JPMorgan Chase & Co. (JPM) Earnings Call Transcript & Summary

This call is being recorded. Your line will be muted for the duration of the call. We will now go live to the presentation. Good afternoon. Welcome to JPMorgan Chase's 2026 Company Update. Welcome to the stage Mikael Grubb.

All right. Good afternoon. It's my pleasure to welcome you to this event and the new and improved 270 Park. I want to send a special thanks to the extremely dedicated folks who brave the elements and joined us in person. I guess, even in the world's dominant ice hokey nation, there is such a thing as too much winter. Please remember to review the disclaimer about forward-looking statements. And before getting started, let me just quickly walk through the agenda and some logistical points for the afternoon. Jeremy is going to kick us off with a discussion of firm wide topics, and he will also take a few questions at the conclusion of his presentation. After that, we will invite our LOB heads to the stage for the business line-focused Q&A. We will then take a quick break before wrapping the public event with James Q&A. At that point, at least I will need a stiff cocktail which will also be served on this floor. No reservation required. And now let's welcome our first speaker, Chief Financial Officer, Jeremy Barnum.

Welcome to the stage, Jeremy Barnum.

All right. Thank you, Michael, and welcome, everyone. And let me add also thanks for everyone who show up in person. So before we get started, a health warning. Some of the slides you're about to see are shall we say a little bit on the dense side. The reason for that is that we want them to serve not only as a guide to today's conversation but also as an artifact to support all of conversations with you over the next few months. So if you don't have time to consume every number on every page, that's okay, I'll tell you the parts that we think are most important. So with that, let's get started. We have branded this event company update, but there is no real update on these pages, and that's intentional. Consistency is a hallmark of our operating model. Our strategic framework is not just words on the page, is deeply woven into our culture and guides our actions every day. We've highlighted the key elements here. Together, these strengths enable us to serve our clients, customers and communities through any environment and support a relentless focus on generating long-term shareholder value. Our completeness, global presence, diversification and scale are not just attributes. There are competitive advantages that allow us to serve our clients and customers in unique ways. The composition and connectivity of our business lines creates durability and allows us to generate robust results across a wide range of environments. And our operating model enables us to support our clients and customers for their entire life cycle and through multiple generations. The metrics on the right-hand side of the page brings us to life, calling out a few of them. We have $4.8 trillion in AUM. We serve over 86 million U.S. customers. We operate in over 100 markets globally, and we process about $12 trillion of payments a day. Sorry, I simply force quit my notes. Okay. We are also proud of the leadership positions our business as a whole. The market share gains we've achieved are the result of a decade of continued investment and effort. As we look to the future, our focus remains on growing our share and expanding our lead in order to secure the position of the company through many cycles to come even as competition intensifies. And despite the intensifying competition, our 3 lines of business delivered exceptional performance and had a number of notable accomplishments in 2025. Before diving into the specifics, I want to take a step back and frame this page through the lens of scale and investment, which we define here not only as the increase in allocated capital, but also as the cumulative investment spend across technology, people, marketing and more that each business has deployed over the past 5 years, as shown on the top of the page. And in many cases, the results that you see here are the product of investments made even longer ago. With that context, let's review some of the results in 2025. In CCB, we delivered 32% ROE, added 10.4 million new card accounts and reached nearly $1.3 trillion in client investment assets which is more than double the level we saw in 2019. The CIB posted an 18% ROE and 12% revenue growth with record revenue in markets, payments and security services and we expanded global corporate banking coverage to over 40 countries. And in AWM, we delivered a 40% ROE and a 36% pretax margin with record total client asset flows of $553 billion, positive across all channels and regions. We also had the largest active ETF launch on record. With this backdrop of strong LOB results, let's take a step back and discuss recent performance for the company as a whole. 2025 was another year of outstanding results, both in absolute terms and relative to our peers. We delivered 12% growth in EPS, 11% growth in tangible book value per share and an ROTCE of 20%. And as we show you on the bottom left, this year's performance represents a continuation of our long-term outperformance over the last decade. As I just highlighted, our focus remains firmly on long-term growth and performance with the goal of maximizing long-term shareholder value. These ambitions are underpinned by our ongoing investment in bankers, advisers and new markets here in the U.S. and internationally as well as in our technology platform, which continues to drive innovation and efficiency across the firm. We are also deeply connected to the communities in which we operate, and we are committed to being a responsible corporate citizen. Whether it's our community centers or our recently announced security and resiliency initiative, these efforts are both integral to our mission and deliver significant commercial benefits. Before we turn to the 2026 outlook, I'd like to briefly touch on the macro environment. We remain cautiously optimistic. The page shows a stack ranking of the factors we feel better or worse about none of which will be new to you. Currently, the macro backdrop remains supportive and the consumer remains resilient, but the labor market is the key driver there. Business volumes, activity and pipelines all remain very strong. At the same time, our traditional competitors are also benefiting from the supportive backdrop and new challengers continue to emerge, making competition more intense than ever. This environment reinforces the need for vigilance. And just to manage our expectations, might make us a little bit less eager to share certain valuable competitive information. As we move through the next few slides, you'll see that we have dedicated pages for each of our major revenue categories, starting with NII ex markets. Our outlook for 2026 NII ex Markets is unchanged from what we shared at earnings last month. We continue to expect about $95 billion. Breaking down the drivers of the year-on-year growth. We expect a headwind of about $2 billion from rates. The outlook follows the forward curve, which currently implies 83 basis points lower average IORB year-on-year, resulting in deposit margin compression. This is more than offset by balance sheet growth and mix. On the loan side, we expect card to revert closer to long-term trends, but still expect strong growth of more than 6%. In both CIB and AWM, we expect modest loan growth as a result of a continuation of last year's trends, healthy acquisition finance activity, strong infrastructure and AI-related spending as well as ongoing strength in securities-based lending and subscription finance. For deposits, we anticipate low to mid-single-digit growth in banking and wealth management, which I'll discuss in more detail on the next page. We expect payments and security services in CIB to deliver continued deposit growth, albeit at a less robust pace than last year's exceptionally strong performance. In AWM, as clients continue to optimize their cash and redeploy into investments, we expect deposit balances to remain essentially flat. And we now expect markets NII to be about $9.5 billion. I'll cover this in more detail when I discuss the markets business in a couple of pages. Now let's take a closer look at the trends we're observing in retail deposits within CCB. As the headline says, we expect retail deposit growth to resume in 2026. But let's take a moment to review how we got here and expand on some of the drivers and dynamics. As a starting point, we saw significant balance growth during the pandemic as government stimulus drove cash balances higher and rates were low. As we emerge on the pandemic and the Fed's hiking cycle began, yield-seeking flows grew and that, combined with higher spending, drove balances down. In 2025, our total balances were about flat. We did see an inflection point and although total balances were about flat, we did see an inflection point in our checking balances per account, which grew 1% year-on-year. Our checking account acquisition has remained strong and yield-seeking behavior continues to slow. At the same time, yield-seeking flows captured by CCB and in particular, by JPMorgan Wealth Management have actually increased during this period. So while this is a small drag on deposit growth, it is an important long-term tailwind and proof point for our affluent wealth strategy. As you'll recall, last year, we shared what we expected for 2026 deposit growth based on a range of economic scenarios. The central case at the time was about 6% deposit growth. And relative to then rates are higher, yield-seeking flows are higher and the consumer savings rate is lower. And when you put all those effects together, we expect something more like low to mid-single-digit growth this year based on the current central economic scenario. But moving beyond the narrow question of our best guess for this year's deposit growth. The more important point is the consistent track record of account growth, which provides the foundation for long-term deposit growth. And in 2025, we originated 1.7 million net new checking accounts. Now turning to NIR ex Markets. We gather that many of you have questions about the NIR outlook, particularly in the context of our expense guidance. While we are not providing a formal outlook we are expecting higher NIR across the board, except in home lending, where the continued market headwinds are well known. I'll leave you to review the details of this page on your own time, but you can see that we're giving you