JPM - Earnings call transcript Q2 2019

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Operator

Good morning ladies and gentlemen. Welcome to JPMorgan Chase’s second 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

ahead. I to time, and to the please turn Financial At Chase’s would Chairman over go Piepszak, Ms. JPMorgan Jennifer Dimon; and call Officer, this Piepszak. like CEO, Chief Jamie

Jennifer Piepszak

Thank you Operator, good morning everyone. and

role, to to her Before Marianne seven transition support for support during for and Marianne. many over this thank of I my CFO I’d me as so years, nearly thanks started, her get a like huge years but into particularly

Jamie Dimon

add my to too. Yes, want I thanks just

think thoughtful, company did our smart, company, I we great a know, all Marianne. Marianne, all helped as job - thanks so a honest, goes to the make better

all too. a that know going is great also to job, do We Jennifer

Jennifer Piepszak

Thank Jamie. you,

on refer Okay, that presentation. we so now the to to presentation, on back available website, you our ask the of please which at is disclaimer the and the always as

the ROTCE on common these billion $X.XX EPS of $X.X Page record a results offset, number delivered $XXX other Starting of on of a of resolution with X, net notable of Included a income for tax in that well and of audits. billion XX%. return to Adjusting items largely the benefits million revenue firm this XX% on are reported few related an as tax $XX.X this equity tangible of quarter. as we

bank and with record and billion XX% and consumer of card, products long-term global assets and in Underlying in in in management, regions; largely asset performance year-to-date, net for results while in the in inflows, client money the gaining outstanding; with banking X% up growth IBCs the flows; in invest XX%, $X one steady highlights all income quarter investment assets. AUM was share strong commercial sales business; by in number client net wealth new continuing to including across and driven growth

and loan growth important these sales to strong include the year-on-year X% note was of for Credit total leverage. but optimize impact variances we firm. as performance continue our across lending and Overall X% of another positive we down that of the here firm, remained delivered to loan quarter liquidity capital in businesses the home sequentially. It’s across operating usage

by more of on billion second and our was and mix, net rates. growth some sheet up Page liability $XX.X card Non-interest $XXX well approximately rewards the year. of X results. or X% as in balance higher prior Revenue we about up adjustment $X.X quarter detail on driven million revenue interest the as $XXX up the was as Now X% or billion to million year-on-year year-on-year, approximately was absence income largely took

revenue about previously other markets in Excluding home lending IBCs that lower revenue with business I consumer mentioned, banking, production, was and guided. performance offset non-interest variance and by across the auto flat items consumer notable lease, offsetting and as strong and

charge-offs reserved and across fully our were signs were flat which performance Once wholesale. Expenses for billion do again, year-on-year. a businesses offset in in X% of a releases. quarters. continued rate any net remained of $X.X In costs see we as charges billion charge-off And remains $X.X by deterioration broad-based credit with points, credit of were costs million. $XX.X X related favorable billion partially offset net reduction reserve net of up consumer basis credit portfolios, to investments was of with Credit down in FDIC of $XXX wholesale, approximately consumer, prior X% higher our by not favorable in both

CCAR capital distributed last of object you and Page quarter, Fed ended than on XXXX balance to $X.X quarter the as the shareholders, the quarter. basis capital on a not billion ratio sheet We X. plan. the capital CET-X firm did with XX second more versus of know, XX.X%, and Now up to points to our In

increase to are four next quarter. announced dividend repurchase in the quarters, intention flexibility significant the share, and gross third to $X.XX effective have of board common We to its billion up pleased the over the capacity with to $XX.X per

consumer income auto growth ROE remained and investment and of products. was growth users new X of card our across Business continued by loan engagement were loans up leases banking. community X%, Page the and growing and investment We to up mentioned; up XX% growth were were client up year-on-year key generated just an home X% up XX% down banking Across loans billion sales physical net X%, and $X.X CCB deposit XX%. slightly saw I down on franchise, were up sales reflecting loan lending both strong the healthy, Now and and driven X%. Loans XX%, year-on-year strong flat. assets year-on-year channels. across mobile deposits were features. in Card as and with digital active however, given

in over million opened over and have enrollment customers digitally, checking and XX credit X million. exceeds now example, journey offers, For XX our savings million Chase accounts activated

billion notable XX%. $XX.X increase included items up Revenue that of two offset. was largely This

negative mentioned, First, in a the model by a liability in adjustment $XXX rewards the we to and of included current had quarter our year, updates approximately adjustment prior cards driven lending in home million. inputs; MSR as I

X% lower margin mentioned, expansion. volumes, banking higher production up by revenue was adjustment MSR on been XX%, revenues on the balances. lending deposit just would although I compression business up and NII net by spread and have higher driven better XX% Consumer driven Home on was margins offset largely excluding NII, higher lower down and by

and services XX%. merchant cards, In was up auto

Excluding adjustment, volumes. lease expansion growth noted liability auto impact the by previously rewards was higher of on loan margin up revenue NII XX% and driven the higher and card

lower the XX% depreciation, ratio charges. largely and operating billion up in by positive FDIC offset efficiencies by note, continued X% driven higher investments Expenses the and business auto and of significant overhead leverage. Of delivered were lease we $X.X was

partially prices, and by a On credit, portfolio $XXX and as in was offset reflecting reserve mix lesser lending extent by reserve vintages delinquencies included build credit home portfolio. which impaired million, of the the release in purchase this quarter a primarily million. $XXX a improvements naturally home the to cards larger part newer a and of become in This season growth, driven was of

