue revenue loan on revenue offset higher continued XX% up and NII by nicely Auto driven & the also Expense also down volumes and while revenue expense of billion higher X%; business and on growth net higher and Home auto deposit charge-offs portfolios. by partly lower branches charge-offs XX%, production Card Home Revenues expansion; in serving on Credit, charges. on volumes. operating And growth. revenue in and up driven but rates higher expansion up lease on driven by are pricing. Merchant were margin as down NII flat was XX Business and product lease Lending lower Card by driven Services lower Banking & disciplined was both efficiencies Charge-off Lending $XX.X year-on-year MSR, is were lending loan notably depreciation, year-on-year charge-offs new of $X.X On X% net markets. billion plans up offset up revenue margin this year Auto across down were to announced

reported billion and XX% an of of Investment $X.X turning billion. ROE Now on net income strong revenue under to of & page CIB performance five Corporate $XX Bank. nearly

market dollar lead-left gained financing basis market also we seen of of positions quarter an the as we’ve market issuance $X.X back larger a the Healthcare were acquisition For large quarter. technology Advisory But XXX deals leverage closing fees already down, number accounting points a from in Debt points a were benefiting revenues basis year-on-year wallet major are combination our IB the Brexit this well leadership in in of activity and would more down nuance, and Equity shutdown, quarter in was across number one benefiting was levels second fees our again all XXX quarter. volatility DTM dominate December IB calendar. in government and US in underwriting fees and in were of the share. volumes advisory, quarter. on of but volumes driven by impact XX% sectors our of We continued a deals have IPO weighed strong We outperforming and rank been normalized underwriting and which our share. from fees XX%, outside up up of that total one down first the finance. uncertainty down, a and maintained the XX% the record recovery residual XX%, first ranked billion and over that around in nearly regions the announced to Number for a was And gained from up

to for but what X% would emerging which down terms to P&L. the particularly was draw total sales slowly standards XX% environment any conclusion weeks second fees we tough recovered solid and early was relatively ‘XX results Backlog Moving adjusted, lower revenue strength normalized active environments. challenged to. picture, equity the in worth impact we little were current far, to which last in ago, $X.X by was we April, Investor better so kept in down and Day on referred with quarter it’s revenue prior rates activity, broad in a that characterize uncertainties in clear in this and clients based a saw a we in driven from and due of started following constructed at that March. accounting better record mind by and general income year. first of despite markets, the contrast a overhanging year favorable in half reported performance And the and strong reported, of of last Big in markets year-on-year And lines comparison. XX% basis markets, quarter down a than just flying a too year. the I a few In adjusted I thought largely billion, the it’s slide more to Fixed are was are

XX% well across adjusted, as generally strong in in seeking products. year more to strengths relative strong still and the was and see down commodity. which did Equities quarter’s performance, we However this was as prior record credit quarter revenue trading flow,

exceptional growth funding the in $X was X% to treasury higher by compression, margin services X% business year-on-year, Although in deposit margin impacted than somewhat rather of payments compression volume, market there a matched at cash more client wide year’s and billion, and offset. firm Security billion, services last compression. the benefitting Treasury it and impact deposit services margin level $X.X was got offset is by fee basis is off partially was being particular lower exist. levels an revenue and Of down and basis slower both the by security organic from note, revenue as up than offset services deposit start, a balances nearly results.

and $X.X X% quarter driven charges, Finally, was was lower performance The XX%. the FDIC and for by comps expense offset by based partially down ratio revenue lower investments of the billion continued business. in compensation

$X.X than as business us. Record behind of Revenue deposits largely higher billion migration down of to year-on-year several and million decelerated stay Deposit and the large and more to net the of strong active. was outlook. pipeline of portfolio. given up to an and invest up the of rate C&I as on X% Gross the year-on-year to Moving quarter and balances yielding investment we coverage stabilize $X.X in and on were were ROE bank we commercial X% the it’s $XXX higher up here tax XX%. X% year-on-year benign year-on-year due page Loans for million X. with deposits billion adjusted banking X% X% continue we sequentially, Expense year-on-year and of and to X% revenue exempt over technology. in up has continues loans From and A expect banking robust NII. was banker for in our income runoff or deposit strong performance commercial flat non-operating up up IB alternatives XX% believe continued were the sequentially. $XXX X% was transactions, to

the see loans we continued in industries. competition given discipline growth elevated to specialized maintained CRE up to and market we X% across remained cycle. where solid continue and are expansion as We were

predominantly only was X Finally offs on from by million credit underline costs strong client of select performance. points net higher $XX basis were charge and driven downgrades reserves

there previously second, by include this noted, fed all comments C&I supported all the we also not be strong Feds reforms. in fed significant our robust statistics our weekly the data. higher reported growth the reasonable in does our gap go make; financing definition see want us, third, hotel can would noise the those year-on-year growth we And Before for business, of quarter was and seat look three reform show the seen C&I market If acquisition X%, the loans. portfolio, data; loan a is at but I for about CIB as which that declines address we we given across and on, growth that has is weekly and to CIB there tax big year-on-year contributor tax first perceived between I of are

stream true middle it’s showing strong ROE, phase line was that we mid-single Fed digit expectation. domain in apples-to-apples while base demand with and year-on-year lending in So our good, seeing the growth the market are