some directional insights on NIR across the major sub lines of business. Of course, all of this remains highly market-dependent and it's important to acknowledge that our outlook assumes a constructive macro backdrop. In other scenarios, particularly in the event of a sustained equity market sell-off revenue in a number of our capital market-sensitive businesses would be challenged. In such a scenario, we would, of course, also have some offsets on the expense side. And to round out the revenue story, let's talk about markets. The performance of our markets business over the past 6 years has been truly exceptional. At times during this period, we have asked ourselves whether their performance was sustainable, and if not, whether there was a risk of reverting to 2019 levels. By averaging the 2020 to 2024 period, as we've done on this page, it becomes clear that it is probably time to retire that conversation. Of course, markets revenue is volatile and the repeat of the 2025 performance is not guaranteed. But the themes that have supported the recent growth higher levels of volatility, a healthy corporate wallet and strong primary activity remain in place. Now let me take a second to make a few points about business dynamics and revenue streams. As a reminder, we continue to encourage you to look at the markets business on a total revenue basis. The core of our long-term value proposition to clients is meeting their evolving needs as a reliable counterparty across the full product suite, supporting them through cycles and different market conditions. We believe this client-centric approach will grow the franchise sustainably and the composition of the revenue inside that growth is less of a focus. Nonetheless, let me take a second to discuss financing revenue and a related point, which is Markets NII. We continue to find that competitive financing capabilities are a key enabling product to grow with our most complex clients. Last year, we told you that it represents a growing portion of our revenue and that remains true in 2025. In terms of the markets NII outlook, we expect it to be around $9.5 billion this year up from $3.3 billion last year and slightly higher than the $8 billion we indicated at fourth quarter earnings. It's important to continue reminding you that we expect the majority of this increase to be offset by lower NIR. This is because much of the increase comes from the impact of lower rates on the funding expense for portions of the business that typically involve a derivative offset, which, as you know, is accounted for as NIR. The gray bar on the right reflects the expected growth in loans and cash financing driven by client demand. To the extent that demand materializes the associate NII would likely contribute to the bottom line. But as you can see, that effect is quite a modest portion of the overall increase. Looking ahead, despite the many leading positions of our various markets businesses, we feel optimistic about our ability to grow as we execute the priorities you can see listed on the right. With that, let's pivot to the expense outlook. Consistent with what we shared at earnings, we expect 2026 adjusted expense to be about $105 billion, which is up about $9 billion year-on-year. Starting with the first bar, you can see the contribution from bankers, advisers and branches, which represents our client-facing employees and spaces that are critical to driving growth for years to come. The details on the top right highlight the continued growth in JPMorgan Wealth Management and Private Bank client advisers as well as senior bankers in the CIB. You may have seen the announcement we just put out on our branch expansion plans. This year, we're planning to open more than 160 branches in over 30 states and renovate nearly 600 locations. The brand strategy remains core to our growth as it brings us into new markets, including low to moderate income and rural communities. The second largest category is volume and revenue-related expenses. About 30% of this increase is revenue gross ups. In other words, activities where each dollar of expense is directly linked to at least $1 of revenue with auto leases being the most prominent example. The remainder of this category includes what we also consider good expense as it is directly linked with higher revenues, increased activity and greater client engagement with our products. Technology is also a significant driver, and I'll cover that in more detail in a moment. The next bar is marketing spend, which is generally highly targeted with predictable payback periods as it drives both demand for card products and results in strong customer engagement across the rest of our consumer franchise. There is a small other bucket that is grouped with real estate. On real estate, there is some catch-up on expense as we've needed to add space to accommodate the headcount growth over the past few years while also bringing employees back to the office. So we're modernizing our older spaces and adjusting seating densities to improve the employee experience. Finally, while inflation doesn't have its own bar it's present across all categories, whether it's technology, hardware, labor or real estate. And even as inflation moderates, these effects add up. On the next page, we address the question of efficiency. You will recall that last year, we talked about living within our means. This was not a cap on expense growth or accrued hiring groups. Instead, we were setting a cultural tone to discourage automatically hiring people as the default response to any given problem or opportunity while still making it clear that the priority was revenue growth. The left-hand side of the page shows the result of that. We grew in classing roles and very modestly in some technology roles while shrinking in operations and support functions. We've also seen productivity gains. Given our size, no single initiative is likely to be material to the firm. But our ability to identify and implement a broad range of efficiency opportunities has been critical to our ability to simultaneously show industry-leading growth and profitability. Just to highlight one example from the page. In CCB, just in the last year, accounts per operations employees are up 6%. As we think about 2026, we're taking a more flexible approach to living within our means. The discipline remains and will continue to be laser-focused on productivity. At the same time, the businesses do see compelling opportunities to develop additional products, features and capabilities for clients and customers. So we've budgeted some additional headcount in technology to deliver that. And while efficiency and productivity are always priorities, we are not managing the firm for short-term operating leverage. We feel instead that long-term PPNR growth is a much better lens to assess our investments. As we show you on the right-hand side of the page, our PPNR CAGR continues to outpace both revenue and expense growth, demonstrating the power of sustained investment in the scale of franchise. As I just mentioned, technology remains a major driver of our expense growth as we expect to spend about $19.8 billion this year, up 10% year-on-year, reflecting business growth and demand for new products and capabilities. On the bottom left, you'll see the breakdown across the lines of business. On the right, we've broken out the main drivers. In the first bucket, the contributors of growth are regular way inflation and perhaps not surprisingly, higher hardware expense as AI-related shortages are pushing up memory prices. The second bucket is volume and feature demand, which is driving growth in technology infrastructure costs, including the public cloud as well as higher software costs associated with higher volumes. While the absolute spend growth rate has been in the low single digits, we have continued to see unit cost reductions across a wide range of modern infrastructure products. We continue to invest and are spending about $1.2 billion more this year on major projects, and we've identified about $600 million in efficiencies some of which are AI-related, enabling us to invest more than we otherwise could. Other areas of ongoing investment include AI initiatives, projects to enhance the customer experience, and platform build-outs like Apple Card. As we mentioned before, we are probably past the point of peak modernization. That said, we will always continue to modernize our technology and have shifted focus from infrastructure modernization to modernizing the underlying application code and data. An important reason we need to continue modernizing is to ensure we are positioned to benefit from AI and other cutting-edge innovation. On surprisingly, AI is one of the most frequently discussed topics both internally and externally. So I want to highlight a few points about our approach. We continue to invest in AI, and we're seeing tangible benefits in multiple areas. Machine learning and analytical AI have been driving improvements in revenue and expense for many years particularly in marketing and fraud detection. The share of generative AI continues to grow as a percentage of our total AI activity. And overall, we've doubled the number of use cases in production this year. We're focusing our efforts on the highest impact areas such as customer service, including call center efficiency and personalized client insights as well as in technology, particularly for our software engineers. We're also pleased with the widespread adoption of LLM suite, our internal generative AI platform and more importantly, with the evolution of how employees are using it. As they move beyond brainstorming and summarization, to using our internal APIs to safely integrate GenAI capabilities into business-aligned applications and daily workflows. Looking forward, we will continue to challenge ourselves to drive transformation and while carefully managing the associated risks. We believe these efforts will help us scale and continue to improve products, services and client experiences in this increasingly competitive environment. Now turning to credit. There's not much new to say since earnings. We continue to expect this year's card net charge-off rate to be about 3.4%. The consumer remains resilient. And as always, the labor market is the critical factor to watch. I want to take this opportunity to provide a bit more color on a few credit-related topics of interest. Starting with Apple card, we've received some questions about the relatively higher subprime percentage in that portfolio. This segment already makes up about 15% of our current portfolio, and given the