Net charge-offs were $XXX up million.

the loan a lending driven to million and sale card, portfolio. $XX the charge-offs we net grow Excluding by up the were home continue year, on as in prior recovery

and $X.X to and investment on the income of CIB turning billion XX% Now Page X, ROE corporate an of $X.X bank reported on net revenue of billion.

or featured in XX% X% a equity the a of As year, lower levels of were respectively, With underwriting, activity in and reflecting Advisory, also quarter, XX-year strong and XX% performance prior that record was as IBCs for down. underwriting market reminder, revenue was XX%, revenues in overall our debt in fees last as share year. in deal a year-on-year was and particularly that mind markets. underwriting well the down IB which billion $X.X near-record equity equity down record

number have worth our It’s benefiting gained products all share overall investment rank year-to-date continued from and noting to across and in on continue one basis, we a regions, bankers.

volumes [indiscernible] tech to In advisory, first activity. in have seen we than our underwriting finance, positions number robust In share quarter been and equity bank. also in in more position healthcare, other from and we since deal our rank the we debt announced grew in one, announced activity benefit there underwriting, any pick-up strong where we in and continue leadership lead has significant and leveraged from deals benefiting

the with overall Looking to pipeline last lower compared is remains in and saw acquisition strong opportunities we year elevated financing Dialog financing continue. to flow healthy, though fewer and we and debt with activity IB expect forward, underwriting. clients the lease active deal

flat year-on-year. which markets, was total billion, was $X.X revenue to Moving

Our include fixed results from a of gain IPO notable the in income Tradewind.

down been year-on-year revenue Excluding against have last this gain, quarter markets performance strong second X% would year.

quarter were contributed rates deposit increased activity down $X.X to that to and X% and markets in year-on-year with remained X% EMEA the more agency activity balances decline derivatives; down an were in respectively, and a North a America rate all-time Equity by year. last margin X% than client compression. against with services year-on-year client [Indiscernible] reaching organic record revenues an prime Treasury a growth offset was income billion relative adjusted compare cash high. in basis and security and down prime stable mortgage being services Fixed $X billion, trading, said, in weakness offset equity partially changing in environment. on XX% tough by markets client with due second

quarter, at the As and margin client was similar offset. firm-wide is impacted deposit a primarily to last by betas, level an rather than reminder, there compression funding basis

on Sequentially, services X% treasury was flat security was higher services up balances fees. and and

partially quarter was Finally, expenses compared ratio compensation XX%. were billion higher year comps by the X% expenses offset legal performance-based lower expense. prior revenue the $X.X for of The with to up

lower investment $X.X outperformance balances. revenue up deposit gross lower of M&A continue worth and of lower X% onto NII billion net on activity Now $X advisory toward banking to moving down due lending syndicated X% target. year-to-date reported banking Also Page our was solidly and strong to noting Revenue of driven slightly billion X. long-term Commercial we here, last predominantly activity, by year-on-year XX%. year $X.X on of income and and an billion ROE $X our banking commercial progress was on billion IB

short-term tax-exempt up loans migration The Loans specialized although by adjusted X% we’ve year-on-year balances continue down the see as C&I driven were investing, to here acquisition-related and portfolio. $XXX - investments balances technology. run-off from industries, saw offset to Deposit remains or million lower stabilized Expenses up at our story been we coverage of ongoing and importantly in in markets X% solid with in for being to were largely expansion non-interest year-on-year deposits. X% unchanged we and in including flat, interest-bearing activities. banker by have total, X% where sequentially up areas X% growth in financing were continued

advantage higher cycle. real rates, clients are up in of given long-term were to banking X% in modestly where estate where are we loans taking term we with the declines lending, continue commercial in where lower activity be by offset selective, CRE

Finally, million rate points. credit of net costs basis were charge-off X with a $XX

asset and Page on wealth X. onto management Now

billion offset of year-on-year the lower Asset $XXX as offset valuation the of and income continued market of XX%. average was net year-on-year and quarter in for investments investment Expenses $X.X and flat were impact by million billion X% was leverage by advisors $X.X wealth partially up as ROE lower fees. of were technology gains. of distribution management with pre-tax Revenue reported margin higher

inflows $X.X higher cumulative similar fixed had inflows of assets quarter, as and were in driven $X into and sequentially of liquidity liquidity and inflows net the both of and up $XX and income, largely have Deposits net $X as by products, were the balances year-on-year, AUM to long-term by commercial record bank, well market levels we total X% globally. net client stabilized. billion. X% X% trillion records, overall up saw billion trillion, of up For we driven long-term

record on both had we and Finally, X%, loan lending. strength with mortgage up balances wholesale

and net income the net vast I $XXX benefits reported mentioned Corporate losses year-on-year. interest sheet the Now to were that income offset million $XXX onto balance X. partially million of prior million, Revenue private down corporate legacy driven the $XXX in tax up on on was equity net mix, by Page of earlier. year-on-year by $XX gains net investments rates majority higher of including Expenses versus million year. million, higher $XXX due