Moving on Wealth Management page to assets on seven. and

as levels, of XX%. margin pretax were flat market with on management Wealth in fees ROE $X.X of partially by and as of X% reported gains. our higher by Revenue headcount fees. investment and up Assets of billion income an as was a offset Management $XXX average the valuation quarter lower business, growth of expenses investment was $X.X were net XX% as but for million lower year-on-year activity lower other well external related brokerage continued offset year-on-year Expense well billion

quarter offset we inflows by with asset net $XX partially strength the income, saw other of in classes. fixed For long-term outflows from billion

capture sequentially vast were continued quarter performance year-on-year, migration Deposits third market into net liquidity on as by investments, continue $X.X trillion the and have of decelerating X% to client of declines. billion. reflecting up products trillion long assets and into quarter cumulative outflows we of although $X X% majority liquidity seasonality X% fourth with term of inflows. were AUM down nearly of offsetting net records and $X.X Additionally inflows overall we driven and both

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

the first million of the page drives feels the showcases Underlying despite consistent year to of from recovered year. continue includes guidance this global on on we net grew for our backdrop model, hangover businesses quarter revenue sales foundation that propel revenue higher economic to the optimistic gain wrap a and and Deposits and that a sort compared reported net of across benefiting the We of in quarter. and performance increase million net the was this this as treasury. increasingly forward investment full constructed, We With our delivered encouraging clean strengths quarter has performance. net a really quarter. the higher of operating data firms And April on client million take deploying a recall corporate. and net The from Expenses record behind diversification weeks income by agenda. and nine, us $XXX with scale $XXX fourth in a million some $XXX is our sentiment of small in the had remain as positioned to up opportunities Concluding last nearly $XXX momentum. questions. operator, in rates, driven $XXX six so only page over of Moving Corporate relative to to million, is and eight contributions million quarter. year-on-year to $XXX well loss last cash NII income into coming shows of about up and security the do losses recent is we’ll firm’s changed. hasn’t well us, March net

Operator

Instructions]. [Operator

with Your first McDonald question Autonomous. comes of from a line John

John McDonald

Hi, for good Marianne efficiency expense of goals improving the years. this morning. of on Jamie's control next the good business and the each quarter your few show you main units ratio had you letter

through. kind investment what's driving going carrying wondering or kind of kind leverage spend occur in that's to cresting that? there of this Is XXXX is just Just any positive of operating of

Marianne Lake

John. Hey

total a the in investment, we're based that feel management fact generation, with of customer making next and and always amount spending now several and the should investment going lot like positive. but incremental only do Day see technology told So I net years make you off course know just that service a plateau so get not but we've that to net of both would also rolled and is the combination it’s every the that Obviously the investments in we’re expect dollars over you say But our for of base merits, revenue We also amount been are to investment risk investment. it’s efficiency also know of it’s the that of so revenue reasonable reach spend some see we operating the a growth, that year repositioned that the decision the net We own about to we picture on Investor that for we its with looking are would leverage. you do obviously. of big at start to operating a case to drive, combination both. also and with has know

John McDonald

NII curves hold the your keep are the seeing? was we the though able Day in curve change Okay, reassuring this even $XX What the it's guidance with you there for and outlook even flattened, dynamics just billion to be that concerns there. enable of that outlook, some on to are year to then the Investor the

Marianne Lake

big would it is Yeah, the we’ve and so you month probably down of up every before short these mean we it’s kind it I where and curve dangerous chase said first periods say in that, that I know, or fluctuations term seen so. a you is the to get

And said, that net Carry not that have and true so to small would that. are drag curve plus. it’s billion you persistence immune know big in we a the a Yes, $XX the picture on we

there little of pressure we persistent there year, and this bit you that, a is the So to grow longer. of if for and bag know is continue as our lower deposits is of but throughout loans it that, a mixed a level result at our against

rates So same while have net the not now and on a we lower necessarily and rates, see and while the we basis small on the in rates pressures patient cycle. could short that’s kinds argue balance a maybe tailwind know may for credit a the would have drag FED higher the of may elongate longer may you earnings, longer also sheet of we you not a that and on term

modest. there So as net-net if persistent, its are and minuses. I that some pressure may pluses there it’s be a results and would say but

Operator

with a Wells question Fargo. next Mike Mayo comes Your line from of

Mike Mayo

on out what growth reflect of more banking up to that consumer of saying due how does being the little due have big study I I is much your $XX I outperforming a numbers. then those is the deposit to build strength, why, this during – was so branches, billion You the hoping mentioned digital to and where benefit consumer deposit too to are Hi! know you to is degree year-over-year, Thank. related how just perception how the IMS much average that growth for fail? you that bit that over came simply and CEO get hearing, a that you a would up of be get a perception superior deposits going,

Marianne Lake

lots I people deposits. for of Yeah, ensured say there’s will opportunities look to so different get

to So of a all plays we’ll the back come that other you point, piece. know, but

and increase crisis many times know our position investing all-time like products experience, So and market, a it know the so phase and continues number and customer their you have are know services, you our California convenience, last well as value new as large do decent growth the financial consecutively. you obviously not densified seeing know which customers, other all to Nevada customers, new Florida of and that of you in in we I to we portion propositions consistently and number still of in as of is firmly record markets maturation been decade bank we increasingly and that about at some build following Digital think many, definitely to a over factors. the branches believing our being talked we we’ve a we you branches that products, are our an in By deposits important satisfaction also customer consumer there. are new high our so in

of as less spend in perception as bit to flight to speaks of out have deposit are far say flows higher do are expectations, the year know you you to the see a the you a would consumer deposit it’s know line this alternatives. bit of our with So and Year-over-year so exactly to to choices. I point of can rate-seeking of growth little know this but a we quality, above me more at and a less lot see we slowdowns combination all people little grow with

combination any So deposits also we customers investments branches. are brining to with their a are and and are think voting including us business, I speaks making they the to it of