relative size of Apple Card, we don't expect that number to increase meaningfully. The more important point is that we are not strangers to subprime. So we feel confident that we have the data, experience and capabilities necessary to successfully integrate the portfolio. Another topic of frequent discussion is the so-called K-shaped economy or to be more precise, economic heterogeneity. Different commentators define this differently and come to different conclusions, waiting into that debate is beyond the scope of this presentation. But from the narrow lens of the impact of this heterogeneity on credit performance, the problematic version for us would be a significant divergence in spend growth between the highest and lowest income segments. What we're seeing in the data is that while there is a difference, the difference is not outside the pre-pandemic range and lower income consumers remain resilient. And with respect to the AI ecosystem, nothing has really changed since we talked about it in the fourth quarter. There's a lot of demand for financing, and we expect to continue participating in it, but we are not going to compromise on perms to chase share. Another recent topic of market interest is the potential risk in the software industry from the advances in AI. Our exposure to that industry is small relative to the size of the wholesale portfolio and is concentrated in the enterprise software space. And the exposure to the more vulnerable players in the broader software industry is quite small. Beyond that, the potential impact of AI disruption is obviously not limited to the software industry. So we continue to look across the whole portfolio to identify emerging risks. And of course, one of the reasons for our large excess capital position is to protect us from these types of potential disruptions. So now let's turn to the question of the excess capital. We kept our access relatively flat by taking what you might call in all of the above approach while deploying in line with our capital hierarchy. We put more capital to work for organic growth in RWA expansion, invested in unique assets with attractive return profiles like the Apple Card and increased the dividend and bought back shares. All the while, we maintained a significant buffer given our cautious macro outlook and the belief that even more compelling opportunities could emerge. On the right-hand side of the page, we've attempted to account for our aggregate deployment of capital over the last few years. Notice that in this view, we have characterized investments that are expensed through the income statement as a use of capital. On this basis, you can see that our deployment has been in line with our hierarchy, and we would expect this to continue going forward. Looking ahead, it appears that Basel III endgame probably won't change capital requirements significantly in either direction relative to the current rules. That said, we're still awaiting the reproposal so there's some uncertainty. And importantly, GSIB remains a significant pending item. Now let's spend a few minutes on liquidity. Over the last few years, we've talked a lot about capital regulation but less about liquidity. We think now is a good time to shift our focus to bank liquidity regulation and what we believe needs to change. Before starting, though, I want to briefly direct your attention to the left-hand side of the page, where we summarize some of the key attributes of our [ FORTIS ] balance sheet. $1.5 trillion of cash and marketable securities as well as nearly $0.5 trillion of additional available borrowing capacity and a number of other metrics we show you every quarter. Now turning to regulation. It's important to say that all of the post-2008 changes did, in fact, make the system safer, but it was at the cost of an incredibly complicated framework that was -- that has not always succeeded in its stated goals. Specifically, in the case of liquidity, you can see from the graph on the left, the increase in the percentage of highly liquid assets on bank balance sheets. Narrowly, that increase means that the typical balance sheet is less risky but it also means that less credit is being extended into the real economy. More importantly, despite this apparent reduction in risk, over the last decade, we've seen a number of instances of regulators taking ad hoc actions in response to liquidity challenges in the system, most prominently in the spring of 2023. On the top of the page, you can see how our levels of CET1 access, the shaded area and bank LCR access the line have evolved since 2018, and you can see how we've moved from a period where we were closer to our capital requirements to a period now where we are closer to our liquidity requirements, and to a significant extent, this is true about the banking system as a whole as well. And as we say on the bottom right, the current strength of both the banking system and the macro environment makes it a good time to consider changes so the system is more resilient the next time it is challenged. Unfortunately, I don't have time now to take you through all the dimensions of our analysis as well as our proposed solutions. But some of the key principles are on the page. And yes, the alphabet soup of regulatory liquidity acronyms was generated by AI and by our treasurer no less. In any case, the overarching theme is we believe the link between real-world liquidity management and regulatory requirements, including recovery and resolution planning should be stronger, in order to enable banks to manage through various stresses without the need for ad hoc interventions by the government. A second ago, I talked about our nearly $2 trillion in liquidity resources but in LCR, only about $1 trillion of the cash and marketable securities were accounted and none of the available borrowing capacity is accounted. Aligning the definition of liquidity resources more closely with the collateral value of the assets on the balance sheet as defined by Central Bank facility haircuts would help to shrink the gap. In the end, the goal is to finish delivering on the promise of the post-2008 changes, a resilient system where bank failures are rare, but when they happen, they are orderly, do not require extraordinary government actions, and at the same time, the banking system as a whole is actively contributing to robust economic growth. All right. Starting to wrap this up now. Each year, we update the stylized returns view to reflect relevant economic scenarios for the current environment. Using our internal outlook and estimated sensitivities to key variables we show the range of ROTCE outcomes across these scenarios over a medium-term period. The scenarios cover a broad range of economic conditions from benign to recessionary but importantly, we do not include a full-blown GFC style crisis. Over the years, we've come to colocally refer to this page as the scarves page. So running with that, the scarves you see here illustrate a few important points. First, it's generally consistent with what our realized performance has looked like over the last 10 years. A range of returns above 17% when the economy is generally healthy and stable and lower but still solid returns above our cost of equity when the economy is less robust, but not in a severe recession. Second, it demonstrates why we continue to feel that 17% is a reasonable expectation of our through-the-cycle returns. The dotted line represents the target. Some scenarios end up below it and some above it. In that context, we do periodically get asked whether we should raise the target, given the launch point is 20% and many scenarios produced returns above 17%. In short, the answer is no, and let me explain why. This page will look somewhat familiar to you as I presented a similar one last year. But this year, we want to emphasize some different points. Over the years, you've heard us say that ROTCE is an output, not an input. What we mean by that is that we do not make decisions in order to achieve a particular outcome on ROTCE. Our focus is on growing long-term shareholder value, which we believe is best approximated by our ability to deploy capital at returns in excess of our cost of equity which is correlated to but not the same thing as achieving high ROTCE in isolation. Last year, I showed you that in practice, this means that much of our capital deployment will be in businesses that generate returns below 17% as we respond to the opportunity set and optimize across resource constraints. This year, we wanted to illustrate what that looks like firm-wide level, which we've done on the right. Let me take a moment to explain this chart. The width of each bar is the capital of the firm, represented here by tangible book value, which has grown over time. So the bars have become wider. The Y-axis is ROTCE, and the height of each bar is the ROTCE in that year. The amount of SBA we deliver is a function of both the width of the bar and the portion of it that is above the indicative cost of equity line shown as the dark brown rectangles. In other words, the area in each quadrilateral above the line. As you can see at the bottom, our ability to generate returns in excess of our cost of equity is unrivaled by peers. Some of these concepts may seem self explanatory, but it's worth illustrating in the context of thinking about our target. For us, the 17% through the cycle target is not aspirational, rather, it serves as a helpful backstop measure to think about the trade-offs between investing in every single SBA positive business and focusing on maximizing returns. For now, we believe this is the right number and we remain committed to generating long-term shareholder value through investments in growth as well as expense discipline. And talking about the long term, last year at Investor Day, each of our lines of business shared their long-term ambitions. While I won't go through every item on the page, I want to emphasize that we are making progress towards these goals, though, given the longer time horizon, you shouldn't expect progress to be linear. Our line of business CEOs will be on stage shortly to answer your questions about our businesses, and we'll gladly provide additional perspective. In closing, as the slide shows, we believe the company's prospects are bright, and we are optimistic about the future. With that, I'm happy to take a few questions about what I've just discussed, and I would remind you that my colleagues will be on stage shortly. So while I'm happy to answer questions about the lines of business, you'll likely get higher-quality answers from that. So Mikael, over to you.

