JPMorgan Chase & Co Q2 2024 Earnings Call Transcript

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

Question: Steven Chubak - Wolfe Research, LLC - Analyst : Hi, good morning, Jeremy. So I wanted to start off with a question on capital. Just given some indications that the Fed is considering favorable revisions to both Basel III Endgame and the GSIB surcharge calculations, which I know you've been pushing for, for some time. As you evaluate just different capital scenarios, are these revisions material enough for they could support a higher normalized ROTCE at the firm versus the 17% target? And if so, just how that might impact or inform your appetite for buybacks going forward?

Question: Steven Chubak - Wolfe Research, LLC - Analyst : Don't need to apologize, Jeremy. That was a really helpful perspective. Maybe just for my follow-up on NII, you've been very consistent just in flagging the risks related to NII over earning, especially in light of potential deposit attrition as well as repricing headwinds. In the second quarter, we did see at least some moderation in repricing pressures. Deposit balances were also more resilient in what's a seasonally weak quarter for deposit growth. So just given the evidence that some deposit pressures appear to be abating, do you see the potential for NII normalizing higher? And where do you think that level could ultimately be in terms of stabilization?

Question: Steven Chubak - Wolfe Research, LLC - Analyst : Understood, Jeremy. Thanks so much for taking my questions.

Question: Saul Martinez - HSBC - Analyst : Good morning. Thanks for taking my question. Jeremy, can you give an update on the stress capital buffer? You noted obviously that you think there is an error in the Fed's calculation due to OCI. Can you just give us a sense of what the dialogue with the Fed looks like is there a process to modify the SCB higher? And if you can give us a sense of what that process looks like. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 12, 2024 / 12:30PM, JPM.N - Q2 2024 JPMorgan Chase & Co Earnings Call

Question: Saul Martinez - HSBC - Analyst : Okay, got it. That's helpful. Just following up on capital returns, on Steve's question, I think you highlighted in response, it's a matter of when, not if. And obviously, Jamie is not there, you can't speak for Jamie, but seems to have shown limited enthusiasm for special dividend or buybacks at current valuations? Can you just give us a sense of how you're thinking about the various options? Any updated thoughts on a special dividend and you do other things like, for example, have a materially increasing your dividend payout sort of a step function increase where you keep that flat and grow into that, grow your earnings into that over time, can you just maybe give us a sense of how you're thinking about what options you have available to deploy that capital?

Question: Saul Martinez - HSBC - Analyst : Okay, great. Thanks a lot. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 12, 2024 / 12:30PM, JPM.N - Q2 2024 JPMorgan Chase & Co Earnings Call

Question: Ken Usdin - Jefferies LLC - Analyst : Thanks a lot. Good morning, Jeremy. Jeremy, great to see the progress on investment banking fees up sequentially and 50% year over year. And I saw you on the tape earlier, just talking about, still regulatory concerns a little bit in the advisory space, and we clearly didn't see the debt portfolio in place, although your DCM was great again. I'm just wondering just where you feel the environment is relative to the potential and just go where the dialogue is across the three main bucket areas in terms of like how does this feel in terms of a current environment versus a potential environment that we could still see ahead? Thanks.

Question: Ken Usdin - Jefferies LLC - Analyst : Great. Thank you for all that, Jeremy. And just one on the consumer side, just anything you're noticing in terms of people just have been waiting for this delinquency stabilization on the credit card side. Obviously, your loss rates are coming in as you expected, and we did see 30 days of pretty flat, 90 days, come down a little bit. Is that seasonal? Is it just a good rate of change trend? Any thoughts there? Thanks.

Question: Ken Usdin - Jefferies LLC - Analyst : Thank you.

Question: Glenn Schorr - Evercore ISI - Analyst : Hi, thanks very much. So Jeremy, the discussions so far around private credit and you all, your recent comments have been the ability to add on balance sheet and compete when you need to compete on the private credit front. I do think that most of the discussion has been about the direct-lending component. So I'm curious if you are showing more progress and activity on that front. And then very importantly, do you see the same trend happening on the asset-backed finance side because that's a bigger part of the world, and it is a bigger part of your business? So I'd appreciate your thoughts there. Thanks.

Question: Glenn Schorr - Evercore ISI - Analyst : That's great for you if you are not hearing much about it, so we can leave it at that. Maybe just one quick follow-up in terms of your just overall posturing on -- you were patient and smart when rates were low, waited to deploy, worked out great. We know that story. Now it seems like you have tons of excess liquidity and you are being patient and rates are high. And I'm curious on how you think about what kind of triggers, what kind of things you're looking for in the market to know if and when you would extend duration?

Question: Glenn Schorr - Evercore ISI - Analyst : Super, helpful. Thanks so much for that.

Question: Matt O'Connor - Deutsche Bank - Analyst : Good morning. I was just wondering if you can elaborate on essentially the math behind the ROTCE being too high at 20% and more normalized at 17%. Obviously, you've pointed to over-earning NII. And I guess the question is, is that all of it to go from 20% to 17%? And if so, is that all consumer deposit costs? Or are there a few other components that you could help frame for us?