turning to be X not should the on and I’ll the comment this to outlook, Finally just the page environment. changes which surprising Page given rate NII, on

with As things, see, consistent is to three and rates this among updating outlook The rate multiple other cuts are year, assume, end about $XX.X scenarios full-year sentiment. to on which long our current billion. based you XXXX NII up can which we is market lower reduction

compares cuts earnings. this time that a first reminder, quarter of a rate As the zero to assumed at scenario

and well will the We up, evident. and and to the in great power outlook, healthy, Understanding wrap and outperform shape, is delivered strong positions earnings diversification credit grow overall strategically in scale continue in macro us is from quarter of in U.S. the some there the we is the and remains still invest any to returns beyond. the our potential headwinds of model our business expect businesses To environment. to rate uncertainty bankers technology, this franchise consumer company and

that, the line With open Q&A. please for Operator,

Operator

instructions] [Operator

Our first Mitchell Research. Jim Buckingham of question comes from

Jim Mitchell

at loan card what to feel as X% quarter. growth sort wanted and a Hey, growth. you of particularly sense I strong sustainable how good this to do think get morning. year-over-year driving that was that noticed it I just is uptick, is you

Jennifer Piepszak

we’re card we about there. Sure, what so good feel on loan growth, very seeing

high borrowing investor day, talked a seeing customers, we actually being existing have opportunity shifting growth coming our we feel About how so about $XXX customers our is to talked existing can from $XXX the within so we’re time, off first customers, and highly day. that of we have about about and to at new squarely the able existing paradigm of majority talked great of investor in billion at loan you us. and we targeted and think As our quality buyback, for of existing as with cards this we the we’re real harvest customers, there you really customers the opportunity it existing as to that versus about billion about

Jim Mitchell

we you continue in Should the to just expect environment? sort footprint this rate reduce to of mortgage

Jennifer Piepszak

business, remain of that so the quarter well, we back I the business rate expansion would I say but a highly saw in rally, and we would good on On challenges the margin mortgage volumes and it say dependent did obviously as the see increase some and so unchanged. was structural

servicing and a the thinking balance perspective, and challenges. so, good sheet but de-risking across structural and of optimizing quarter the looking capital portfolio the sales at on so the so doesn’t And rally we overall on from it change loan about back to liquidity continue the focus

Jim Mitchell

thanks. Okay,

Operator

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

Erika Najarian

primary go income suggest morning. to good interest deposit is first earlier me my that were three wanted million swing, the just your guess rate cuts in rate face of your lower assumption $XXX net guide up your your to to on particularly you which give is, I in question defensive I cuts. saying Hi, that you would to what including could for is that year, this guide--or pricing? back quite us

Jennifer Piepszak

Okay, sure.

at Then on point. obviously I’ll That where billion-plus, fact First long if one one about talked end back has you of to pressure take some on think third of million so the the increased, guidance quarter $XX.X to we quarter we and full of and impact cuts, than have cut, all, broad, was in persisted and so can the it’s that that as outlook, and the and through pressure more, and billion-minus. $XX are so first about our and more quarter to think pulled quite short point. you at second then $XXX based being that outcomes of you our -- if quarter, on the thought current we the end of it’s advice, in the rate billion-plus, range end and bit long three the of $XXX would a given quarter below million terms we about $XX.X a in then range the about outcomes can a fourth

speaking you of think so the so Then in on as there saw is symmetric, terms and of on of the betas betas, lot we a largely re-price side can consumer the way being little on down. opportunity and way not up,

there the valuable re-price we’ll not if lose be in few ticks Then full are goes. security tick commercial relationships services any like customer how have wealth ahead On there, we large beta, services, so say so of bank to what management, asset to side, and businesses see would largely see But wholesale and you a importantly, at like I treasury at institutional should there. and places it would we’re of re-price are model and we the started the opportunity still look up assumed, going have but there. we over

Jamie Dimon

in embedded your all it’s assumptions. And

Jennifer Piepszak

And [indiscernible]. it’s embedded all in the

Erika Najarian

Got it.

optimizing to the going expect and relief liquidity investment were the saying to another I securities and optimization? mortgage in going the and we reserve continued about of could to capital growth Jim’s overall, down Just as in think question, see therefore some of release this that forward, back RWA about as some go loans balances part part relief it as we think we were you continued also perhaps up X%. noticed Should and

Jennifer Piepszak

a so see yes, when lending, that securities perspective, sales yes. are in you loan so the home purchases RWA as offset capital we’re are doing is a on in and side, so as the Sure, perspective, it, precisely from which more they why yes, efficient liquidity well

depend and Having portfolio course that said be environment I going impacted of reserves remains. mean, the are the mix the that, reserves because that necessarily on that, will - of not by directly to upon

Jamie Dimon

number. I ratio far you not is can our sense you does relevant simply a XX.X, by securitize. own all It Advance economic frame more is to capital mortgages XX. when obviously important standardizing and would add, just advance make standardized is can’t

Erika Najarian

thank it, you. Got

Operator

from Our Wells Mike comes Mayo next question Fargo. of

Mike Mayo

you years XXXX, for that then tech The said you’d a spending? Where to it that’s is is I Hi. tech and from went it plan of the it year-over-year, I the some because on to of do keep results update current XX% this connecting, spending, think spending in couple not guess XX% tech we’d and maybe accelerated see XXXX. efficiency more connecting, ratio you with so accelerate pace what’s and going, where

