JPMorgan Chase & Co Q2 2025 Earnings Call Transcript

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

Question: Christopher McGratty - Keefe Bruyette & Woods Inc - Analyst : Jamie, relative to three months ago, there's a lot of optimism -- relative to three months ago, there's a lot of optimism on financial deregulation and really going to break in the bank's favor. I'm interested if you agree, number one, with this optimism and anything specifically you could point to? And secondarily, on capital, I'm interested in what's on or off the table in terms of uses of capital. What do you need to see from the macro regulatory? And how should we be thinking about the timing? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 15, 2025 / 12:30PM, JPM.N - Q2 2025 JPMorgan Chase & Co Earnings Call

Question: Christopher McGratty - Keefe Bruyette & Woods Inc - Analyst : I appreciate all the color. If I could ask on a follow-up, the inorganic comments. I'm interested in capital allocation between your businesses, where you think -- if that were to present an opportunity where -- which businesses would most likely be the use of that capital? Thanks.

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : This almost sounds like a fintech and AI call. But maybe just switching gears, I think, Jamie, your comments in the press release, give us a sense like when we think about middle market businesses in the US, what's the state of play there when we think about interstates, tariffs, consumer spending slowing? Should we be concerned in terms of credit quality outlook looking out 6, 9, 12 months? Just what's your take based on all the data that you all look at? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 15, 2025 / 12:30PM, JPM.N - Q2 2025 JPMorgan Chase & Co Earnings Call

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Got it. And I guess just as a follow on -- go ahead, Jeremy, yeah.

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : And I was just wondering in terms of your sense of just the state of play, the health of the balance sheets of these customers. And also, if you can expand that into the consumer, any areas of stress from a credit quality perspective that you're beginning to get more concerned today versus three or six months ago?

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : That was helpful. And would you say the same about Commercial? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 15, 2025 / 12:30PM, JPM.N - Q2 2025 JPMorgan Chase & Co Earnings Call

Question: John McDonald - Truist Securities, Inc. - Analyst : Jeremy, quick follow-up on the consumer credit, broader comments taken there. But in terms of the NPAs, the nonaccruals and consumers seem to have a bit of a jump. Is there something technical there? Maybe just talk to that.

Question: John McDonald - Truist Securities, Inc. - Analyst : Okay. Great. And wanted to ask for some more color on retail deposits. Maybe in the context of Marianne's presentation from Investor Day, could you remind us of what's giving you incremental confidence and seeing some improvement in deposit margin and kind of producing that mid- to upper single-digit deposit growth that Marianne talked about?

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : Jeremy, can you talk about why commercial loan growth was much stronger in the second quarter and any strength by geography? And Jamie, can you address what regulators could do to potentially have banks lend more in the future consistent with what the Treasury Secretary said is his goal? Thanks.

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : You didn't mention the cost to make a loan. Is there a potential for streamlining there?

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : And last one, when you say inorganic growth, would you buy a private credit firm? Is that something you can at least consider?

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : Peak private credit, I can't leave on those three words. What do you mean by peak private credit?

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : Sorry, Jeremy?

Question: Erika Najarian - UBS AG - Analyst : Jamie and Jeremy, you've talked about simplifying the regulatory construct. And it seems like based on the progress so far, will mostly get there, particularly with Basel III Endgame and G-SIB, which impacts you so much. And to that end, if we do get a more simplified regulatory construct that addresses both the capital and liquidity constraints, does that move up JPMorgan's natural ROTCE? You talked about 17% through the cycle a lot. Obviously, perhaps we would optimize the denominator. Why wouldn't that be additive to your natural ROTCE? Or does this get passed back on to your clients in terms of pricing?

Question: Erika Najarian - UBS AG - Analyst : Yeah, for sure. And I think that's a big discussion point with investors in terms of talking about actually the EPS gains rather than just ROTCE improvement. And the second question I had is you mentioned, and clearly, we saw it in the numbers, a late in the quarter, pickup in activity levels. And I'm wondering as we think about sentiment and what this means for the second half, is it -- does activity levels pick up because it felt like we were taking extreme outcomes from tariff policy off the table? Is it the tax bill certainty? I guess I'm just wondering, has some of the issues that prevented activity levels, or really stunned it in April and early May, have those fully been taken out of your clients thinking as we think about the second half of the year and activity levels continuing from here?