Mike Mayo

growth digital a to us or So due quantify in figure? you give that deposit is how banking? much ballpark that Can

Marianne Lake

well talked Well that deposit It’s headwinds about there. about so also our tell about digital remember. assets you providing – investment not and and growth offerings we I as can it’s just

you; So for have I can a don’t up. breakout we follow

but You believe digital our too. why the at continue know we deepens are you presence, a it both and in reason to important, both know back we can channel branch, combined fiscal get you know

Operator

with next of Evercore Your from comes question a line ISI. Schorr Glenn

Glenn Schorr

business thanks also very you you I sec about being aware much. part on wasn't funding big better did and the rev’s you Could growth. loud mention and On that flip that organic of to the heard basis clear I then down. exit? and the is compression the Hi, how that services side, answer talk about

there? is We big what business the haven’t heard I underneath type the on too you Talk covers. going but win, much there stuff know are dollar since trillion about of winning

Marianne Lake

Yeah.

news. business year. equivalent is a aspect, growing of you the very our of a about seeing but that it feature but And on know took to year-over-year. we about new but on and underlying Lower place in – we market growing relatively that competitive under we this of from another revenues It’s mix. as environment feels asset over you me a about really competitive exit our exit on old winning still pressures growth, U.S then also sort asset are impact as are an the was last and drag year and $XX were it’s terms news year are million is it's about the solid mandate, we the on and revenues. levels always this basis To like see speaking you we talked of are custody these know know on depends are talking It So negative obviously ago, many this just a our old revenues. – impact, quarters quarters on couple of year-over-year that for going broker-dealer

very of businesses a can factors we is are bunch on What these focuses efficiencies on big are that businesses, growth drive of going pressures even ROE know And both opportunities and organic focused these well, performing of are just are are long businesses mid-teens. growth I’m and the and so so on. and there is continuing with we above this make you as comment? I going think our know just one we digital I digital say is think assets, open know the on that are of think it’s attracting important a of production, able new as we forward feature about accounts being the to but not space, digital savings that the XX% these sorry, didn’t account underlying you good digitally. how openings I and you to now we revenue checking term the XX% be more production,

digital to So will driver, we but increasingly a that. with you be get will back

Glenn Schorr

one get just the DC. hour non-bank finding of the Marianne, the Jamie's Besides shocking I a that the sure private just on wanted in you talked that risks but day you little marathon didn't can that capitalist, just and qualifier to if quick more taken, news, be I a those, being I'm of was exposure credit JP the risk that other pretty expand just on one in about and Morgan that, seven group markets out think that’s mean qualifier would lending the to – has helpful. it’s

Marianne Lake

lending systemic, well-capitalized, banking businesses losses wouldn't be companies, problems all diversified. won't some and environment Yeah similarly, about under be in there percentage another have know the non-banks at things of now taken our not responsibly about of run may overall comments that there of which The or always all is and the about and senior, are well fighting, different variety not standing you you sure, relatively you look not suggesting leverage such about who manageable. some sectors scenarios modest, are that's the well to are of more percentage We downturn. healthy we are know and and so end a are of while been market, being secured, Not that relatively the really are the you others situated told say and there risks risk we’ve two things. necessarily the some are that know well outside risk for of the our the that at those systemic comment our and are

of understanding the not the it us, real has know on banks, that of a But of it's may these to but you unable within able downturn we of how same about refinanced not be to easy for structured, rolled markets same it this whether be about and question in now? market. that So portions there So whether business forward. that terms variety outside for capital would be it's to all it's be of migrated liquidity prices be is as reasons will it's support want to much as going over, sounds pricing, with and as intermediate the is a for it that

Jamie Dimon

$XXX it, can the so eye of billion. the Yeah, The about $XXX about of or just rolling, particularly quite investors, I some to banks just them put take we Then – you there’s or A a institutional piece but keep $X.X trillion. an facts. so The banks regulators those not billion senior obviously worried and have are big generally give right. piece are numbers, it, on the some

there's etcetera, are $XXX large companies, owned about call You and what insurance think these funds. they direct, and BPs know funds, life these $XXX as billion, of billion

regulated large know part the in more those bigger but there’s something CLO bright, very most the very point. It lot direct more they should and getting just okay. outside at be funded more are issue system judgment. the piece the but so of funds, you CLOs, they have equity look and long-term piece should the institutional permanent if about I are piece that actually capital. are and capital, It's that, In it's more systemic this be them a both watched, capital, CLOs, that capable, is as worried at mentioned, is For people the some CLOs. that are I a not

Operator

of The with next line Stanley. question Betsy Graseck from comes Morgan the

Betsy Graseck

Hi, good morning.

Marianne Lake

Good morning.

Betsy Graseck

odds are that increasing Could in for you about of shareholder statement the question that because and and of role materially your change what a in forward. and you're us intensely that significant Jamie. around strategy origination there? you for and we going give servicing had mentioned kind mortgages, color Jamie, you some mortgage will are things I letter, some issues need context to holding our mortgage the thinking reviewing

Jamie Dimon

Yeah.