Jamie Dimon

take that always be think we little right I [indiscernible] business, had today, think this how going win it they last now what that in the going lower Loan journey and and it’d happy is of was in because investing Could billion, just tech so next [indiscernible] we’re environment, it’s regardless but get tell Daniel and today things what Gordon about becoming like there’s the efficient, whatever that. will cut trying efficient spend technology. Rewards like we’re programs want, build, shouldn’t a we they say more $XX.X we’re some for to cheaper it in to to to My year, the spend not My credit something do you’re Chase I we we’re be you and which we or but you billion recession also spend, to and to like very things $XX.X you bit I all money something time time, If and think are becoming then It’s is one? the a more year. all efficient, really have will

spend get of we’ll environment, and the probably too. tech efficient in We’re going regardless more to do it

Jennifer Piepszak

in create more our going to productivity more and invest, AI and we’re learning to productive of in machine investments there lot capacity then terms do productive, invest - be cloud. and developers technology a That’s that right, lot cloud, about to using become early we there’s a talked it’s to continue innings become to able there can and and the and

Jamie Dimon

all - so of to because stuff the that, amazing in hard world AI down It’s [indiscernible] with and today our effectively going things and [indiscernible]. like the it’s and [indiscernible] costs are on

hundreds obviously mentioned all look how going put things to that to investment Invest, our start and at of a got was so grew You cost those client build, you XX%, perspective decisions Invest, millions You You you’ve Invest in of assets You portion dollars making you of forward. about

Mike Mayo

Then a all the environment, now? the in interest are rates, one have place you trade environment, big I markets have hand follow-up, the banks, of you Jamie, the have take taking you down the on environment mentioned the the world. which mean, things highlighted lot How on a is you have the you other you temperature? temperature capital lower war, of you results. pessimism; what’s hand, to When your a the the

Jamie Dimon

not It’s bad. that

know, be the The thing is worse but tension growth mostly bit in is normal, think in I little bit know by you trade it’s war. going States is Those a expect doing States see you is is a little north consumer the X%, now one year. of probably kind driven than is to fine, You is be of a be United we The global going the geopolitical X.X% and kind sentiment constant. life business to of uncertain uncertainty this United forward, higher constant. a may things what

negative-X have is gone have expand. wouldn’t so zero. I You should yet. lot and to they don’t be Europe the too countries little pessimistic a know, but A opportunity better growing of great get around to and be doing [indiscernible], you Japan is bit, from Brazil travel They has to world, growing

and the they that good Obviously day actually not on see, say rates the that’s the does. the not cut. it’s I just react to cutting Fed one we’re what going Fed rate we’re important bad. would a Fed the rates will raises data IF so to Fed’s booming, more and and recession, that’s going what’s If

Mike Mayo

All right, thank you.

Operator

Schorr comes Glenn Evercore question next of Our ISI. from

Glenn Schorr

up missed I the if size year-on-year sure by you X% total was I but think average but not it, growth loan tell loan impacted Can average I’m what thanks. or loans was without year-on-year, that either that? sales sales. up loan were us Hi, of

Jennifer Piepszak

say, going Yes, Glenn. there’s growth, in you loan a things few on as

you to the sales, of have run-off We those if loan items. probably about the have the you closer think loan can adjust also exempt we tax growth X% so for portfolio,

about we think as is ex-CIB you can say, areas about we’re Importantly, and X% the always good a year full year. to an of adjust the the X% terms where and if outcome, and an that loan not investing, full growth input, number of we’re seeing for in you loan growth we loan sales the for feel

Glenn Schorr

that. appreciate Okay,

lot of that of numbers deposits year-on-year, on - anything curious bigger Just or strength the that mix peers. just to some non-interest X% you seen lack being only are franchise bearing Is doing JPMorgan’s manage actively at down we’ve a shift?

Jennifer Piepszak

As AUM. I said, seeing bank in balances we the stabilize commercial and are

non-interest still we we’re and are continued the largely seeing consumer bank. growth balances bearing migration some then bearing, to in course have stabilize, seeing of We those from do interest but

quarter the a second we’ve so that’s high there, of well. largely healthy the bank, some so seen typically even feels as consumer we spending, decelerate, as result consumer where is The in growth non-interest have in bank growth that consumer in bearing and seasonally

Glenn Schorr

Maybe persists it’s think like or two looking after XXXX linear? it forward way other with no complex it you XXXX. environment half, year In incremental Because at that? is Okay. a remotely cuts if is are last about the next one. on into we to cuts, looked if curve if over-simplify the Appreciate into rate rate three this we guide ongoing and billion or year, the too a words,

Jennifer Piepszak

Glenn. complicated, more Yes, it’s probably

of give guidance would are, be more. versus talking further to importantly the if broader we’re until going they insurance that on cuts know may at outcomes so be broad we’re that are there not sustain slowdown, the cuts economic response are are we as in and to given we that that a about, expansion things looking as XXXX range Just cuts other