Do you have any questions, raise your hand. We will go first to Manan Gosalia from Morgan Stanley.

Great. Manan Gosalia, Morgan Stanley. Thanks, Jeremy. In terms of Basel III game, you mentioned that there is some uncertainty associated with what the rules might be. [indiscernible] surcharges also, there's some uncertainty associated with that. But I guess once you have more certainty, how quickly can you deploy that excess capital, it sounds like with the liquidity slide that you also need some changes to come through on the liquidity side. Is that correct? And what is the time frame to deploy that?

Yes. Sure. So that's approximately correct, and you've made some relevant [indiscernible]. So let me just add a little bit of nuance there. First of all, I would reemphasize the point that you also made that, yes, as everyone is assuming at this point that the RWA outcome under Basel III approximately neutral at this point. And part of the reason for that is that the regulators have been quite transparent, including [indiscernible] and the speech recently on what she's thinking about mortgage RWA risk weights and so on. So the information has been out there, and I think the consensus outcome is sort of converging to a relatively narrow one. But it's not over. And so until the rule actually comes out, I think we should just not jump yet, point one. And point two, people kind of forget about GSIB sometimes they don't realize that those are 2 separate rule makings. And [ GSIB ] is a very important thing that we continue to feel very strongly about the need to fix that in order to, among other things, ensure that the American banking system can remain globally competitive. The way that the GSIB surcharge punishes success is a real problem, as you obviously know, especially probably for us. So that's a big focus but fine. Setting that aside, assuming that things come out roughly in line with consensus, the reality is that's been clear for some time, I would say. And we have had excess capital relative to any plausible range of outcome for some time. So I guess I would slightly challenge your employed mental model that we're kind of at the starting gate, ready for the starting gun to go off to start deploying. In reality, as I think my page has showed, we've done a bunch of [indiscernible] ready and that's just going to continue, again, in line with all of the above approach, we're going to deploy. We're going to grow our RWA. We've done buybacks, we've done dividends and all the other organic and inorganic opportunities are always on the table. And on the final point, yes, like we can certainly deploy it in its current form without changes to liquidity. But at the margin, the stuff I showed on the page kind of highlights how -- what it winds up, meaning is that the capital deployment will be disproportionately focused in relatively higher risk density instruments. And that's fine. There are many opportunities there. But with the system as a whole needs is the broadest possible set of deployment to be unlocked so that we can do our part to drive economic growth and to achieve that, you need to address some of the liquidity things that I also point out.

All right. Ebrahim Poonawala from Bank of America.

Question on ROTCE. I think on the earnings call, you talked about incrementally when capital is deployed, the return on equity could be below the 17% target. I'm just wondering, as you see mature customer relationships across businesses, are those return on equity, the return profile of those north of maybe 17% or even 20%, and it's because you keep growing the bank and the incremental growth is below. I'm just trying to understand as we think about the maturation of the new clients that are coming in, structurally, is this becoming a more profitable bank?

Right. Okay. I mean that's an interesting question. I guess I think the answer, unfortunately, is quite nuanced, right? Because I think there's a couple of -- at least off the top of my head, 3 or 4 different dynamics that sometimes compete with each other or shall we say. On the one hand, as you know, we're doing a ton of investment. We're growing. We're onboarding new clients. In many cases, I'm looking at some of my colleagues from the corporate and investment bank, the growth of new clients comes with lending. That lending is relatively low returning, and you eventually get other business. So yes, that's an example of an investment today that as it matures, has higher returns. Similarly, CCB branch expansion strategy obviously has the same types of characteristics, right? So yes, sure. If you want to, you can persuade yourself that the maturation of many of the investments that we've made are a source of a significant tailwind going forward. On the other hand, like there's a bunch of excess capital and we generate a bunch of organic capital every year. And as I think we tried to emphasize this year and we emphasized last year too, it is simply value destructive to return capital to shareholders just because the opportunity does not return 17%. And when the alternative is buying back stock at whatever, 2.8 or 3x tangible book. So we're -- and that's also not the same thing as being a sort of dumb SBA maximizing machine. Jamie is not a fan of the SVA acronym, which is why we talk about it as long-term shareholder value generation. Buying generic par assets and adding bank leverage to them is fake [ SVA ]. That's not what we're going to do. but organic good customer business on a 14% return is obviously better for us than buying back stock. And so that's how you get the mix of push and pull in terms of the evolution of the ROTCE.

All right. We'll take our last question for Jeremy from the Zoom. Matt O'Connor from Deutsche Bank.

All right. I just want to clarify on the markets net AI. I guess, first.

We're having some audio problems Matt.

Am I echoing bad?

There's like a specific audio issue. The image looks good, actually, your bandwidth is probably.

