JPMorgan Chase & Co at Barclays Global Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jason Goldberg - Barclays Services Corp - Analyst : Maybe the best place to start, Doug, is just given CIB encompasses Global Banking, Markets, Payment, Securities Services; does business with, I think, 90%-plus of the Fortune 500 over 60 countries. Just give us an overview of what you're hearing, seeing from your customer base. I don't know how you want to segment that, but I'm just kind of curious. You're clearly in the know. Douglas Petno - JPMorgan Chase & Co - Co-Chief Executive Officer - Commercial & Investment Bank Sure, Jason. So first, thank you. Great to see you. Great to see everybody. It's nice to be here. As you say, we have an amazing wholesale client

Question: Jason Goldberg - Barclays Services Corp - Analyst : Got it. And maybe we can just kind of just -- next step, we can maybe just run through the businesses individually. I have to start with Markets. Totally appreciate we take a longer-term view here. But just any kind of thoughts on the quarter-to-date trends in trading, both FICC, equities, and kind of what you're hearing, seeing? Douglas Petno - JPMorgan Chase & Co - Co-Chief Executive Officer - Commercial & Investment Bank Yeah. Our Markets team is doing extremely well. We're very proud of the performance. They're on track to have a terrific year. The momentum from the first half of the year has extended into the third quarter. We're seeing broad-based strength across FICC and equities and in particular, strength in securitized product rates and credit. And equity is really the strength across the entire client franchise. We're seeing elevated client activity. And then there's just the trading performance in those teams has been quite good. And we have a few weeks left in the quarter. But we would sort of estimate that Markets revenue for the quarter would be up sort of in the high-teens percentage rate. Obviously, a few weeks to go. There's -- anything could happen to be a showstopper. We don't expect that. But as we sit here today, we're expecting a strong quarter in Markets.

Question: Jason Goldberg - Barclays Services Corp - Analyst : Got it. And I guess, before we kind of move off of trading, the Markets' balance sheet has increased quite significantly over the past year. Maybe just talk to the thought process behind the growth and the appetite to continue to run the balance sheet from here? Douglas Petno - JPMorgan Chase & Co - Co-Chief Executive Officer - Commercial & Investment Bank Yeah. Financing our Markets clients is something we've done for a long time. And I think it gets back to -- the root of our strategy is to build every one of our businesses in CIB around our clients, have a deep understanding of what their needs may be, and the capital intensity of our Markets clients is increasing. We're trying to provide credit solutions in an agnostic way and bring value to our clients. In many cases, providing loans to the clients preserves your existing Markets revenue pool. In some cases, it opens up and expands your wallet opportunity with our clients. And it's very often the case that these financing products on their own are standalone profitable and interesting for us. But I think that you should expect financing revenues as a part of our Markets business overall to continue to start climb this -- step up over time. I think a positive of that is it brings much more stability to Markets revenue. Those revenue pools are much less volatile than pure Markets-driven, flow-driven kind of activity.

Question: Jason Goldberg - Barclays Services Corp - Analyst : Makes sense. And then just on credit quality. I mean, wholesale charge-offs have been sub-20 basis points for a bit now. On the second-quarter earnings call, Jeremy mentioned reserve builds came from downgrades, a handful of names. Maybe just talk to your outlook for credit quality across the main portfolios. Any particular areas of concern? Douglas Petno - JPMorgan Chase & Co - Co-Chief Executive Officer - Commercial & Investment Bank Yeah, there's no real concentrated area that we're worried about. We feel great about our underwriting. We feel good about the quality of our portfolio overall. We definitely feel like we're adequately reserved for a full range of economic scenarios. If you break it into C&I and CRE and C&I, it has been -- the losses in the downgrades have been like just that idiosyncratic. It's one or two situations where they're not secular. It's sort of -- you have to think of a company that had outsized exposure to the government as a customer. We've seen everything that the government has done to cancel contracts and sort of change their consumption profile. Their companies were caught sort of flat footed in that. I don't think that's going to -- that's happened. There could be more of it, but it isn't like we have a tremendous amount of risk to that across the portfolio. You have some tariff-related stress in the system. I would say until that sort of the dust has settled on trade and all of that is washed through, it's possible you could see more downgrades and possibly some charge-offs, especially for clients that sort of the lower end of the risk spectrum, more thinly capitalized, tighter margins, and aren't as able to adjust their supply chain. But depending on how the tariffs play out, you might see more stress. Nothing that we're certainly not panicked about. We're watching it all carefully. And those clients aren't standing still waiting for that to happen. They're securing liquidity. They're changing their business models through evolving and adapting. So -- and then in CRE, our commercial real estate portfolio is quite solid. The one area that we continue to watch is office. Our office exposure is less than 10% of our portfolio. And even while office fundamentals are weak, they're starting to see some signs of improvement. It certainly feels like we're off the bottom in office. And for us in real estate overall and certainly, for our office portfolio, we feel like we're well reserved for whatever might happen across the commercial real estate sector.