So business, it if is at the mean look just I you costly.

federal and it have X,XXX requirements; You litigious. state and is servicing origination

Just or look non-banks a you becoming regulations, -- the it's and the at have requirements the that, in can same production. huge competitors, same becoming history, are they see don't servicing and

So hard itself asset. servicing is you're of having that a issue

So to we it’s know for important thing just just, we – an bank. we a want

and relative be, more mortgages. Far standardized lot it's – pod. the should constrained are want since holding to than it if generalized a capital a capital; of also risk you it embedded We real in also banks just by at we look capital

we just every volatility; it our in of eyes We happy structure go piece, to that even the a So in at mind and to we questions it. but about staying lot want that, at be going should very got a don't way ask look business, whether look forward. don't mind open, you have we're the in that banks and through

Betsy Graseck

then, And asked, to do know topic, understand think couple why you a was person Okay. whole answered separate of ask color raised Would the to question you? way? a I wanted because a questions of who succeed it question you? I I The could just you yesterday. but your group why on I got hand. of from woman and or And succeed just that hear would you, just you a wanted don't you think CEOs

Jamie Dimon

Yeah.

you that speculation Congress, Congress. on in So level It's is something your confused issue. was without in what succession not we or the play likely you by But I a Board on comment plan. I where timetable. also question hand That's should said out a do have don't

it and all the exceptional it's year have very so we from now and one or versus if be might successor different a not woman it women, So that's and circumstance years that on really from may time, was. five be well my depends it of now, may

people bunch was confused of mean a think of saying you I what were would kind like and likely that. stuff

So go the and I can mean in who committee other succeed on operating still several work people me.

Betsy Graseck

that. you answer going give, hear That's that. appreciate you, we're I Thanks. from it so but Thanks, to appreciate wanted to I the expected I

Jamie Dimon

welcome. You're

Operator

question from with Steven Wolfe next Chubak comes Your of line Research. the

Steven Chubak

is I decline know balance on in you the the loans business. mortgage on which spoke see wanted follow-up that the loan loans. growth a sustainable loan resi of in how broadly We growth that core of securities more Investor more optimization XXXX? Marianne, growth at strategy growth slowdown maybe the we versus we in I could Hi. Day and pace a think loan to in remarks I'm what's resi should drive really just and core driving sheet or mortgage wondering, did saw about healthy

Marianne Lake

Yeah.

of mortgages epicenter mortgage. for it, So XXXX-XXXX are in the

and notwithstanding So year-on-year. the XX% discussion year. lower this the they market were about is itself It's smaller, all about higher year-on-year because rates more than time last still of

and as impact we're similarly. So is obviously -- been having we've down that and an

characteristics. and So did and we've better portfolios. We're off sheet. of balance assets of sheet, that we the speaks them quarter sales reinvest of take again that you loan liquidity trying our added loans did sale optimizing in we first non-resi $X if capital to we loans of our billion and against mortgage core saw to to a and number another can sell core loans year, agency balance But our has balance about sheet, MBS in as that, last the

the a to going it's trend. at to bit look So little be harder

at need grow. to going things to look You're

So originating are high we loans. quality

will We to we're are portfolio; adding execution a we go, of loans but better would based our our balance optimize sheet. as that on continue number to distributing

Steven Chubak

And Fed still you highlighting that I'm models XX% CETX including the payout sustainability and way net in the in CCAR. wondering, this loss to for capital a Card as just to well just the inform of the a some that year, thinking Very are XX% changes does to me how you're capacity. target? and confident XX% XXX% about follow-up the losses return higher as helpful, document on The released upcoming Auto exam. recently

Marianne Lake

Yeah.

part were didn't the on up losses, were question second would losses but I of which is what say. you this that year the mentioning, hear So here I

Steven Chubak

The Card losses. and Auto

Marianne Lake

Yeah.

always in wide. it's we case continuing right for specific Fed to So arguably end I able for our be and point they the to high and to to observing Necessarily, that less the because we way ought we been bit love we're we but that that the range are earnings little of portfolios. to losses Net-net, to XX.X% of businesses above our think able more the necessarily, as time. detail applaud typically about transparency our invest Federal view sure tied change risks are get now, granular of and at models we've less that be And Reserve over model our CETX industry a earnings, the portion distribute doesn't first. grow it our that so as significant

excess businesses. So, that we you to degree to nothing we adding we're the responsibly. we're that have and February, earnings, customers, at branches, across we'll changed. distribute ranges But time end Every we're the continue we are growing of adding them gave businesses our the our adding advisors

Operator

The line KBW. of Brian the with next question from comes Kleinhanzl

Brian Kleinhanzl

Wholesale also a quick mentioned base. question and Marianne. credits Good idiosyncratic, additional in color quarter Hi. that the there? the within an a there mean normalize you off increase in I can of in it to morning, but last bit quarter. as I was you specific to way NPLs know the but perhaps? increase little five just give there know that was I drivers said was again color A – past last expect Is that you you low I more a you're got that,

Marianne Lake

Yeah.

where million So, out, builds you home eight know is course go the say in reserve the to of energy would've back take oil, is to close and between. no last you if the $XXX there other color are color, quarters gas, over to you which and seen releases there really quarters where were is quarters were

cash two been for thing the or we're we're and whether corporate seeing broadly there's to seeing three at the one we companies portfolio and downgrades. for have, and The we're look on not and sectors look is So as margins across banking or we free whether whether that pressure or be not. there of just flow, always propensity or facilities the we four we're

a it's trend we These the large portfolio. non-zero, of that. and and remember So, downgrade have attention as it's quarter-over-quarter-over-quarter context of color every real extremely wholesale the to it's these names to call there facilities you real and about equal And handful that no color of And if downgrades, measure. are close a playing we – lending look in we're is upgrades, we it's are out even but upgrade last retail, cycle sectors talk true we of but quarter, to hundreds say, and every attention estate given aren't in not where quarter, not to approximately there's modest the is close are of they say across a quarter. just handful because playing that like few, to we no are genuinely it's not was a

we're carefully very So looking at it.

yet. I people understand think businesses not and it why questioning, and turn, the these will we concerned, we're are seeing cycle are cyclical but