Question: Jim Mitchell - Global Hunter Securities LLC - Analyst : Maybe just on -- Jeremy, if I look at your 10-Q and 10-K rate sensitivity disclosures, it looks like you guys have done a lot to reduce your asset sensitivity to the short end of the curve. So can you talk about what you've been doing to change the positioning of the balance sheet, whether extending duration or hedges? And is there more you can do to desensitize the balance sheet before rate cuts begin to kick in as I guess the markets expect later this year? Thanks.

Question: Jim Mitchell - Global Hunter Securities LLC - Analyst : Fair enough.

Question: Jim Mitchell - Global Hunter Securities LLC - Analyst : Okay, thanks. And maybe just one more on the regulatory front. I think regulators look at reducing the SLR as a way to encourage banks, or open up an avenue to expand your balance sheet into lower-risk assets. Do you see that -- is it really just a supply issue? Or how do you think about the demand supply dynamic? And is there really opportunities for you to grow? I would imagine, I guess, with an SLR not being constrained, maybe it's better return in lower-margin areas? Just your thoughts.

Question: Ken Usdin - Autonomous Research LLC - Analyst : First question is I just wanted to ask you about the recent Sapphire price changes and just what you're seeing in terms of initial response, and just how that fits in strategically with the competitive landscape on Card and your growth opportunity?

Question: Ken Usdin - Autonomous Research LLC - Analyst : Got it. It is a quite nice lounge. On the trading side, just wondering how much the strong results this quarter, the quarter changed a lot from April to June. And I'm just wondering how much do you think that was environmental? Has it calmed down at all? And also how much is just your ability to kind of use the balance sheet to boost results also, could that make it more sustainable regardless of what the environment is doing? Thanks a lot.

Question: Matt O'Connor - Deutsche Bank - Analyst : From regional banks --

Question: Matt O'Connor - Deutsche Bank - Analyst : I just wanted to ask about any pressure from commercial and corporate customers to try to offset the tariff impact from regional banks that have pointed to deposit pricing pressure on the commercial side, and if you're seeing any signs of that or more broadly speaking. Thank you.

Question: Matt O'Connor - Deutsche Bank - Analyst : Okay, thank you.

Question: Gerard Cassidy - RBC Capital Markets Inc - Analyst : I'd like to circle back to the return on tangible common equity topic that you guys have discussed. Obviously, you had a very strong number this quarter, 20% when you adjusted for the onetime effect. And you go back to your Investor Day and you pointed out 17% is what the targeted level is. And if we turn back the clock and go back to 2020, you had the same 17% goal for the ROTCE, but your CET1 ratio back then was guidance -- guidance was 11.5% to 12%. So my question is, has the business for you folks change such that now it's just inherently a more profitable business? Or are there some onetime -- not onetime items, but are there some tailwinds that are artificially -- I hate to use that word, but are they inflating the ROTCE which is why you guys are very cautious about lifting that goal from 17%?

Question: Gerard Cassidy - RBC Capital Markets Inc - Analyst : Jeremy, I'm glad you still use an HP 12C. That's good. Just as a follow-up -- as a quick follow-up on Jeremy, you touched on -- just as a quick follow-up, Jeremy. In the markets comment that you made, you said that there were fewer opportunities in securitized products and fixed income financing. Can you expand upon that or give us any color there? Thank you.

Question: Saul Martinez - HSBC Securities (USA) Inc - Analyst : Just wondering, I just want to follow up on Ken's question about sales and trading. And I think you kind of addressed this, Jeremy. But I just -- you had another strong quarter there on the back of a pretty exceptional Q1 on the back of really strong 2024. I mean, how are you thinking about how much of this is the result of an exceptional trading environment versus something that's more durable? And presumably less volatility, good for investment banking, but would you see some normalization in Sales & Trading as a result? Or do you think there's still opportunities to grow certain businesses and take share? Just curious how much -- how you think about what's exceptional versus what's more durable here.

Question: Chris Kotowski - Oppenheimer & Co Inc - Analyst : Kind of an old-school bank analyst question. After a long time of kind of bemoaning slow C&I loan growth, you had this extraordinary growth this quarter, $33 billion on average and more than 6% quarter over quarter. But then when we look at the P&L in the commercial and investment bank, net interest income is down 2% and lending income is down 4%. And I know there's hedges and other complicated things, but it just kind of doesn't compute that you'd have such strong loan growth and not have revenue growth associated with that.