JP Morgan Chase & Co. (NYSE:JPM) reported first-quarter financial results on Tuesday. The transcript from the company’s earnings call has been provided below.
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Operator
The JP Morgan Chase earnings call will begin shortly. The JP Morgan Chase earnings call will begin shortly. Good morning ladies and gentlemen. Welcome to JPMorgan Chase first quarter 2026 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. The presentation is available on JPMorgan Chase website. Please refer to the disclaimer in the back concerning forward looking statements. Please stand by. At this time, I would like to turn the call over to JPMorgan Chase chairman and CEO Jamie Dimon and chief financial officer Jeremy Barnum. Mr. Barnum, please go ahead.
Jeremy Barnum (Chief Financial Officer)
Thank you very much and good morning everyone. This quarter the firm reported net income of 16.5 billion and EPS of $5.94 with an ROE of 23%. Revenue of $50.5 billion was up 10% year on year, primarily driven by higher markets revenue, higher asset management and investment banking fees and higher NII driven by the impact of balance sheet growth, predominantly offset by the impact of lower rates. Expenses of $26.9 billion were up 14% year on year, largely driven by higher compensation, including higher revenue related compensation and growth in front office employees as well as higher brokerage expense and distribution fees. The increase also reflects the absence of an FDIC special accrual release in the prior year and credit costs of $2.5 billion with net charge offs of 2.3 billion and a net reserve build of 191 million. And in terms of the balance sheet, we ended the quarter with a standardized CET1 ratio 14.3%, down 30 basis points versus the prior quarter as net income was more than offset by capital distributions and higher RWA. This quarter’s standardized RWA is up 60 billion, primarily driven by the markets business, reflecting higher client activity, seasonal effects and higher energy prices which resulted in higher RWA across market risk and credit risk ex lending. Now let me spend a few minutes on the recently released Basel III endgame and G SIB reproposals. I’ll start by acknowledging that this has been a long journey and getting it done across multiple regulators and applied to the full set of US Banks is unquestionably a difficult task. With that said, we do have some concerns with elements of what’s been put forward, primarily with the G-SIB proposal. On the left hand side we show you our preliminary estimate of the impact on JPMorgan Chase next to what the Fed has disclosed for the Category 1 and 2 banks. In aggregate, our results are worse in each category estimated RWA is higher, G SIB is worse, and because our CCAR losses are below the floor, the Fed’s reduction is not going to apply to us. The result is that under the proposed rules, our CET1 capital would increase around 4%, while the Fed’s estimate for large banks is about a 5% reduction. Our long standing position has been that the agency should calculate each component of the capital requirements correctly without regard to what that may mean for any specific firm or for the broader industry. And to the extent regulators want to add conservatism, they should make that explicit rather than embedding it in methodological choices. Turning to G-SIB on the right, the surcharge on the repurposed rule looks quite, quite high when placed in the historical context, as the chart clearly illustrates. As many of you know, we have been on the record for the better part of this last decade advocating for averaging smaller buckets GDP scaling and reweighting short term wholesale funding to 20%. And we were glad to see many of those concepts in the npr. However, while we have every reason to believe that the Fed’s published estimate of a 3.8% reduction in capital associated with the G-SIB of NPR (Notice of Proposed Rulemaking) is accurate when defined narrowly, it’s important to understand that under the current rule, the surcharges for almost all of the G-SIB banks are scheduled to increase meaningfully over the next two years simply as a result of recent growth in the system, despite in our view, no change in real world systemic risk. In addition to that background increase, the proposed change in the short term wholesale funding methodology adds about $22 billion of G SIB specific capital, principally to the Money center banks of which we represent about 13 billion, while in the process making the methodology less risk sensitive and less consistent with the Fed’s original rationale for including it. This could have been addressed by better adjusting for growth in the system, but it wasn’t enough. The net result is that we need to plan for 