Maybe I'll email my question and it can be addressed later.

Probably [indiscernible] you should turn your camera off though.

How about now?

No.

Sorry. Matt, we'll go to the next question, sorry. Maybe we'll take one from the room, if there is one. Yes, Chris Kotowski. Go ahead.

Chris Kotowski from Oppenheimer. Just all of us listen to an awful lot of bank earnings calls. And just 2 or 3 years ago, it was like everybody was on an RWA diet, everybody was getting their returns higher. And now I feel like every earnings call you're on every bank management feels like they've earned the right to grow and to spend more and you even hear it from the European banks and [indiscernible] kind of phrase there a little expense number. And I'm wondering, have you noticed that have an impact on the effectiveness of your spending? Has the competition increased? And how would you measure that?

Now look, I think there's absolutely no question that the competition under. We've been talking about that for a while, right? I mean the rest of the system has been recurring itself for a long time. U.S. system and even the European system. And at this point, there was a while where there were some significant tailwinds just from the weaknesses of our competitors. I just don't think that's true anymore. And you see that in a bunch of different ways. And I think my colleagues can probably give you examples in a second. So that's fine, right? I mean that's hopefully, we never shy away from a company. So it's there, it's real, and it's hard. And we talk a lot about the nature of the competition is different too. Like it's not just the large traditional banks, it's also other types of competitors. So it's everywhere. And that's why, obviously, we're going to do judiciously we're going to do it with discipline. We're going to do it in an economically rational way. But this is not the environment in which to be penny-wise and [indiscernible] some fundamental sense Yes, I agree with you. I don't measure it, but I agree.

All right. Thank you, Jeremy, and I will now let the LOB heads take the stage.

Please welcome to the stage, Marianne Lake, Mary Callahan Erdoes, Doug Petno and Troy Rohrbaugh.

So I know you're all very eager to ask questions. But before that, I actually have a question and it is for Troy. And I was wondering if you could take us through the banking and markets guidance for Q1.

Sure. I feel like this year, Mikael, I want to go with guidance before you get to ask questions. This quarter has started out for both banking and markets very well. So in IB fees year-on-year, we're currently forecasting up mid-teens. And if the quarter remains constructive, that could easily be the high teens. And then for markets year-on-year, we're currently forecasting up mid-teens as well. But as all of you know, that is very dependent upon volatility and other factors in the market. And it feels like volatility continues to pick up almost every day. So again, we're hopeful for the quarter. It started well, but there's definitely plenty left of it.

All right. Thank you, Troy. Mike Mayo. Go ahead.

This is a question for everybody on the panel, and we're in the middle of the AI scare trade and some of the views expressed I think, have some merit, right? You have to adapt to survive. Remember the old JPMorgan in the early '90s, they didn't quite adapt and now you guys own them. So there is some merit to this. On the other hand, some of the [indiscernible] express team really, really stupid. So when you look at your businesses, are you in AI and tech victim or beneficiary and in plain English, if you're a beneficiary, why is that the case? And what metrics are you monitoring?

I could just start off by saying at JPMorgan could be an endgame winner in the AI space. And you've heard it from a lot of the sort of more prolific people in the field say that it's really for the [indiscernible] and so if you have a very high tech spend and you know exactly what you're doing and where you're headed and you're very disciplined about it, you have a higher probability that you're going to have success. If you also have taken pretty aggressive steps, we were one of the first companies to have both [ Lori Beer and Teresa ] beyond the operating committee with a dedicated AI specialists to help us to think through how we were going to organize ourselves, how we were going to be disciplined about it, how we were going to be precise about what we were going to do and how we were going to measure it. And each one of us benefits from each other's successes. We just had a business review this morning at the operating committee, and we talked about something that I did in my line of business in Asset and Wealth Management, where we took 200 people. We tried to figure out some of the controls work they have to do, where each one of them have to read 50-plus pages of something and then compare and contrast and ask the right controls questions. With some very sophisticated AI work that we did, we were able to take that technology. We have now spread it to 3,000 people across the company that have done it, and we've identified another 3, 4, maybe even 5,000 people that will be able to benefit from that. technology, the 80 specific pumps that we've put in and make it safer, better, less error prone and frankly, take out the no joy work in our employees daily lives so that they can get on to higher level added value.

Yes. I'm happy to add to it, too. So I think there's a lot to be said for the fact that you're going to get more efficiency and the competition will become more efficient, but we have some strategic advantages that we've nurtured over decades. So trust, confidence, value beyond price, our customer relationships, both the scale of them and the scale of everything, quite frankly, the depth of our relationships and our data assets. So we have a bunch of strategic assets that I think are hard to replicate. That will be one of the reasons. And then only the paranoid survive. So we are walking around thinking we have a defined right to success. We are walking around. We're thinking about how to optimize the value that we give to our customers, how to perfect our processes and our systems there will be price competition, but we compete on a lot more than price. So deep sense of and healthy paranoia, lots of strategic assets.

Maybe just to add on Mary's points, we didn't just start this work in the last couple of years. We have a center of excellence for machine learning and AI over the last decade. And to paint for -- with a finer brush within CIB, just to give you a sense of the categories of opportunity for us. One big standout category is just giving value back to clients to think agentic commerce better cash flow forecasting and analytics. The team productivity, banker enablement, sales enablement, we see real productivity gains there through AI and advanced analytics, we obviously have AI and ops and AI and tech. So when you think about these coding assistance, we're essentially a tech company. We're a center of the bull's eye for deploying those capabilities. We're using it in risk-fraud compliance, extensive use basis across those and then pricing optimization. So I think loans deposit securities and have a higher order of analytics around that. Every one of those categories has multiple use cases, dedicated teams trackable KPIs. And then there's a whole book of work that's just kind of table stakes and unmeasurable and you'll never really know. But you need to do it and actually have to have the modern tech stack, modern data stack and a foundation to be competitive. But I think what were the categories we were giving one or the other. I think we're in the one you'd want us to be in.

I mean all I would add is, obviously, I grew with [indiscernible] and I think Marianne's point about the paranoia that we live in around this for every one of our businesses. We don't just think it holistically at our level or even the next level down, like every small piece of our franchise, we have dedicated teams, embedded people that are focused on every day. And I think one of the main points is the size and scale, even marginal gains in efficiency that we can get from AI just accrue at levels that other people don't have. If you look at the size and scale of just something as simple as FX, just 0.25 basis point with our size and scale, just gives us a revenue outcome that other people don't have. And that's manifest across our whole business. I think that's a huge advantage if we get it right.

All right. Erika Najarian, go ahead.

Thank you for my question. I feel like the dorky student in front of the class. The positive narrative where that started the year has started very quickly over the past 2 weeks and maybe wanted to address one for the CIB business and one Mary for your business. The first is the investment banking pipeline. I think there are a lot of concerns that given the volatility, the pipeline is not as robust as people would like for this year. Additionally, it would be interesting to see if there are any sort of update in terms of sponsor sentiment given the market hiccup. And Mary, alternatives within retail has been a big positive theme in terms of growth. And I'm wondering if you could shed some light in terms of how you're seeing the next 6 to 12 months shape up in terms of progress in penetration.

