JP Morgan Chase & Co. (NYSE: JPM) Q3 2025 Earnings Call | 10/14/2025

Overview:

• Speakers: Jeremy Barnum (CFO), Jamie Dimon (Chairman & CEO), Operator, and various analysts (John McDonald - Truist, Glenn Shore - Evercore ISI, Betsy Gressick - Morgan Stanley, Ibrahim Poonawalla - Bank of America, Mike Mayo - Wells Fargo, Gerard Cassidy - RBC, Erica Najarian - UBS, Jim Mitchell - Seaport Global, Ken Utzden - Autonomous, Chris McGrady - KBW).
• Focus: Shorter prepared remarks emphasizing quick transition to Q&A. Reported strong results amid resilient consumer and robust markets activity. Provided updated FY2025 guidance and preliminary 2026 outlook.

Key Financial Highlights (Jeremy Barnum):

• Net Income: $14.4B; EPS: $5.07; ROTCE: 20%.
• Revenue: $47.1B (up 9% YoY), driven by higher markets revenue, asset management fees, IB fees, and payments. NII offset by balance sheet growth/mix vs. lower rates.
• Expenses: $24.3B (up 8% YoY), from volume/revenue-related growth.
• Credit Costs: $3.4B (net charge-offs $2.6B; reserve build $810M). Wholesale charge-offs elevated due to fraud in secured lending (e.g., $170M from Tricolor); consumer/wholesale otherwise in line.
• Balance Sheet: CET1 ratio 14.8% (down 30 bps QoQ) from RWA growth in wholesale lending/markets.
• Business Segments:
  • Consumer & Community Banking (CCB): Net income $5B; revenue $19.5B (up 9% YoY on higher NII from revolving balances). Consumers resilient; #1 retail deposit share (5th year); record Sapphire new accounts.
  • Corporate & Investment Bank (CIB): Net income $6.9B; revenue $19.9B (up 17% YoY). IB fees up 16% (strong equity underwriting/IPOs); Fixed Income up 21%; Equities up 33%.
  • Asset & Wealth Management (AWM): Net income $1.7B; pre-tax margin 36%; record revenue $6.1B (up 12% YoY). AUM $4.6T (up 18%); client assets $6.8T (up 20%); $72B long-term inflows.
  • Corporate: Net income $825M; revenue $1.7B.

Outlook (Q4/FY2025 and Preliminary 2026):

• Q4 NII ex-markets: ~$23.5B; Total NII ~$25B.
• Q4 Adjusted Expenses: ~$24.5B; FY ~$95.9B (up from stronger revenue).
• FY2025 Card NCO Rate: ~3.3% (improved from resilient consumer).
• 2026 NII ex-markets (Central Case): ~$95B (using Sep 30 forwards: 75 bps cuts in 2025, 50 bps in H1 2026; offset by growth in revolves, deposits, loans). Consensus expenses ~$100B seen as low (post-seasonality, labor inflation, growth).
• Full 2026 guidance (NII, expenses, card NCO) at Q4 earnings; further discussion at Feb company update.

Q&A Highlights:

• Deposits (CCB Growth): Flat QoQ; scenarios from Investor Day (3% Q4'25, 6% '26) pushed out slightly due to lower savings rates, strong equities shifting to investments, higher yield-seeking. Confident in long-term trajectory via 400K+ new accounts; wholesale deposits strong but muted growth expected in '26.
• Credit & Wholesale Fundamentals: Demand from "revived animal spirits" (acquisitions, large deals). No major public-private differentiation; subprime auto challenging. Tricolor: $170M charge-off (secured lending fraud); no First Brands exposure. Portfolio mix shifting to higher expected losses but with appropriate returns/reserves. Reserves granular; day-1 builds on new direct lending.
• Capital Utilization: Generating organic capital; arresting excess growth while deploying to real economy (e.g., $500B aspirational lending over 10 years to critical U.S. industries + $10B equity investments). Prefer franchise-accretive RWA over buybacks at current valuations; dividend hikes possible (all-of-above).
• Macro/Consumer Risks: Resilient spending/delinquencies below expectations; low hiring/firing signals uncertainty. Potential labor deterioration if growth slows; not a "tipping point" yet.
• Expenses & AI: '26 growth ~4% (new normal labor inflation 3-4%, plus investments/revenue-tied). AI for productivity (constrain headcount, process reengineering); focus on discipline over measurable savings. Medical costs up 10% in '26/'27; competitive pay pressures from hedge funds/PE.
• NBFI Lending Risks: Broad category (half traditional); mostly secured/structured. Potential higher losses in downturn (double leverage in CLOs/BDCs); fraud in some (Tricolor/First Brands as "cockroaches"). Review processes post-incidents; not elevated vs. other risks. Investors: Narrow focus (e.g., subprime vs. secured to asset managers); review BDC disclosures.
• Housing/Mortgages: Supply issues (permitting/NIMBY); reduce post-GFC regs (securitization/origination/servicing) to cut costs 30-40 bps without added risk. Avoid pushing homeownership blindly.
• Regulatory Changes (Basel III Endgame): New admin acting quickly/holistically (product-level math, not system calibration). Trending positive (urgency, inter-agency collaboration); allows banks' role in mortgages. Timing per public comments; fix inaccuracies (G-SIB, CCAR, operational risk). Intended vs. unintended effects (e.g., pushing mortgages to non-banks).
• IB/M&A Pipeline: Robust/upbeat; strength in IPOs (processes continued despite volatility), M&A (busiest summer), acquisition finance. Rate cuts priced in; sponsor activity not overly sensitive unless yield curve flattens more.
• Other: Loan yields up 3 bps on mix (e.g., cards). Sapphire refresh: Transitional reward amortization pressures card revenue rate (normalizes in quarters). Retail share to 15%: Via value proposition/expansion, not aggressive pricing (recent share loss disciplined/expected).