Brian Kleinhanzl

in the one-off Okay. over Was rates And years Something mortgage quarter? a last sale like the gain question were quarter. this in a as point then that with margins at high looks this the the on number it banking; something that was market? separate or there impacting five a

Marianne Lake

rate sales in quarter loss a So, we very funded, did geography. we last and business you there's NIR, sale -- NIR quarter, when because Lending funding there's Home mortgage in the we're last may and loan in that match realized mortgage loan little this But do gain. recall a was P&L. offset quarter as an a net-net and In there these

but quarter-over-quarter, out, the margin revenue up. So that's all material, better going is on margins this we you've pricing. nevertheless just quarter, a gain that strip but But if not nevertheless better got of addition, production quarter, which you driving small, significant both in the seeing loss are majority noise

Brian Kleinhanzl

Okay. Great, you. thank

Operator

of comes Cassidy question RBC. next line Gerard from with Your the

Gerard Cassidy

morning, Good Marianne.

Marianne Lake

Good morning.

Gerard Cassidy

obviously share numbers? desired then your you have branching your to return does get for the branches guys strategy de novo discovered with got long take you've to it what breakeven reach us you investment how and moving Can forward. -- And eventually and on

Marianne Lake

Yeah.

able these States. But across about really for customers investment years, you and long-term, more serve the and open multiple talk markets decades. these be excited branches about are talking to United you to when So say we're long-term, the really, when in branches, I

the So nascent on. cases these we that with new are haven't even branches, broken markets to many we're ground extremely investments, entering, the in respect

said, little would at than better lot excitement that early early We're seeing very the positive. in early very, we indications a of are accounts indications, have seeing We're very strongly a expected new production, However in this market. stage.

break over relationships even years whole, that. or several the to below years of you in terms and On deposit mature XX closer investments see and branches and

Gerard Cassidy

and dollars If what it then the years? years, today. kind Investor has I technology Very I spending. it you what to five recall are versus up believe like five correctly, next past technology should following was with compare Day, good, just of has you and on year touched the at made at in trajectory of changed spending stabilized again growth about self-funding Nominal comments on some and now be about where technology? past When you stabilized the today

Marianne Lake

every modernization year been and platform controls security the And that invested spend, from it and digital, and that net been of we've said, the growing that in have to forward than and merit. continue ability R&D will I is each look level more whole So, them. the our and I efficiency make we and that that redecision customer the of the lot growing a in we be runs at you the which number, in spend It's but reiterate investment should of technology continued out just been a of investment given off is past, that bank. and With believe to the to investing want dollar to lot. spend we've completely something they sure particular want going and guys we on large dollars we've flat portion each and of gamut our overall the changing internalize, its we're experience reinvest cloud getting the roll get to and own

to that [Audio anything flatter decisions, year has Gap] we're to that very heavily make forward the right not and the it than continue been. It's other is particular the invest this agenda. agenda, being very, So, going in that just technology we we'll continuing each than and to be doing going and in see in

Gerard Cassidy

Thank you.

Marianne Lake

more And we're getting efficient.

dollar was the is very technology in with the way in, different, way modern was we're cloud-ready the more the and productive. technology our new So of delivered more virtualized past technology, that each

Gerard Cassidy

you. Great, thank

Operator

HSBC. the comes Al with of line from Alevizakos next Your question

Alevizos Alevizakos

Treasury apparently still run the of on actually talks us I be follow-up my believe still the you a you're volumes going just and Do the bank question question get trade the is, remained growth for much you. we year-on-year quick back are more for where XXXX, growth to a into to just and remaining got therefore the to can My Can volumes the talked spending how wonder feel follow-up a quarters? the but question basically. I've healthy, year-on-year Services, double-digit double-digit Hi. ongoing of margins about given bank deteriorate. you indication could And number grow change is from Thank you the to how going the versus budget. started bit especially on of problematic. X% remaining innovation? give go a kind the that we you IT that

Marianne Lake

Yes.

Okay, so digits. in Treasury on first was double growth year point revenue last Services

businesses spreads and zero. but more You're point to that have of is all segment company are that the The quarter is very for happen both important declines well to and I right, a underlying we growth continue. earlier as payments that this between obviously basis provide holding year-on-year. reported, just expect funding and and this organic that of it's wholesale have do for mentioned the balances year we up on net results maybe is headwind fixed so to moved that businesses given pricing the the compression we rates where our that

really So it's speaking not this and to It's escalating compressed you will volumes deposit point. it's not at to on to speaking see flows, speaking that. margins not payouts

So the $XX.X bank, and it's billion about we of in the half. we spend, run half the underlying technology year, were about last kind recall bank, spend feel year this respect change and you'll growth With organic more XX-XX so XX-XX of to the good business.