Question: Jason Goldberg - Barclays Services Corp - Analyst : I mean, the company overall has talked about $95.5 billion of expenses overall for the year. I guess, any kind of thoughts around that number, or do we have to wait for Jeremy on the earnings call? Douglas Petno - JPMorgan Chase & Co - Co-Chief Executive Officer - Commercial & Investment Bank Yeah, I think you wait for Jeremy on the earnings for that.

Question: Jason Goldberg - Barclays Services Corp - Analyst : And that was up low double digits year over year on the trading front -- on the IB front. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 2:30PM, JPM.N - JPMorgan Chase & Co at Barclays Global Financial Services Conference Douglas Petno - JPMorgan Chase & Co - Co-Chief Executive Officer - Commercial & Investment Bank Correct.

Question: Jason Goldberg - Barclays Services Corp - Analyst : I guess, again, in Payments, there's -- you're competing against a lot of different players, banks, nonbanks, tech, fintech, and the like. Maybe just talk a bit about the landscape and kind of just where you see the competitive threat. Douglas Petno - JPMorgan Chase & Co - Co-Chief Executive Officer - Commercial & Investment Bank I mean, it's extremely competitive in every product, in every market, and in every client segment. And think to all our traditional universal banks, global banks, regional banks, commercial banks, certainly all the fintechs, depending on sort of the Payments product continuum. The other thing to just highlight, too, unlike the transactional Investment Banking business, to win Payments business, you have to convince a CFO or treasurer to lift up their treasury operation from an incumbent that's otherwise doing probably a reasonable job and move it to you. So you've got to display some combination of much more resiliency, reliability, or value. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 2:30PM, JPM.N - JPMorgan Chase & Co at Barclays Global Financial Services Conference You're going to increase effectiveness or bring efficiency to their treasury middle office. That is a very -- think sort of more software sales. So the investments we're making in our operational resiliency, cybersecurity, user experience are all contributing factors to our win rate. The investments we're making in our onboarding and service journeys for our clients are all contributing to our win rate. The fact that JPMorgan is one of the few players that has an integrated merchant services, trade, and treasury services business, that can bundle all of those capabilities together, is contributing to our win rate. And if you just sort of look back at the historic -- our Payments fee revenue growth sort of low to mid-teens, that's quite impressive. We do -- while we do grow with our clients, to grow Payments fee revenue in the teens is something we're extremely proud of. Given the point I said earlier, you're literally lifting it out of an incumbent and moving it over. I think the other notable benefit of sort of putting these businesses together as we did 1.5 years ago, is we're now acquiring customers much earlier in their life cycle. So we jump in -- we don't have to displace an incumbent. We're becoming the primary operating bank for a client at inception, which is a much -- reduces your cost to acquire that business. And it's a much easier game to play. But I think just -- if you just look at our market share over the last five years, we've added 3.5 points a share. And so we feel like the things -- the steps we're taking to invest in our platform capabilities and user experience are really contributing to our success. But, man, there is competition everywhere.