I mean I can just start, that's [ Anton ] [indiscernible] in the back of the room and runs the part of the alternatives business for us that focuses on making sure that we do that we find the right investments, both inside JPMorgan as well as across the street for all of our GPs that we invest in. And the most important thing is size of risk that's appropriate for clients. And so I can't comment on how the rest of the industry is doing that. But as you can imagine at JPMorgan, risk-adjusted return rightsizing, proper disclosures, liquidity stress testing for each and every one of our clients, all the way down to the first-time buyer of something is of utmost importance. And so we think that we have a standard that's pretty high for that, and we are watching every one of these little ripples that you see in the market. We have forecasted it. We've been talking about that. You've heard that from Jamie on many earnings calls, talking about when you put less liquid investments into things that people are expecting liquidity in, it needs to have been placed properly in the client portfolios, and we're hoping that, that's the case across what we see out there. whether those should be in all sorts of accounts or only in the ones that it's properly managed or that's what the industry is going to quickly find out here.

Yes. And so for investment banking, you heard the guidance in the caveat on high teens was pointing to exactly the market conditions you described. So and last year showed us it can go hot and cold pretty quickly. But we started the year strong. Pipelines were very good. and it was broad-based. It was across DCM, ECM and M&A. The one thing I will say in M&A, these are powerful strategic drivers. Companies really see a strategic imperative to be bigger in global and they need growth. And I think that they're seeing through a lot of market disruption, whether it be uncertainty around tariffs, some of this AI disruption, I think a lot of these transactions will survive that volatility and carry on. Capital markets will be much more subject to whatever the broader fundamentals are, but the pipelines are very strong. And it's not simply a U.S. marketplace, a large majority of the wallets in the U.S., but we're seeing strength in Europe, seeing tremendous activity in Japan. So it's very much a global opportunity right at this moment. In terms of private equity, if the market shut down, if the IPO market slows down, it is the most fickle of the capital markets, and they slow down some of their exits, but they have tremendous dry powder. They're looking for opportunities to invest and they're constantly hunting and market shake-ups create disruption for them and they behave opportunistically as well. So the sentiment hasn't really changed. I think they're a little frustrated with the pace at which they're monetizing their investments but still a tremendous opportunity, and we're staying very focused on the private equity community.

All right. Let's do zoom question, Mr. Cassidy from RBC.

This is directed a little bit of a follow-up on Doug's comments. But to Doug and Troy, we've seen some disruption in the private credit markets very recently. What's your guys read on that, number one? And number two, what are the opportunities or consequences that we should all be looking out for a bank like yours because of what's going on in the private credit markets at this time.

Sure. So I won't comment on any specific player in the market. They're all our clients, and you can read the press just like we do. But I would say, I mean, people should be -- I'm shocked that people are shocked. I mean the reality is, in this environment, as the world gets more volatile, as you get towards the end of the cycle, this outcomes should be expected. So we prepare for all of these scenarios. We stress test our book. We're very thoughtful about the risk we take. We feel that in many ways, we're quite conservative compared to our peer set. So this is just part of the scenario analysis that we do on a regular basis. So again, I think at this point, it feels a bit isolated to a handful of situations but that could quite easily change, and we're prepared for that, both from managing our own portfolio, which we feel quite comfortable about at this point and also from the opportunity it potentially gives us and others. So at this point, there's still a lot of capital in the private credit ecosystem. We see lots of deployment. We see lots of people chasing opportunities. So this hasn't changed that overall ecosystem, but we're watching it closely. We're very risk disciplined. We're comfortable with where we are. But I'm just a little surprised that people are so surprised. This is inevitable.

The only thing I would add is our strategy is to serve clients and lending is an outcome, not the strategy. And we went into to direct lending product, specifically. So we'd have a broader base of debt solutions, credit solutions that can provide an agnostic capital structure financing alternative we're not trying to acquire loans. We're building relationships and we take a [indiscernible]. So our model is slightly different. And the underwriters that are underwriting those private credit or the direct lending assets for us are the same underwriters that underwrite our C&I loans generally and bringing all the level of expertise, the industry knowledge, the through-the-cycle judgment and it's not a loan aggregation business. It's a client business.

John McDonald from Truist. Go ahead.

Question for Marianne. Marianne to what extent are you seeing this revitalization of competitors and increased pressure on, especially in retail banking in areas you're looking to grow? And then when you think about your embedded growth from all the building you've done in branches, how should we contextualize this 1.7 net new checking? Is that a hard number to keep up? Or is that something you think you can grow over the next couple of years?

Yes. So thanks for the question. I would say that I mean you've seen that a lot of our competitors have strategies now that are shocking be similar and playbooks that are similar. And I think that imitation is the highest form of flattery, I suppose. And so what we have been doing and investing in for decades is working. It's working in terms of our customer experience. You saw we have record high customer experience is working in terms of deposit share and profitability. And so yes, we've seen lots of people announced plans. I will say it is easier than done. Building branches is one thing, building them in the right places, building them well, hiring the right team, having the right products and services is part of it. So when you look at our share gains, in Consumer Banking, while 40% of it has been on new build, 60% of it has been in our legacy footprint because we're just continually refreshing and evolving our products and services and just doing it better. So we have a long track record of doing it. So it will take a bit for anyone to be able to build a muscle to catch that up. In terms of customer acquisition, which is the beginning of everything, we've been acquiring customers at a 3% to 4% CAGR pretty much consistently over time, 3% last year, 2-ish million net checking accounts, 1.7 million last year. So I would say there was a phenomenon in 2025, well. No, I'll stop. Now I'm kidding. Phenomenal in 2025, so we saw -- it was a little harder last year. The nonresident population was an issue. And so -- but we're going to grow over that this year, and we would expect that to continue onwards and upwards. So we feel like we have the right playbook. We know what we're doing. We expect our share gains to continue. But we do expect the competition to be there. Everybody is trying and it's not just in consumer banking. We talked -- somebody asked a question earlier about the competitiveness everywhere, premium card base is competitive, very competitive right now, and we're still doing quite well. So yes.

Right. Ken go ahead. Ken Usdin.

Ken Usdin from Autonomous. Maybe for the wholesale side of the business, a different question on wholesale deposits and just with the advent of tokenization and potential use cases for stablecoin? Just how are you adapting the ecosystem based on the building blocks that you obviously already have well established in scale as we go forward in terms of just does it become all embedded parts of the of the environment at JPMorgan. How are you kind of facing that? And how do you expect the defensibility of new products and offerings coming up also in...