5.2% in 2028, a 70 basis point increase from the current 4.5% requirement, which when combined with the RWA increase from the Basel III endgame, NPR (Notice of Proposed Rulemaking) results in a total increase of about $20 billion of G SIB capital based on our current balance sheet. This persistent miscalibration of the US surcharge is obviously bad for international compet, but more importantly domestically this means that the cost of credit from JPMorgan Chase to US households and businesses is likely higher than it is from other domestic non G-SIB banks. We recognize that we are larger and more systemically important than even large domestic peers. But in the end, the question is how much more should the cost be? It is very hard to reconcile the principles articulated in the 2015 Fed G SIB white paper with an outcome where JPMorgan Chase has $109 billion of G SIB surcharge. Obviously the rules aren’t final yet and this is what the common process is for. As Jamie wrote in his Chairman’s letter, everyone wants to move on, so our comments will be very focused, but we feel strongly that the framework should be coherent and the system would therefore be better off with these outstanding points addressed. Now moving to our businesses CCB reported net income of 5 billion. Revenue of 19.6 billion was up 7% year on year, predominantly driven by higher card NII, largely on higher revolving balances and higher operating lease income in auto A few points to highlight Notwithstanding the recent volatility in market and gas prices, based on our data, consumers and small businesses remain resilient with consumer spend growth continuing above last year’s pace. Average deposits were up 2% year on year and quarter on quarter driven by account growth and moderating yield seeking flows. Client investment assets were up 18% year on year driven by market performance and healthy net inflows. And in home lending originations of 13.7 billion increased 46% year on year, predominantly driven by refi performance. Next the CIB reported net income of 9 billion. Revenue of 23.4 billion was up 19% year on year driven by higher revenues across the businesses. To give a bit more color, IB fees were up 28% year on year driven by strong performance across MA and equity underwriting, partially offset by lower debt underwriting. Looking ahead, client engagement and pipelines remain healthy, but of course developments in the Middle east could have an impact on deal execution and timing in markets. Fixed income was up 21% year on year with strong performance across the businesses partially offset by lower revenue and rates. Equities was up 17% from increased client activity. Turning to asset and wealth management, AWM reported net income of $1.8 billion with pre tax margin 35%. Revenue of $6.4 billion was up 11% year on year, predominantly driven by growth in management fees on strong net inflows and higher average market levels as well as higher brokerage activity. Long term net inflows were $54 billion with continued strength across fixed income, equity and multi asset. AUM of 4.8 trillion was up 16% year on year and client assets of $7.1 trillion were up 18% year on year, driven by higher market levels and continued net inflows. And before turning to the outlook, corporate reported net income of $699 million on revenue of $1.2 billion. In terms of the full year 2026 outlook, we continue to expect NII X markets to be about $95 billion. We now expect total NII to be approximately $103 billion. As a function of markets NII decreasing to about $8 billion predominantly due to rates which we expect will be primarily offset in NII. The adjusted expense outlook continues to be about 105 billion and the card net charge off rate continues to be approximately 3.4%. With that, we’re now happy to take your questions. So let’s open the line for Q and A.
Operator
Thank you. Please stand by. If you would like to ask a question, please press star one to be entered into the queue. We kindly request that you ask one question and only one related follow up. If you would like to ask an additional question, please press star one to be re entered into the queue. Our first question comes from Steven Chupac with Wolf Research. Your line is open.
Wolfe Research Analyst
Hi, good morning, Jamie and Jeremy. Thanks for taking my questions. So maybe to start on the AI Cash tool which Jamie, you commented on in your letter. There’s been lots of focus on this particular, at least launch. Given that this is a tool which could potentially result in some consumer deposit pressure as well as drive some impact on increased competition as well as higher deposit betas. I was hoping you could just speak to how you see deposit competition unfolding as similar smart tools become more widespread.