Question: Jason Goldberg - Barclays Services Corp - Analyst : Got it. And then maybe just kind of rounding out the business, the Securities Services. I think it kind of get sometimes overlooked. I think people are surprised when they realize JPMorgan is actually the third largest player in this business. Maybe just kind of talk to what you're seeing (multiple speakers) -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 2:30PM, JPM.N - JPMorgan Chase & Co at Barclays Global Financial Services Conference Douglas Petno - JPMorgan Chase & Co - Co-Chief Executive Officer - Commercial & Investment Bank Yeah, don't overlook the Securities Services business. It is kind of tucked within the CIB, but it's an incredible franchise on its own. It does completely benefit by being a part of an investment bank and part of a trading operation. Most of our top clients are also Investment Banking clients and Markets clients. And so the actual -- the utility of having those broad-based relationships is a huge strategic advantage for them. The business is performing extremely well. We had record revenues for each of the last five years. 2024 was a record revenue year for us. Second quarter was a record revenue year for us. And we have industry-leading margins. You mentioned we're in the top three, but we have industry-leading margins at 32%. And I think beyond the actual number, that's 32% while we're making significant investments in bringing new customers on and in our platform and our capabilities. So it's a fantastic franchise. It brings a lot of stability. It brings -- it's a deposit-gathering business for us, and it's a predictable revenue stream. It's nice to have sort of tucked within the CIB, and it's certainly accretive to our growth rates.

Question: Jason Goldberg - Barclays Services Corp - Analyst : Interesting. You mentioned deposits earlier. And CIB, I think, is $1.2 trillion in deposits, so obviously, a big contributor. Balance is up like 12% year over year. Maybe just talk to kind of what's driving that growth and -- Douglas Petno - JPMorgan Chase & Co - Co-Chief Executive Officer - Commercial & Investment Bank Yeah. Our strategy in Payments is to be a primary operating bank to our clients, help them make payroll, manage their payables, collect receivables, manage liquidity. If you do that, if you are truly their primary operating bank, you will get core stable operating deposits; that's the prize. And so we're investing in our products and solutions to drive that outcome. And we invest organically to expand our business to acquire clients as their primary operating bank. That's been a big deposit driver for us. You've seen that in innovation economy. You've seen that in middle market. We've seen that in across our multinational franchise, where the investments we've made in our global pooling liquidity solutions has really been incredibly competitive and successful. And then as I touched on earlier, our Securities Services business is -- it's actually a really positive contributor to our deposit portfolio. So a combination of all those forces has really been -- it's been a -- gives us a good foundation for future deposit growth. And I'd just -- the one sort of thing that always gets lost in the story is the power of having an asset management business attached to JPMorgan. We have hundreds of billions of dollars of yield-seeking liquidity that leaves our clients to get swept to money market accounts in our AWM business. None of that is captured in the P&L of the CIB, but it's certainly captured in the P&L of JPMorgan Chase. And that's complete extension of our treasury platform as clients -- many of our clients have different liquidity requirements to a point.