Sure. I'll take a stab at it first. So first off, I mean, you said it yourself, we have a great starting point in this business. We've been investing in the space for over a decade, [indiscernible] over here and I highly recommended cocktails that you grab because they are the experts in the space, but they've been investing in [ Canexus ] for over a decade. We have incredible products already in the space, whether that be our own JPMorgan coin, which is the tokenized deposit, our support and our participation in the stable coin environment, our tokenization of money market funds and other aspects of the business and other growing products. So I think we feel really comfortable from a bank perspective, we are either at or beyond our peer set. We also embedded in each one of our businesses on the wholesale side, whether that be secure payments, banking or markets at the business level and we spend quite a bit of time on what the future ecosystem could look like. So I would break it into 2 parts. In the market space, there's like tokenized assets or securities. I think in some ways, we may be trying to solve a problem that doesn't exist. But the reality is if we go that way as an industry, we're fully prepared. We're ready to trade it. We're ready to provide custody out of security service for on a digital ledger for these types of assets. So we would provide a same services that we provide in the traditional securities, and we think we'll be very competitive there. On the payment side, maximum are completely ready for the space. It's our view, tokenizes deposits is the more likely logical path forward, but that could change. We think that while it may have some effects on our business in terms of people shifting from traditional deposits to tokenized deposits. With our capabilities, we can continue to grow share, and we'll be finding any of those outcomes, and we're prepared for it.

Yes. And of course, our clients expect that. They expect one-stop shopping from JPMorgan. So we have to have every solution for them, be able to go on a continuum and things change and we're there or them, and that's the most important.

All right. We'll take a question from the webcast. So Martinez, please go ahead.

[ Sol ] I think that's for you.

Technical difficulty.

We will [indiscernible], and we'll go to Steven Chubak.

So I was actually hoping to build on that last question, but really look at tokenization from a retail perspective because Marianne one of the key concerns that we've been hearing from folks increasingly is whether it's the emergence of agentic tools that people can leverage to optimize their cash balances and the yields that they're earning and the emergence of tokenized money market funds and deposits, do you view -- do you see a potential risk that if that's introduced at the retail bank that you are going to see some level of deposit attrition as these customers become more sophisticated and just look to optimize some of their returns. And any perspective you can offer whether this is real risk in your view would be very helpful.

Yes. So I mean, listen, I think, first of all, I should say that yield optimization is not a new phenomenon. There are plenty of high-yield options that exist today for consumers who are looking for that, including within our own complex, including within the bank and in Asset Management. And we sort of offer that, but you can go elsewhere and moving money is increasingly easy. And so of course, you'll see a little bit more help in optimization, but this is not something that has been that difficult for people. So I would just say that, that risk has been out there. Therefore, when you think about, for example, the sort of advent of are you thinking...

Yes, it's really more in the context of immediate settlement versus if I'm a Chase customer, I have to sell a money market position, wait a day, transfer it to a checking account and potentially doing things like bill pay from some sort of tokenized vehicle get that immediate term.

So in that sense, I would say the answer for retail is similar to the answer for Troy, which is for the vast, vast majority of consumer use cases today to all the practical intents and purposes, there's access to 24/7 real-time. It is true that in real assets, there is some lag. And so we're similarly going to be investing in making sure using [ Canexus ] for proprietary solutions. You've seen some announcements with [ EWS ] on a consortium for payments. We're going to continue to invest in understanding how we could continue to reduce friction in some of those processes, but we can provide real-time access to funds within our ecosystem already today. I think that digital, I think that blockchain, I think the tokenized assets, I think that stable points may be part of the future for retail at some point in time. But I don't think that's going to be in the immediate future. We're building the capabilities right now.

We'll try again with the Zoom. Chris McGratty from KBW.

Great. Moving to Slide 11, where you unpack the components of PPNR over the past 5 years. I think it's really helpful and powerful. I believe in Jeremy's remarks, you talked about perhaps being past peak modernization. So I guess my question is, number one, how should we think about the degree of operating leverage over the medium term? And then Secondarily, that's the right conclusion. Maybe comments by business line would be great.

I'm going to -- all right. I'm back. So look, I don't want to like bore you with like we don't believe in operating leverage speech, but I kind of do things that I need to give it. And I think as we were thinking about this, so let me just give it because it's actually interesting. So number one, in any given year, and we've seen this over the prior cycle, realistically, the operating leverage number is going to be primarily driven by revenue dynamics, not expense [indiscernible]. Number two, as you go from the short term to the long term, the question is then, okay, Jamie always talks about how like it's not realistic to have like the ever-expanding margins that are associated actually delivering operating leverage year after year for years is not consistent with capitalism. Now sure, if you're a company with a serious expense problem that's extremely inefficient it's reasonable to have your kind of near-term plan be I'm going to deliver a lot of operating leverage over the next few years, and that's going to return me to reasonable margins, and that is my PPNR growth delivery strategy. But a company like us, which is starting at a very efficient place with very healthy margins, operating leverage is just not how we deliver growth fundamentally. Now obviously, that's not the same as saying we don't care about expenses. And we are very committed to being extremely disciplined about it. We do recognize the market doesn't love years like this year where according to the analyst consensus, we will have negative operating leverage. But we believe very strongly that when you're in the position that we're in as a company focusing on those types metrics is a recipe for under investing in the future and for seriously weakening our strategic position. So in the context of that, the peak modernization point is that, like reaching the peak is not the same as having it go to zero. So we're still spending money on modernization, and we will always modernize our infrastructure. It's just the focus is shifting from kind of a particular momentum, a lot of focus on cleaning up the data center state to a focus on modernizing applications, rewriting things, modernizing data and et. cetera.

Yes. And if I just maybe build on that point slightly, because when you think about our expense base and what we spend on strategic investments, and I'll just use CCB as an example of that, a lot of our investments payback will sort of break even over a few years and pay back over a longer period, but are extremely profitable. And so when we build branches, when we acquire cards, when we're building -- spending on marketing more broadly, these are investments that are going to drive long-term growth and profitability at strong margin. And we don't want to feel constrained this year because of dynamics that are going on. So we're just looking very much at the long term and spending every accretive dollar that we can well.

Okay. Glenn Schorr, go ahead.

Glenn Schorr at Evercore. Troy, I wanted to see if we could drill down a little bit more on your shock that people are shocked comment. So I was a little shocked here.

I think you should save that one for Jamie.

The implication is -- and forgive me for putting words and so put me straight, if I get -- but the implication is that this is not liquidity-led volatility on certain products. This is -- there were some loans extended that are actually going to have some real loss content. If that's the case, that means the equity is zero. So I guess I'm just looking for a perspective, I heard your comments about your book, but perspective, overall, what kind of loss content are we looking at? And is it isolated in private markets because it's a wide-ranging investment fill that usually credit cycles aren't isolated to public or private. It's a broader swath of companies.