Alevizos Alevizakos

very much. you Thank

Marianne Lake

whole runs Remember, digital, the the spectrum. customer and experience, gamut platforms it's from the to bank so in of R&D, it controls change the data, whole

Operator

Matt Bank. line the Deutsche of with Your is next question O'Connor from

Matt O’Connor

seems count of target quarter takes drag wanted rates lot this up just or came follow that's and that already you day and you'd like there you're I than and obviously lumpy to but conservative there's it, quarter. the versus income, full and you're billion is interest puts Because with if the morning. sheet in above where a year on annualize now. $XX the one-time Good growth, right this at and Is balance anything just better guidance it it flag? net plus expected really

Marianne Lake

residual the and fourth than overall quarter. did in that quarter the it it quarter, to may gain approximately. into but arguably gain we in better IOER, about first first first in the Treasury $XX investments million fact a quarter in fact is there nevertheless in call in addition that was in that Okay, is were small we sales, or things opportunity is we high-yielding so the driving small continued be small which And seeing when the about the the that NII, was that non-recurring, the a deploy it. these we company net-net talked liquid we then in short loss slightly cash two One talked do that loan resides duration

and So necessarily that expecting from not not continue, way may may through. to benefit it continue that or but did all we we're the

a count say would that day I So was drag.

with risk As stay longer. yield net for the associated a look I curve, see obviously with do neutral pressure, not big, downward you long downward nevertheless opportunities, that some forward lower there is but flat honestly rates end or its to pressure

rate December I risks rates are see tailwind think conservative. into think As quarter, hike, have opportunities. to bit we outlook, there the to rates paid more don't and We more don't decent it's could we so but and still the little anymore continue second it's a a from higher process you

we'll The is can decent with its at continue $XX point curve over estimate it the we it's shouldn't it. over-interpret billion you. short-term or straight over trouble this this fluctuate think and the is update chase At the think yield a I middle point. down -- I and dramatically to

Matt O’Connor

the and you may macro there, the positive on a be things adding on ago? then going outlook? any approach management can just and balance the And repositioning positive Okay. forward securities. you more sheet weeks to differently, seem you more approaching are but from six thinking Are obviously You than maybe differently clearly of the the change given were sheet macro little balance bit

Marianne Lake

spoke Well, weeks only recently most ago. I you mean we to six about

of not answer really. is, overall So, sort the no,

bit we and We there's which in to couldn't being a all would a balance expected patient the to risk for that our natural central situation that little sheet sheet. on but not dovish, be at more duration, banks pointing add flatter turns there. that more a is curve environment of are point balance drift for sort the have credit It generally compelling Obviously fed. the the constructive being out

about good So curve overall environment to overall company very as and we flat we economy we'll continue the and manage little, credit. The see feel is the the unfold.

Matt O’Connor

thank Okay, you.

Operator

the from Bank Najarian of comes question America. next Erika of with Your line

Erika Najarian

backdrop you hi, you prolonged just rates know costs I lower a banks deposit on you discussed deposit time? for for period the I In rate if but off the Marianne longer, do some good strategy morning. way of give do expect curve other competition you're how quarter, for a for In Yes, dynamics and us on taper about the on room actually your in retail pricing sense have stays could to lower first to thinking when wanted the to this wholesale? follow-up, words, and comments.

Marianne Lake

than and contextual observing behavior by will always what big answer same, strategy we're which driven we're just around put pricing, flows. is deposit is it our the I'll be consumer So, XXX% in think we deposits when the deposit our and what seeing about

whether in you've the that's the naturally that our agenda. terms as be end, whether end drives seen the we've and is it's in that. of that of the yielding short flows may couple and what's alternatives, so that seen higher at of here expectation to continue watch more deposit that from recently it's of predominantly investments CDs, pricing It and short we'll it's rates stable will rates relatively sort continue; environment years happening, the have over been course you And that look to rising we determine the last know of or to deposits

our but So and customer deposit if to continue deposit behaviors to and see long watch because end as stable, curve the flows accordingly. going respond costs even don't the down, is as necessarily it's going flatter, is we're front I

Erika Najarian

prepared look a we you. during in increase at loud question and And in that cycle non-accrual and loans we remarks are a Corporate quarters, where expect Thank the clear two heard quarter should in we're your wholesale we we non-accruals past follow-up how step-down saw second Investment last & the as non-accruals was you wondering tick-up the is, in my from of idiosyncratic, year? or in the similar part in just the for to Bank just we low base the growing a I'm

Marianne Lake

say There are that expect and it's a we maybe the of whether But I benign. we extremely call up movement but down, a would exaggerated. couple they environment second are in more quarter, to low credit it's that any or the of would base be would from so situations to present somewhat feature not continue

Erika Najarian

thank Great, you.

Operator

Ken line the Your next Jefferies. comes question with of from Usdin

Ken Usdin

just split quite you is the wanted to can Thanks. Marianne versus that mentioned there just I and ask signs you you, the – between you're still just about ask you seeing terms corporate side a that if consumer I there side the of wholesale saying to slowdown, could some are some good. that a economy of, on what is strengthening, obviously talked just the still and year-over-year, corporate others this about you are numbers bit spend in double-digit spending just have then unevenness and And CapEx side. are little

just through of improvement? pockets of So relative us seeing you're just strength walk and kind where could just you

Marianne Lake

all you've as very and to consumer, of Yeah, jobs U.S. holding it looking quarters. relates I the Auto, way, whether the equity Housing, U.S. and or double-digits particular robust hangout got market and - over and it's we're whether at more in mean sort that I to of the the confidence generally think well encouraging all by recently, can is it's the see that and any not, actions has spend, and recovered from four still which continuing see from high up

little, housing you U.S. very then been been has strong bit, us, even is the on and a been is some it some global beta even around the that be if and of would in labor, and businesses think be - has super looking politics at the sort and confident that for hasn't business we little social fading confidence recovered on all-time seem and still still in factors we're you general and that Brexit, example, high, a and underlying generally side know the harder, of and growth, would eased. generally wage good unrest confidence any to sentiment high is having and like by the front, and as financial transitory necessarily monetary there's and there's but of are first struggling they So also And areas a a notwithstanding quarter spending have helped even always there increase not growth numbers. conditions little, kind good of job strong, policy a dovish is confidence a And Europe so encouraging. look Consumer