Jamie Dimon (Chairman and CEO)
Yeah, so it’s a great question. And obviously there’s early stages for this particular product, so you have to look at it literally segment by segment, how people manage their money, how they want to manage their money. People are pretty astute at it, particularly the higher net worth. They have tons of choices. They often have money at many different places. And so the question for us is how can we make it easier for them to manage their money in a way they’re comfortable? Most of you on this call, you have in your mind how much days in a checking account and then you write a ticket to a money market fund or a deposit account, something like that. And that’s all we’re trying to do. And you know, we provide great values to people. You know, if you’re a cousin of JP Morgan, I remind people you have, you know, if you have this product, you have atm, you got branches, you got device, you have instant payment systems like Zelle. So we look at the whole basket, how we can do a better job for the client. And yeah, it may squeeze some margins somewhere and create more competition somewhere. You know, that’s life. Jeff Bezos always says your margin is my opportunity. And I kind of agree with that. We’re trying to look at the world from the point of view of customer. What more can we do with them? And this is really early stages and as you know, there’s tons of competition out there for money.
Jeremy Barnum (Chief Financial Officer)
Yeah, exactly. And see, the only thing I was going to add to that, it’s sort of understandable, just got attention because it has sort of AI in it and it’s kind of interesting. But as Jamie says, like, and as you highlighted in your question, competition for deposits has always been very intense. It continues to be intense and we have both external and internal competition from higher yielding alternatives and people sort of optimize that. And as part of running the business, and as also Jamie just alluded to, this thing is like, you know, kind of not even live yet. And it’s sort of targeted at a very small subset of the client base, particularly clients with investments where we think there’s an opportunity to take a larger share of the investment wallet as part of this. So I would. It’s understandable the amount of interest that it’s gotten, but I think the right way to think of it as sort of as an experiment right now.
Wolfe Research Analyst
No, that’s helpful context and maybe switching gears just to the Basel III capital proposal, certainly helpful in terms of how you frame some of the shortcomings, some potential areas for improvement, but maybe just focusing in on the RWA inflationary impacts. Does the guidance that you’ve laid out contemplate any mitigating actions you might pursue? Is there any potential mitigation that you envisage and do you have any preliminary views just on the magnitude of SCB relief that you could see from the removal of some of the double counting of markets or operational risk? I recognize that piece is a little bit more opaque.
Jeremy Barnum (Chief Financial Officer)
Yeah, I mean those are interesting questions. I think obviously we are kind of well practiced over the course of the last decade and a half on understanding the rules in detail and ensuring that we’re using our financial resources efficiently to support the client franchise. So. And I think the hope is that the rules land in a stage where there is nothing in them, which sort of takes an otherwise good and healthy business and makes it completely non economic. I think we’ve alluded to a couple of areas where if you look at the presentation slide on the bottom right hand side, we talked about targeted rwa clarifications needed. There’s this issue with like high yield repo collateral and some stuff about advised lines where, you know, the proposal is a little bit unclear about what the actual impact would be. And in some versions of the world, we think it creates irrational results. But broadly, I don’t think this is a story about optimization at this point. I think this is a story about a rule set that is converging to a place and then we need to just grow the business and deploy the resources to serve our clients. Obviously, we have said a lot about G Sib on this page, and I guess I don’t really have more to say unless you have a question on G Sib. But that is the one area where we think it’s kind of a significant disincentive to a particular type of business, in particular some markets. Business. And I guess I would just make the point that we’ve often made publicly that the depth and breadth of US Capital markets is a key competitive national advantage. And regulatory capital rules that at the margin discourage, you know, a dynamic, you know, secondary market in the United States with active participation by banks is, in our view, sort of not great. So that’s part of the reason that we’re so focused on G SIP because it disproportionately affects that business.