Glenn Schorr

it. appreciate Okay, thank you,

Operator

Our question Cassidy Gerard from of is RBC. next

Gerard Cassidy

then a look you your morning. of take think digit growth? rate XX%, commercial you, really strong I card very driving card also growth, good share and strong. When excluding some strong Thank services - double business, us you had were your year-over-year the that up volumes was with at merchant what’s up Can growth you that it

Jamie Dimon

noticing. Thanks for

Jennifer Piepszak

I that would consumer look help cylinders, strong, all fact on does firing a U.S. product. certainly to is this in of have sales people, brand, continue. say it’s so expect it’s well, morning it’s that backdrop and as retail the to It healthy so we can

Gerard Cassidy

Is referenced you it that they an it are the more or the strong market seeing as boost? - sales, market gains were gives - also added more is retail you just that, you in guys share

Jennifer Piepszak

share, a Yes, taken card. of bit we share in have little

you know, in one there. we’re As sales number

think even in importantly, acquiring. taking that and grow, just given that share take the need we’re is cash, don’t tailwind of card in share we we electronification the merchant on I have card helpful what’s to secular the to in business

Jamie Dimon

take expect future. in more the And to we share

Gerard Cassidy

they’re on some your Speaking the of the future, the system give to Facebook us about you first initiate? can that is, announcement payments guys color what Libra going of read

Jamie Dimon

long to who banks field, [indiscernible] be money those at it governments years have I been and to, Yes, and everybody hold and insist in that’s and competition same three from going - for going I it. governments to to [indiscernible] controls has for time, a Blockchain are be level spend We to too so playing rules going move the are the everybody one going Gerry, happened, live No always the is become will or mind talking place. much activities, in going--you need request and people the of don’t doing that’d on or seven they that about all and one be where think time put and just a, this, be right for wants to even according you’re years true to involved in little [indiscernible] and terrorism for about we’ve very talking one they perspective, wouldn’t now. period should. money point, criminal Libra

Gerard Cassidy

Thank you.

Operator

question McDonald Autonomous. next from is Our John of

John McDonald

big you CET-X I approach the authorization long-term to Hi. year this wanted about you that your target, about? relation in XX CCAR, the How year. the and did ask plan a you’ve CCAR talked got to and XX this

Jennifer Piepszak

Sure.

As by excess dividend, prefer competitive distribution, and then to about shareholders. we businesses, we invest only to then capital grow our sustainable and always that our first we return capital to would have use a saying start to to our and think capital and

approval the the We capacity to range. with end said targeting that the pleased to and of to are that, still we additional are upper shareholders; XX% return $XX.X XX billion having the

the always first lot will We’re had and of uncertainty I because as to in of to course to and buffer, have a there management be want going businesses, our priority then our said, a always capital terms invest regulatory grow of remains framework.

laid as out given XX%. wouldn’t still the distribution of end upper that is we quarters, but we of over targeting XX importantly, Then quarters, way more the four the capital actually need to plan make decision to for are few now a

John McDonald

there? thoughts what thanks Thanks. updated remind you your Jen. FISO, Any thoughts could on us impact Okay, or on initial

Jennifer Piepszak

day. Sure, so haven’t changed from investor

January to we’re for $X implementation. X the $X Our range billion continues to prepared billion, and be

Jamie Dimon

Just $XX XXX year consecutive on are always remind to test one a I stress. want prepared for event, and that. week, stress. real continue million after sheet, assumes dividend like stress stuff nine assumes to going made million, $XX quarters. you we over a [indiscernible], it million all just the grow and CCAR has that balance nine CCAR We Lehman, do you’re going your million your to CCAR to is we so $XX the or you’re us so quarters to $XX losing

so to so. the sometime usage runneth capital, U.S. which of I for branches closes like just economy, eventually of on capital, and ability to things InstaMed growth ability we’re opening soon, use the our mean, of that over - million capital new [indiscernible] branches, Remember, and so capital have four eventually will We did, use be restraints branch plenty somehow really optimistic acquisition capital restrains $X we about million cup we’d capital. our finance we’ll think so I every capital, $XX also on the our including like

Operator

from Our of next is question Graseck Stanley. Morgan Betsy

Betsy Graseck

Jamie, deliver been Right use wanted think taking AML mentioned Hey, for functionality guess not but happened, correspondent it’s case, that you understand an and you it for think Blockchain, about I you think seven I banks. your Blockchain planning where have good you on something time? about I KYC over, just built but has at is solution at to we’ve JPM over you could that now, that. you’re a years hearing morning. much least more

Jamie Dimon

information long the agree takes you one you’re Blockchain to think for is now to it. get trade we’re banks signed among that, up, write other to finance code XXX. into IAN, of think and have and to We have like so think we and people correspondent banks so is banking referring network have banks, XXX to, think have - lot the right I The an information real, stuff so live reason transfer the going of protocols, is a each to it of

and to So right quicker information, as we constantly test things; eventually, can that now, soon be as secure same all that. data, so use have sure going money it’s we can out we’re and for move optimistic make have to about the and with it it’s to you’ll information, that but and roll able we’re you bank immediate wholesale move yes, all

cheaply. remind money, people moving a trillion to comes I day when quite securely moves $X Chase and it quite JPMorgan

you is people said, P we sell have and have - from effectively that didn’t of TCH, at do going payments APIs, money [indiscernible] solve, the to true, moving etc. also data, more floor effectively do well, Blockchain You’ve legitimately that now the we trying real-time to real are building things look - got goes real-time and you’re time was through problem that to P, the want payments but that we so checks, future ledgers much in to

to broader We’re about quite It’s be get optimistic it. to while going take using possibly. have to up One day opened customer everyone it’ll it. set, a to a