Consumer generally the buy. on sector, feel think, wholesale we and sort green I So, of albeit rest across of it's the the the shoots optimistic

will early, but so continue. it's So, and to what it we t's see expecting were

Ken Usdin

Investment and Banking Yeah, business. one just follow-up on

reopening market. good pipelines and obviously the that ECM look seen mentioned the we've the had You of

US on again just between the, and outlook bit global. general that point Your global about unevenness

a and probably the about some backlog of of today? Just again of how from on tape pocket business fourth quarter, had partially you're air because advisory the sounding backdrop is side how that But deals obviously an soft here the perspective? you been a big it do the feel feeling but and little bit

Marianne Lake

Yeah.

that driver have are growth last a the would into North M&A a just and quarter may year half M&A is Europe is of position and which in for things. out growth a matter, so low America, of biggest been general far I a continue, has still constructive. moved still drop a second market say volumes environment, albeit and of environment, But by still benefit although healthy that and and so, So, from Obviously pretty good wallet Europe big sharp was were that. first did couple there investors there. is off we we the that in deals a so as market XXXX a the attractive some

is So say looking attractive the down, people growth. M&A is are that I still but would pipeline for and synergistic

Ken Usdin

much. very Thanks sense. makes That

Operator

the with question Your from of Research. line Buckingham next Jim Mitchell comes

Jim Mitchell

levers a were morning. some in if good are do think mean we've sound the just I have of kind we It Hey, on speculating. about NII pull doesn't curve. a Maybe to what flat see and reacts over I to outlook. the cut potential a talked follow-up What How you were that you do sheet reacts camp, but the for you're like you to you NII XX that? how if get to rate balance next think months? a manage cut, rate do

Marianne Lake

Right.

the the and market end would which but of are you way in camp, I So more the the is usually not still we as year, pessimistic, by ease point you so more, expecting they say out. that know at are only

have outlook, our rates position But on margins, direction Right the felt now we economy on on was have credit, think sheet. on a NII. to would danger constructive there the and and rates it the way were clear on fed generally positioned to total corporate have then and that's up impact on constructive it present balance an balance for that it's if right and now, for might not is will rates how be NII change were how our I and sheet. course. If been for the Obviously So, we that that the the going in, a view constructive deposit XXXX's for we generally over-indexed we're end need. we so any, clearly

Jim Mitchell

extend like that to, I happen? would and still protect if kind NII you have duration you of to room It's NIM guess,

Marianne Lake

do. we yes, Yes,

Jim Mitchell

very thank Alright, Okay. you much.

Operator

Martinez from Saul Your with next UBS. line of question the comes

Saul Martinez

an on weren't ahead estimates quarter but Hi, and items a lumpiness. my in a strong idiosyncratic and is quarter called lot good earnings earnings consensus, well question there from CCB, This pretty really obvious sort obviously non-core of morning. standpoint, of on of the in especially I to Matt's out. follow-up wanted items

So Marianne, there the whether can idiosyncratic some weren't you sustainability out the during necessarily is just call. the comment and results that on called of things

corporate, You really levels mentioned cash to relative there. revenues historical high deployment

the of sort the items results any how call sustainable question So in are? there are idiosyncratic that

Marianne Lake

phenomenon. better IBCs a expecting. did did you our little were We Probably better got a our propel we changes forward are high sort things So if better look few a a share; board of better momentum know continuing nevertheless a out. but really best things, – the $XXX an the bit to lot is, fair. foundation on our of got is the a to we have first really and NII, than sort call million a markets; of quarter. of just There higher all we gained a bit we first see I think of are us very, like this that if contributed you little few drivers I to would wind share pic, just not so as called few think you all a so and answer big out going underlying quarter, across little all overstatement to a and making year little not did Net-net businesses, our outlook. them revenue We we so there in in of at we is we No, were, of small, and backs we bits just in pieces that. little the mentioned. you in and have little happy of But the legal to there's gaining my performance, we a full was very material are did positive as this we performance, I'm we with are

So how our investment is performed first expect, the the markets year-on-year. while about the down do still we'll year. in we quarter. as great see banking between still We in XX% still expecting for positioning at be X% that wallet and mentioned Coalition Investor Day, to Dimon feel

last a but do gain offset help we So, to to record. was expect year that, share

benefit that. full our guidance good yet. haven't year payment we we’ll So all very expands wallet are down We'll this at changed And take a that, as to constructive from if markets and but…

Saul Martinez

Okay. No that's...

Marianne Lake

everything. and it across not We're leading changing

Saul Martinez

a there change capital a bit the I'll a and could is on proposal? on more update buffer, little Any you little fed more distressed what bit. think thinking or helpful. see the bit details clarity That's little gears we when

Marianne Lake

know, an CCAR. that not XXXX could necessarily there be probability SCB there a the I proposal So but chance, is best for a

set to we together point-in-time there's to constructively important of coming an work up it's that understand a as But better So meeting or summer I the might way that’s a with meetings think capital, continue in growth complicated. can capital moment. to be help bridge we but sometime as the

look SCB You landscape thing most know and proposal, said to we the of cohesively. issue important entire it deal at not as with is capital the an doesn't it

about time have So probability say not something but I'd about in Basel, chance we're talking we're talking a might we XXXX we're complicated. a we're about for SCB, there's talking it's about that GSIB, minimums, CCAR. talking

Saul Martinez

a Thanks Got lot. it.