Question: Matt O'Connor - Deutsche Bank - Analyst : Yeah. That was a really helpful chart. Just one follow-up. On the yield curve effects, I guess, what do you mean by that? Because right now, the yield curve is inverted, maybe you're still leaving any impact of that. But kind of longer-term, you'd expect a little bit of steepness of the curve, which I would think would help. But what do you mean by that? Thank you.

Question: Matt O'Connor - Deutsche Bank - Analyst : Got it. Okay, thank you for the details.

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : Hi. Jeremy, you said it's too early to end the over earning narrative, and you highlighted higher deposit costs and the impact of lower rates and lower NII and DCM pull-forward and credit cost going higher. Anything I'm missing on that list? And what would cause you to end the over earning narrative?

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst :

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : Let me just zoom out for one more question on the return target. I mean when I asked Jamie at the [2013] Investor Day, would it make sense to have 13.5% capital, he was basically telling you take a hike, right? And now you have 15.3% capital and you're saying, well, we might want to have a lot more capital here. I mean at some point, if you're spending $17 billion a year to improve the company, if you're gaining share with digital banking, if you're automating the back office, if you're moving ahead with AI, if you're doing all these things that I think you say others aren't doing, why wouldn't those returns go higher over time? Or do you just assume you'll be competing those benefits away? Thanks.

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : All right. Thank you.

Question: Betsy Graseck - Morgan Stanley - Analyst : Hi, Jeremy. So I did want to ask one drill-down question on 2Q, and it's related to the dollar amount of buybacks that you did do. I think in the press release, right and the slide deck, it's $4.9 billion common stock net repurchases. So the question here is what's the governor for you on how much to do every quarter? And I mean I understand it is a function of okay, how much do we organically grow? But even with that, so you get the organic growth which you had some nice movement there. But you do the organic growth and then is it how much do we earn and we want to buy back our earnings? Or how should we be thinking about what that repurchase volume should be looking like over time? And I remember at Investor Day, the whole debate around I don't want to buy back my stock, but we are, right. So I get this question from investors quite a bit of how should we be thinking about, how you think about what the right amount is to be doing here? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 12, 2024 / 12:30PM, JPM.N - Q2 2024 JPMorgan Chase & Co Earnings Call

Question: Betsy Graseck - Morgan Stanley - Analyst : Great. Thank you, Jeremy. Appreciate it.

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Jeremy, I know you touched on deposits earlier in the call in response to a question. I noticed on the average balances, the non-interest bearing deposits were relatively stable quarter to quarter versus prior quarters when they have steadily declined. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 12, 2024 / 12:30PM, JPM.N - Q2 2024 JPMorgan Chase & Co Earnings Call And this is one of the areas, of course investors are focused on in terms of the future of the net interest margin for you and your peers. Can you elaborate if you can, what you're seeing in that non-interest-bearing deposit account? I know this is average and not period end, the period end number may actually be lower. But what are you guys seeing here?

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Very good. And as a follow-up, you've been very clear about the consumer credit card charge-offs and delinquency levels. And we all know about the commercial real estate office, and you always talk about over-earning on net interest income of course. One of the great credit quality stories for everyone, including yourselves, is the C&I portfolio, how strong it's been for in this elevated rate environment. And I know your numbers are still quite low, but there in the Corporate and Investment Bank, you had about a $500 million pickup in non-accrual loans. Can you share with us what are you seeing in C&I? Are there any early signs of cracks or anything? And again, I know your numbers are still good, but I'm just trying to look forward to see if there's something here over the next 12 months or so.

Question: Gerard Cassidy - RBC Capital Markets - Analyst : Great, appreciate the insights as always. Thank you.

Question: Erika Najarian - UBS Investment Bank - Analyst : Hi, good morning. I just had one cleanup question, Jeremy. The consensus provision for 2024 is $10.7 billion. Could you maybe clarify for once and for all sort of Jamie's comments at an industry conference earlier and try to sort of triangulate if that $10.7 billion provision is appropriate for the growth level that you are planning for in card?

Question: Erika Najarian - UBS Investment Bank - Analyst : Great. Thank you.

Question: Jim Mitchell - Seaport Global Securities LLC - Analyst : Hey, good morning. Maybe just one last question on sort of deploying excess capital. It seems like the two primary ways to do that organically would be through the trading book or the loan book. So maybe two questions there. One, trading assets were up 20% year over year, is that you leaning into it or just a function of demand? And is there further opportunities to grow that? And then secondly, outside of cards, loan demand has been quite weak. And any thoughts from you on if you're seeing any change in demand or how you're thinking about loan demand going forward? Thanks. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 12, 2024 / 12:30PM, JPM.N - Q2 2024 JPMorgan Chase & Co Earnings Call

Question: Jim Mitchell - Seaport Global Securities LLC - Analyst : All right. Okay, great. Thanks.