Betsy Graseck

offer; desire banking strategy that. payments, here that’s Libra things period? for there--you house question a for and doing do The what and services it payments, know, this real-time meetings what’s is, out of we solution towards supposedly coming this cheaper senate point, these is we One is interchange, going seems the this, desire how interchange about committee and for over your your already to financial think you’re go as in that’s but the to like pricing through for outlook a is

Jamie Dimon

stuff free [Indiscernible] much that That’s when people and issue save built to it, there going of there these payments already also use. with is debit effectively say cross-border, actual so know, make put that. that’s floor here, systems are want the payments, done. much, card, credit people who real-time payment do secure use card be [indiscernible], do smaller - border remittances so and than in there to is already real-time through might to real-time me, like in real-time PXP To checks [indiscernible] fraud you actually is and cross-border, cross it you not sure are

pay used far eventually to and for use cards. cards is someone I here You beneficiary They consumer. States, know, people the than United card. these in services we’re their credit serve, the cards, remember debit love last like cards. remember, credit going to who but debit is cards, their don’t The provided, my Always cards. use debit their they I credit the more people that’s

Betsy Graseck

when get it’s Yes, great. rewards, you

Okay, thanks.

Jamie Dimon

more free they’ll stuff. JPMorgan, be at getting And

buy sell we rolled have just can free--you very very gave local just get You few but a stock clear. accounts, good--it cheap, free. you We investing, very for and only out, got a

[indiscernible] future to give very do that time, and we good be discounts So remains now on our a mortgages. we’re and clients the can all cheaper banking and card, all but bright. thing. faster to our customers, with more is that’s for going and and we the If very better more package take or and seen, [indiscernible] That

Jennifer Piepszak

you on get cards, flows. forget the rights chargeback get don’t you and credit And

Jamie Dimon

Chase Right, score. get--you how for tell score online, you’re customer, get you’re they and a customers you go improve to [indiscernible] you their going your FICO to be can going to--we’re able FICO free,

You like off. really I really this taken [indiscernible] - it, get Chase market we don’t offers but mean, it’s

Jennifer Piepszak

in customers can at our being base cost that a day. terms investor can Sure, to at like powerful them, then very value to able flywheel talked Chase of clients bring It’s deliver really deliver we so merchant value zero where the to to that about our a and we us. to large large we [indiscernible], customer

consumers activated, this and in merchant I said so powerful our as Chase XX at just million our large to zero So and is clients, we’ve had presentation, but offers us. the over really cost not benefits

Betsy Graseck

So needs that the Hill well. cost as on maybe less efficient, message heard of more get to

Jamie Dimon

we and Yes, talk a to lot all the the and time Hill understand of people that.

always which do have we job Of better to for course, you consumers, want been. they a

Betsy Graseck

or used question you exploit than is trying it’s we an is them, I’m that that have on. about being but that, catchphrase here on just thinking a fintech’s by Is to you seem got focus is there something, it’s don’t I Yes, where for the because under-banked, know considering is better offer than you’ve solving maybe you, them? anything Are doesn’t like the for under-banked. just final [indiscernible], just a solution necessarily and I - guess

Jamie Dimon

[indiscernible]. We have

it’s a a and more it’s neighbourhoods. as get great, FICO saving, FICO financial just those to XX% go to mortgage Banking, We other We branch house important. be the some we we which education, a get Chat, scores, Chase are do. of it we Then them like about is to neighborhoods, we’re do I think thing. think card do you do I but our the full people that. called more and can product, educate really a is have branches the mentioned into might buy Secure stuff things what score, and of to but think doing really there so [indiscernible] can thing philanthropy, I is which

great have the do use a we You can overdraft, and so can direct ATMs, stuff online but you mobile can you $X.XX month, think I you payments for like it’s product under-banked. that’s that, deposit, a can think

we’ve always going I trying a of XX% bit pushed little now more, think we’re that so that’s or--and kind [indiscernible].

Then we also [indiscernible] it special, venture have I banking, call fund.

rolled bank to always course try are. think going our and capitalism, But [indiscernible] I have Fintech, of that. Jen We’re at that toes businesses, finding called out to their [indiscernible] rolled so Zelle is My American do changer say that. I PXP, if that’s account, stay have that’s we of to lot credit that’s so money it [indiscernible] making and without your eat was we’re the that of we year on do help When bank good last they we’re forefront money fees your can My do your immediately like paying Loan, to so ways good, well. want grow use Chase the understand and what for it. do would loans a she and friends a $XX out Plan and Chase loans to cards, people to non-traditional you compete. lunch, at and you even it balances to stuff and relatives move to can We everybody,

do and job all-in if fix we there to better and job consumer, for complaints, we are the do it. think We’re great them, for a trying American we’ll a legitimate

Jennifer Piepszak

the and right, markets, mentioned you in That’s our LMI XX% expansion XX%. in that’s [indiscernible]

Betsy Graseck

Thanks.