Question: Jason Goldberg - Barclays Services Corp - Analyst : Fair. Private credit's another area that's gotten a lot of attention. I guess, JPMorgan kind of touches that term in many different ways. But just kind of love to get your thoughts on the state of play. We've seen a lot of growth in that segment. Kind of your thoughts there, and just what role is JPMorgan playing? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 2:30PM, JPM.N - JPMorgan Chase & Co at Barclays Global Financial Services Conference Douglas Petno - JPMorgan Chase & Co - Co-Chief Executive Officer - Commercial & Investment Bank It's a tremendous market. It's grown dramatically in the last several years. It's now multiple-trillion-dollar market. It's over half the C&I lending market. So it's here to stay and something that we watch very carefully. You all as investors and students and banks should sort of appreciate as well as anybody that banks that had grown loans at over 20% in an extended period of time tend not to do well. So there will certainly be winners and losers in this asset class over time. There are some outstanding players, and then there's some secondary and tertiary players. And so we're not so worried about the outstanding players. Many of them, most of them, are clients of ours. The secondary and tertiary players, it's -- they've not been through a hard recession. I wouldn't consider the pandemic a hard recession. So we'll see what happens if we see two, three quarters of real tough economic climate. We touched the segment in several ways. We're the bank to the GPs. We take them public. We sell these businesses. They're Investment Banking clients. They're Markets clients, and we finance their portfolios on a very strategic basis and conservative advance rates. And then the second part of the business is we have the product offering with the exception -- in the Investment Bank and in our Markets business, we're not an asset gatherer. It's a solution set we're bringing to solve problems or help our clients. The teams aren't motivated by, hey, let's go grow a bunch of direct loans. And so we were public at our high-yield conference early in the year. We announced [$50 million] of capital availability to be in the direct lending business. It was meant for nothing other than to signify that we have the balance sheet, we have the scale, we have the capacity, and we're open for business. But there's no way a target that we -- hey, we've got -- we expect to or are working hard to fund [$50 million] of direct loans. I will also say that we're running all these credits through our pre-existing credit rails, the same underwriting expertise that's been in place for generations at JPMorgan; and look at all of our middle-market loans, all of our buyout loans, and have delivered extremely strong credit performance for us for decades. So we're running it through the same rails. We're maintaining the same credit discipline. All it is for us is just a way to be much more holistic and comprehensive, and product agnostic in delivering a solution. So we're in the game, but it isn't the one and only thing we're doing.

Question: Jason Goldberg - Barclays Services Corp - Analyst : No, makes sense. I guess, in that vein, if we kind of look at this new CIB, it's kind of been around six quarters. ROE's kind of been running 17% to 20% despite Investment Banking fees, maybe not being where they could be, and allocated capital increasing. You talked to kind of 16%. I guess, two questions. I guess, kind of given the increased diversity of the business, just how do you think about the variability returns? And then secondly, is something greater than 16% conceivable just given your market share opportunities, global scale, positioning, and the like? Douglas Petno - JPMorgan Chase & Co - Co-Chief Executive Officer - Commercial & Investment Bank So I'll take the last part first. So the 16% -- so everybody is sort of on the same page -- was a medium-term outlook that we gave at Investor Day. It's just simply that. It was an outlook. It was not an aspirational target in any way. And as we sat on stage at Investor Day, we didn't know where the regulatory framework was going to go. The economy was wobbly. So at that point in the market, it's very reasonable to consider that we're over-earning on credit, over-earning on deposits. And the Investment Banking landscape as we telegraphed at that point was very uncertain. So 16% was not an aspirational target, medium-term outlook, given the facts and circumstances we felt at the time. The other notable point is 16% is pretty good and best in class by any standard, and a lot of different subcomponents of the businesses we're in. And on top of that, the 16% outlook for us includes a tremendous amount of investment in our future, platform capabilities, technology, organic growth, bankers, systems, AI, our whole stable coins initiative. So all of that's in there, and we're still delivering strong returns and margins. So I don't want to be defensive around the 16%. It's just meant to be a conservative guidepost for all of you. Is it possible that we can outperform it? We've shown that we can. And I think depending on where the economy goes, what happens with the regulations, there's a real chance that we could do that. In terms of variability around the margins and the returns of the business, having run the commercial bank for 12-plus years, that was a high ROE, much more stable revenue stream, margin business in CIB. So just by putting that together with CIB, I think you get -- it's accretive to sort of margin stability and return stability. I think another notable point -- we touched on it earlier -- is the increasing percentage of financing revenues as a part of our Markets business. It's a much more stable returns and margins in that. So I don't -- it's very hard to mention and quantify. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 2:30PM, JPM.N - JPMorgan Chase & Co at Barclays Global Financial Services Conference But I think as the business mix has shifted pro forma for the combination, this new commercial and investment bank, you should expect some degree of increase in stability of margins and earnings and returns. At least, we're hopeful that's the case.