JP Morgan Analyst
Anything you could speak to just in terms of the removal of the double counting. Oh, yeah, sorry, I forgot about that part of your question. Yeah. So as you know, like, we’re currently below the floor. Right. So obviously if that is like the new normal, then if the double count is addressed by removing further things from stress testing, it wouldn’t have any impact. If the double count is addressed by modifying the operational risk calculation in rwa, then it might have some impact. And obviously it’s far from guaranteed that we will be a bank that is permanently below the floor. But I suspect that issue is more relevant for institutions whose business mix is such that they’re going to tend to structurally be above the floor. It’s a little bit unclear for us as things settle down, whether we’re going to bounce around above and below the floor or tend to be structurally above the floor. We’ll see. But I think removal of the double count is definitely something we support. It’s probably not our number one priority at this point because some progress has been made on that front. Yeah. Can I just also just mention on the market, global market shock, it’s never been in the real world all these years, including during the COVID Covid and then before the Great Recession, nothing like what they have. And we already have $80 billion or $90 billion of capital for the trading books. So those numbers just completely out of whack with reality and operational risk capital. I can’t avoid saying it is another crazy obtuse, one in a thousand year thing. And then worse than that, my opinion, they create risk weighted assets. You know, every company in the world has operational risk and they artificially create risk weighted assets which do not exist. And this locks up a lot of capital liquidity for eternity for no good reason. And I understand this operational risk. I think there are real ways to measure it, by the way, which I point out, which is not this artificial over architected academic exercise, but there’s operational risk and margin loans that are late and using subprime collateral as opposed to prime collateral, how you process things. And that’s what they should really be focusing, reducing actual operational risk as opposed to these calculations which you can’t change. Like if it all comes from the mortgage business and you got out of the mortgage business, it still stays there. Like who would do something like that? And so it’s time to really look at this stuff and do it right.
Operator
Well said. Well, thanks so much for taking my questions. Thanks Steven. Thank you. Our next question comes from Erica Najarian with UBS. You may proceed.
UBS Analyst
Yes, thank you. Good morning. Jeremy, my first question is for you. You modified the market’s NII outlook given the change in rates between end of February and today. I’m wondering, as we think about the EX market’s NII number of 95 billion, you retain that. What are sort of the offsets to higher rates in the asset sensitivity, you know, if we don’t have cuts for the rest of the year.
Jeremy Barnum (Chief Financial Officer)
Yeah, sure. So it’s a good question because I think we have said that we’re asset sensitive and rates are a little bit higher as a removal of the cuts in the back half of the year. And so you might have otherwise expected us to revise the markets up a little bit. But just to do a little mental math, the air that we’ve just disclosed, 1.8 billion as a result of the fact that the cuts were pretty backdated, the impact on the full year average is only about 20 basis points. So the amount of upward revision that you might have otherwise expected is really quite small when you do that math. And there were some other bits of up and down noise, some rounding effects, so that is essentially the reason the numbers unchanged. I don’t think there’s too much to read into it.
UBS Analyst
Got it perfectly clear. And my second question is for Jamie. Of course we were all unpacking your chairman’s letter from a few weeks ago. And one of the topics that you wrote about and you’ve spoken about at length in the past is on private credit. And I think we fully appreciate what JP Morgan’s view here is. But given all of the headlines that this topic has garnered, I guess the question here for you and your team is if we do have a recession and higher defaults and higher severity and cumulative losses in leveraged lending, what is the ultimate loss back to the banks? Because as we understand the banks are fairly well protected in terms of structure. And while you address this in your letter, for those that maybe hadn’t had time to read it and that are listening to this call, do you think that if we do have a default cycle in private credit that it will be systemic?
Jamie Dimon (Chairman and CEO)
No. I mean I was quite clear. I don’t think so. And I gave them big numbers. Private credit leverage lending is like 1.7 trillion. High yield bonds are something like 1.7 trillion. Bank syndicated leverage loans like 1.7 trillion. Investment grade debts, 13 trillion. Mortgage debts like 13 trillion. And there’s a lot of other stuff out there. And I pointed out that I think there’s been some weakening in underwriting and not just by private credit elsewhere. And there will be a credit cycle one day. And I think when there’s a credit cycle, losses will be worse than people expect relative to the scenario. I don’t think it’s systemic. It almost can’t be systemic at that size relative to anything else. But you know, when recessions happen and values go down and people refinance at higher rates, there’ll be stress and strain in the system. …