Operator

Our of Usdin next Ken question Jefferies. is from

Ken Usdin

Thanks a lot, morning. good

a But equally can just in to that ask that trading explain supplement. side liquidity, and adds you to to specific is managing you mentioned that seem so now to so growing dynamics on regard in you last the talk related share asset that it the story? to could interest know doesn’t it wanted to Just the net accounting sheet gains, year, the the be income is balance change behind the strategies liability, on related and just assets, the with related Thanks. huge market about, in the you’ve seen I trading you jump had

Jennifer Piepszak

on in and of Sure, balances well, our a start would balance yielding you higher sheet so quarter, that see quarter so over and duration intensive balance securities related growth But that as and we balance up you some to of have know, that over had quarter you strong businesses we sheet well, and have securities than that seen side that basis in quarter. spot duration deposit growth is is primarily then was as the growth, the of saw that deposit on markets adding the and some businesses, reflected so sheet with IOER, short down you were we are terms and--yes.

Ken Usdin

quarter? Jen, so loan say sales this you is it part the that did management you of Okay, the the strategy? the had on what of Okay. amount gains liquidity

Jamie Dimon

get repo that. you in than if return a get going [Indiscernible] IOER, to you do in higher you’re

a in some these capital on get that’s seen wholly higher to things. owned you’re securities in standardized you on that, return If do we’ve you what than loans, going of and standardized--using are

Jennifer Piepszak

due was home right, to the the home mentioned securities That’s growth, sales I have and [indiscernible] should lending.

Ken Usdin

you what this above sales were, say the what loan That us on it. gains trend? got were amount the--can the of okay, Right, tell makes Did sense. you they if the quarter

Jennifer Piepszak

in amounts had first sales the the second gains, quarter, the and loan disclosed quarter haven’t the We of we the some in quarter. fourth and

billion, quarter about and second the The notional and amount, little was in the so more. bit the first just first a about second quarter of $X quarter billion terms was $X

Jamie Dimon

second quarter The gains up places, in but different not were--they the material. in net-net show not much,

Jennifer Piepszak

Yes.

Ken Usdin

Got it.

thoughts outlook Thanks. buckets of any on there? continuation pipeline just investment across Lastly, the and the the the banking

Jennifer Piepszak

Sure.

and albeit for backdrop strong well in a In a level given pipeline, slowdown growth, a third synergistic lower is looking feels said, last healthy, refinancing in off bit, IBCs opportunities are America, seasonally where overhang opportunities, although a that say especially muted. so a a ECM, so still typically subdued, pipeline rate the more for of had perhaps banking is remind terms Europe to being as DCM, a second down activity North you investment good in the just think uncertainty. taper That still healthy In current reversion we companies the bit bit. activity, a but quarter, issuance I’ll M&A, in with more that a more and reflecting getting the half but quarter, for of environment. is the will sequentially new DCM Then year will about quarter as be you performance well off I acquisition normal as the assumption space record well would some is from macro which as very environment. are should financing second a done deals very

Operator

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

Matt O’Connor

sheet but to liquidity three managing on other cuts? for Good rate morning. curve little managing the and realize how but the the areas cut change You expenses? think follows you about different? rate a I there wouldn’t that’s out in earlier said bit four environment do quickly, there are back Do technology, you balance think in a can that company expectations you about

Jennifer Piepszak

But the balance and we you we very of in duration. we environment, all the manage would here the are broad by assets the terms would negatively sheet, we’re range lot we convex a temporary terms going up says, to the so both else again balance we’re of so change us not way company cuts, by run rates not liquidity in in a Jamie to we and managing the headwind, directions. in to our and way of of there and and we’re always with quarter. which an continue interest dimensions, capital, that so the change rate company just to Then are management, to if with again and equal, going way the the expenses, duration, of balance to slowdown, going shorter, talk declining the with be both response But sheet drift liabilities, we as sheet outcomes driven because change investing it’s environment, will run clients, and being add insurance that going so because run of because macro not if as expect serving we to the economic say I’ll across broader It’s about. Sure, a being end balance all we’re just discipline, we rate naturally environment. a this more cuts did end sheet company up

basis. are of in part That large on a volume-related portfolio an broader natural re-decision a there and obviously on slowdown investment expenses, we annual levers our said,

in the we continue look upon We think that depending at that. we opportunity, a to take would have things important, but to opportunity, the that are always will invest

Jamie Dimon

all you spend stuff and deals better opportunities Remember to in themselves a there are real vendors over fall are huge give money that. also [indiscernible] There to recession, your like always so opportunities and wisely, for be I card but opportunity that--you going very say it, we’re and in take have Sapphire birthed great and careful. this to you got we to so was okay, the imagine think not you’ve could ’XX

double. money other is, spent marketing a downturn, it returns is in on usually the better The thing usually

Matt O’Connor

the the and environment? is about and based it there. or sheet number. all, talked authorization to Is is a on the your capital balance use still your expectation that thought be process you’ll price, you big that the determined Obviously growth, buyback it And stock very of

Jennifer Piepszak

I would determined. say still be to

and Our be grow excess to first choice so will invest always be our still to capital business, our use to determined.

to As over have you we think to know, have pleased about it, it’s time and the four but so obviously quarters flexibility.