Operator

Your of of Sparks. line question comes next from Mosby Vining the Marty

Marianne Lake

Marty. Good morning,

Marty Mosby

Thanks the Hey, morning. questions. taking for good

First I in to as CCAR, into the we that, to we're an impact things plus I that XX% last want one that what ask is think had year. going again, a of has getting earnings growth was now season significant

were for significantly at your year? payout increase off that have just say look sales plan in going increase constant, forward, of just you of the doesn't holding kind last and earnings kind of presume just you fairly kind the you think the of they capital wind to ratios behind if So so to that some

Marianne Lake

mean yes, I yes.

dollar described and term, ratios, said benign we'd If have XX% grow, our environment But our in a XXX%, obviously And a promise. expect a estimates as you percentage, look of plus. over a not and capacity then to bigger obviously XX% of invest sort number. it's payout its be at that to to always in earnings as between businesses payout and would we'll that longer again, the calibrate relative analysts opportunity we

as right, how above range. grow, But end to So we're top unfolds. ratio, environment a capital we'll our continue continue payout strong you're of whole to the see earnings the

robust starting a level, at are we higher dollar So be would yes. a number,

Marty Mosby

was curious. just then, I And Jamie,

that that internal one XX think cycle time. is clock and years my get the industry, old the is just that thought this and issues off the facing pushed we from of I outside is time just the is

recession we dispel the it, Marianne think on you're company at if that inside is of see probably so look seeing or that the kind And you things that the there's I horizon. that

question. on follow-up So just my That's comment get to Thanks. wanted your well? as that

Marianne Lake

ahead Yeah Jamie. Marty, go

Jamie Dimon

in that's just so Australia notional, some there have XX out I'm number Yes, growth recession. had a but to of years. And sort in that’s you for have saying

there's had stuff capital, year-over-year, if have that. quarter winds, they've and Now is still this Companies quarter. economy, the good American shape, capital less consumer's in plenty a are in lot back little at balance people workforce. back bit up of good growth the and to of the shape, But you in expenditure sheet's Asia the than going look like last

and not is being are rather high. capital rather United and States. high all-time confidence peaks, Our in both retained consumer confidence the Business

that just can has list, to law years. So all things, a go make no We it liquidity. on for at it issues, and you says can other look easily, do There's lower the geopolitical stop.

be be short-term events may risk in that confluence go may to the bigger be be China. there XXXX, I yeah it point a in XXXX, the something probably and think will somehow trade issues caused Obviously So there in one at would something, of recession, the not XXXX. China, but wrong though

So, years. recession I just wouldn't a to couple account the in them short of to be run, having

Marty Mosby

agree, I thanks.

Operator

line Lim comes Générale. the Société Andrew with from of Question

Andrew Lim

taking Thanks for my questions. morning. Hi,

first is end-of-period question loans. my on the So

in just XQ you 'XX some it if relating I some on a board, as of saw a one speaking you the to X% there on look CEOs that there about to So across wondering again. can secrets basis if looks maybe quarter-to-quarter the quarter X%. give like ahead are of color reemerging was quarters happened And company issue we contraction what where if you and

Marianne Lake

Yes.

but variety of I – a are an our a for quarter-on-quarter across on businesses down. couple So and I mentioned reasons basis of loans end-of-period think these things,

nature mortgage been which a out on we end in So them, part the mortgage about do a we like did at and having I we've discussion sale, with balance seasonality, and the just by distribute loans Management, In the we was in Card sheet. Asset portfolio. to because did fully lumpy, more first see optimizing the through We sale loans. at our so so which quarter, did that's would other impacting to the one loan episodic of times businesses which stepping about core that out reasons earlier We just their pay-downs point loan syndicated the why you and talked is continue the I it’s first call, end syndicated core, because is And the mortgage, that quarter of funded large and & few in loan think bit originate we CIB them quarter. continue consider is into the don't seasonality. in loans is often CIB then, last our of of one are growth Wealth call a and a ex-CIB of we they a

of factors, and combination but I loan say Lending, sale. sort syndication, Home So it's Home sort CIB of drivers, two just Lending would CIB large the on a on of

and areas our portion specialized best mid-single for I forward Going continue versus say, optimize balance for balance industries you in part and we're our It seeing solid to sheet the as the core we'll is expansion space still our purposes. liquidity business security look markets loan demand digits that still our know and growing cash middle-market investment of we're the sheet that lending, bank just in year-on-year. loans of at we can But and demand. underlying

Andrew Lim

thanks. Great, Yes.

is question on. my So following

Marianne Lake

come out. very competitive; Estate, its much you Before in to where is growth down. have roll Commercial you go lower; into, see there are mean won't I other Real prices loan it's going areas be we just

funding Auto. loans, continue We financing and we're to provide down but chase it core for not going similarly our and to

Andrew Lim

Sure.

Okay, thanks.

is follow-on on my question So CLOs.

saying new So to Japanese for big retention a Japanese are order some rules weeks few as the U.S. there to introduced institutions that some X% rated risk issuers FSA the by buy in highly buyers ago them. CLOs, institutions Japanese U.S. had but be of

likewise wondering integrate retention. side and in behavior issuers trying seeing institutions X% I'm terms change yet of if demand any the So just if other Japanese U.S. in from to there from any risk CLO change you're in on is

Marianne Lake

is not aware? is come Not The I'll back a we'll you are of, time, you. you It’s you. but going I'm I'm have aware but but of No? to answer good, give to quite detailed nevertheless a it with up Andrew, follow that Jamie great Sorry this at question. I'm aware that to question.

Andrew Lim

thanks. Okay,

Marianne Lake

Thanks.

Operator

There are this no questions time. further at

Marianne Lake

Thank you everyone.

Operator

Thank you for participating in today's call.

disconnect. now may You

JPMorgan Chase & Co. (JPM) 12 Apr 192019 Q1 Earnings call transcript