Matt O’Connor

the Is there even, there flexibility timing of that or is too?

Jamie Dimon

can It that we the in past, day. has every been change but

Operator

is of Saul question next Our from Martinez UBS.

Saul Martinez

good Hey, morning. A couple of questions.

you’re outlook that the guidance you were in If different this not I a we to guidance but NII from have cuts, very rate appreciate fully how on was this the of environment. to $XX billion very, year, First $XX beyond sustainable set NII giving a day multiple year, beyond rate see kind that billion, dependent do there do investor just out of you moving Is think simply outline billion might that the moving that lower If of to pricing? those and economy to parts you some of how $XX guidance, are. the some deposit we responds, parts it about you $XX what of end upon get the what billion? perhaps can are think of

Jennifer Piepszak

that balance in would offset mix. benefit sheet that were about and we we increases the XX, because any importantly at be steady growth that Sure, of so rates state assuming I re-price, come was day, XX stands, day, when so in say from and going to we the would growth talked any from guidance at gave assuming to investor majority largely weren’t rates, further still we so investor incremental

remember of because in be were we path bit may that arrows even the which environment. the there were there, slide get you slide, to a believe different that believe different may different obviously rate continues state number there little longer, but there If on in growth implying to obviously the to franchise. a that there. of It at were so a We steady was that of the time, paths get we number still be still true, take number so a a

Saul Martinez

announced you elaborate there strategy. you’re just seem learned closing experience. Finn, If on fly because the you experience, gears learned maybe I can with entities and or face bit, think other the from or little But their logic of helpful. is you to that digital that’s does or are brand that it change you recently logic financial a Finn, what doing in banking millennials institutions the stated some Okay, you what need closed separate that I and a don’t could

Jennifer Piepszak

in lot a learned We Finn.

certainly importance a that means You the power said learned of we the don’t Chase separate brand that we brand. of that need it,

that reuse mobile learned we were and also them customers love, features and about app. the a able over We port number Chase features of to our those to

things doing shut I when and be learned afraid think the we can to need primary what we them to testing down mobile and to we’ve learn serve our like app. learning always needed this, not through and customers Chase and

Jamie Dimon

you only already what We learned out you it you there have, a bank, so do a of lot, like were how to there. lessons digital do retail account to on openings of a digital. tend When rely lot

all us by are learning good our and smarter don’t doing good, those learn, you from things learning job, I Chase you The of the so go at we one a at account never make of businesses hope so point. mistakes be branch. they’re people is to some way, Bezos like can embedded, can we and you what kind mistakes you and going how open Finn always that, a really into will all. and look better, and that skunkworks at did great now things mistakes kind from That a at teach and made like tell We’re are Jeff failures of

an an to digital separated minutes the You open from branch so account system. we physical [indiscernible] takes only [indiscernible] got at can it much better open account,

Jennifer Piepszak

account now is Yes, the about account our XX% digital of new opening and activity.

Jamie Dimon

And doing various processing things. in it business and small and all we’ll these merchant be

Saul Martinez

Got it, much. Thanks very okay.

Operator

is question Eric Compton from next Our of Morningstar.

Eric Compton

me, There for been these can This legacy around the and recently newer closing from platforms my related since question over with the was of platforms been to, to either of taking these compete issues potentially Finn actually re-do app, has their your reasons some of of platforms, overdone, and banks legacy Do for longer legacy why? way, talk in the depending things already or hamstring the for platforms? need kind items was these a order or mentioned mentioned difficulties if tech one eventually down there really into the to legacy and run which built Is that COBOL, any and really with items you own so, has also some about part the compete kind term Thanks. tech not questions. with on those in thanks time? morning, hype is at the really on guess platforms Good problems be tell banks of press my - as focus, ties outside, huge a is to Finn. is dealing how I the for on sixties question which you with who you it most can for into can view least building scratch, around some kind big you firms are of from strategically fintech new there, what deal. do who be to hard so really going are

Jamie Dimon

why eligible many the service open seem run efficient cloud, look digital better error applications. platforms, will yes, or eligible AIs to will the be it been platforms cloud marginalized they hype are [indiscernible] and like is credit little tons free journey, now for costs that of public truth--and your to very rates things cloud, XX built be The more more it and minutes, [indiscernible] to these those embedded the you tech some need opposed re-factored But and over those decade, they’re better monkeying to but customer of these there in also be part so the and reason in [indiscernible] system, whole cloud But accounts reformulated can will your not the to re-factored side that million building The things bit have modify customers, that X,XXX these a I’d will down. in efficient. around around had do we that are get legacy both. the go true a - has also as of doing you’re to so that, is be things at being AI, it’s and and your platforms be be are right, we’ve time, new weeks we Over days those things are X,XXX to we time, go is down, way a But centers, data years numbers. with because of all and those so spend numbers legacy bit little re-factoring, our fine. in getting

Operator

no at further have questions time. We this

Jamie Dimon

Well, thank you very talk to great much. We’ll did job. all a you quarter. a you in Jen,

Jennifer Piepszak

Thanks everyone. Thanks Jamie.

Operator

for today’s you participating Thank in call.

You may disconnect. now

JPMorgan Chase & Co. (JPM) 16 Jul 192019 Q2 Earnings call transcript