Yes. I mean I almost think in some ways, you answered your own question. We don't view this depending on how the economic environment develops, either this year or in the even into '27 that it will be isolated to a very small part of private credit. So first of all, when we say private credit, the ecosystem is huge now. It goes from very large investment-grade deals to very small middle market companies that are below investment grade. So it's a huge spectrum. Also, the public and private markets are merging together. Some of the largest deals out there are now hybrid deals, there are some very large deals that in some ways are done in the private space, but look like public deals for all intents and purposes. So our view is that this isn't going to be isolated to just private credit. As you move forward, get near the end of a cycle, if it were to get more of a significant downturn we'd expect this to be a little bit more broad-based and not be isolated to just private credit. So the boss may have a slightly different view. I don't think so. But more broadly, like we don't think about it as just private credit. We think about it as the whole credit ecosystem. As Doug mentioned, we use the same underwriting standards. Yes, we understand each space is different. They all have their own characteristics, but ultimately, a credit and it's going to be across the whole spectrum if we get a more significant downturn. It won't be isolated there. In terms of your question of where are we specifically right now, it appears to be isolated, much like the things we announced third quarter were isolated from our perspective. It doesn't mean they're good or we're proud of them. But ultimately, more and more of these things happen as you get late cycle, at this point, they're arguably isolated, but that could change.

Ebrahim Poonawala. Go ahead.

Troy just talk to us in terms of -- Jeremy talked about all the changes in regulations. When we think about banks versus nonbanks regulatory arbitrage, there have been many areas where banks have lost market share over the last decade. When you look at the playing field today, do you think you're -- you've run the markets business for a long time, are you better positioned to compete with the nonbanks. So when we think about market makers trying to get into high-touch trading gain share there. Just when you look through all of that, do you think you're better positioned to defend and even gain share relative to some of these players?

Sure, you mean specifically to markets? Or do you mean broadly to the CIB? Because we compete with nonbanks in [indiscernible].

Yes, one, just the likes of Citadel Securities leaning into high touch. Can you defend that share one? And then just more broadly, as we think about even lending -- you heard [ Scott Besson ] talked about lending move to private credit. He wants it into banks. Is that happening?

Sure. That's sort of what I was getting at. I'll separate the 2. So in markets, I mean everyone mentioned Citadel Securities and [ Jane ] Street because they've been incredibly successful. They've done an amazing job. They've grown significantly. I think from the very beginning, we know them very well. We compete with them in some smarts of our business very aggressively with each other, other parts we partner and other parts, they're a real client. And we have like a long track record of having relationships like that. They happen to be very good. We've always assumed that they would be successful. But without talking about them specifically, I don't think their success or nonbank market makers are really because of regulator. I think it's electronification in the market, overall change in market structure, the fact that they've done a very good job, the advent of [ quant ] trading. So we're going to absolutely compete in the space. I feel very comfortable that we can hold our own and gain share. They may gain share as well, but it will arguably, in our view, be at the expense of someone else. And we're prepared to go to toe to toe, not specifically with the 2 of them, but with everyone in the space, including them. I think it's going to be hard for some of the players that are more traditional because they're not going to have the resources to invest in the space. I don't think it's because of regulation just because there's a change in capital rules, it's not going to change our ability or what we have to do to compete with them in that space. We're going to compete, but regulation won't be the driver of that. When it comes to nonbank lenders, again, I don't think the regulation is going to change enough to dramatically change the playing field. But again, we're competing there. We've been competing -- but as Doug said, like we have a very different business model there. Whereas in market making, we have the same business model. We are market makers. We're competing for the same trades particularly as these nonbanks go to higher touch parts of the business. But in the lending space, they're lending to get assets like that's their goal. That isn't our goal. As Doug mentioned, our goal is to have a holistic relationship with our clients. And we feel like we're doing a really good job there. We have our own direct lending solution. I mentioned previously in the month that we have deployed almost $14 billion of capital right now there. At the end of last year, that's about where we were. We have over $25 billion of partner capital available. We're in the heart of the ecosystem. We're doing a lot of financing. We're doing a lot of lending. We're not doing it to develop assets like that's not what we do. We're doing it to be in the ecosystem to create a halo effect with our clients and create velocity in our portfolios. And we really have a competitive advantage because we have all these ancillary products that we want to do with these clients. The people that are just lending don't. So we think both can grow. I know everyone likes to write the article about us fighting with each other. But I think in the most part, there's opportunity for both sides and we will compete there.

It's exactly why the last question that was just asked about expense management and why you would take a break, like we would never take a break for the areas that we're fiercely competing against. We're going to win. We're all focused on the long-term shareholder value up here. No one has a short-term measure at all for wanting to hit a profit target of any kind. We could if we want it to, you could just shut things off in a short term, if that's not how this place is driven. And so you shouldn't expect it to happen, which is exactly why Jeremy's point about how the whole thing works is so important.

All right. Gerard Cassidy on the Zoom.

Can you hear you, Mikael?

Yes, sir.

This is for Mary. Obviously, 2025 was another spectacular year for Wealth Management, Asset Management at JPMorgan. Two-part question. First, when all the excess capital, does it make sense you've had great organic growth, of course. Does it ever make sense to do an acquisition in your space, in your specific area? And then second, can you parse out for us how much of the bull market or the asset inflation we've all seen over the last 2 or 3 years, how has that contributed to the success that you guys have had?

In Asset & Wealth Management, we had a tremendous year last year, over $550 billion with flows like Jeremy had mentioned. And very importantly, thanks to Ben and his obsession with the ROE number, we hit a 40% ROE target, and we're well above our targets that we laid out for you of 25% margin, 25% ROE, 4% flows and 5% revenue growth. And we will continue to grow on those. The markets have been very healthy. So that has obviously helped. But our investment performance is the thing that is our North Star, as you always know. And so our investment performance garners new clients as well as more assets in. On the M&A front, it's something we think about every single day. I think Ben signed a different NDA once every 2 weeks last year. And so there are about 25 of them. Most of the big deals, except for one big one last year, we had seen and turned down for a variety of reasons, it didn't fit either culturally or otherwise. But it is something that we are always in the game on. We are always looking, we are always learning. It's a very important part of the muscles that we have here, not just in Asset and Wealth Management, but in each of our businesses, we need to know what's going on. We need to know if it's better to buy or to build organic or acquisition. And so that's what you would expect us to be doing, and that's what we're doing each and every day.

Erika, go ahead.

This question is for both Marianne and Mary and follow-up to Mike's question on AI. Another part of the market disruption is this concept that AI will disrupt financial advisers, that there'd be no need for financial advisers. And I guess I would love your just raw response to that, Mary. And Marianne, as you think about acquiring client assets through the branch network, is there a role for AI in terms of helping customers in the beginning of their investment journey and tax planning journey?

So yes. So AI for our bankers in the branches and for our advisers to whom they refer their clients, their sort of adviser tools and wealth planning tools are a critical part of our strategy and have been. It's one of the reasons why we're seeing adviser productivity go up so much, but also while we're seeing record levels of client satisfaction, too. And so using what we know about our customers from their deep relationships they have with us being able to deploy that through -- with AI to the desktop of advisers and the desktop of bankers has meant that we've been able to deliver twice as many net flows per adviser over the last 5 years. So it's definitely a big part of it, and we're just at the beginning.

Honestly. Yes. I would just say -- I actually think about it very differently. I think that the companies that invest the most in AI, particularly in this space where you need an adviser, not just on the wealth management front, but when you think about our investment bankers, you think about our asset management advisers when you're talking to the CIOs of different sovereign wealth funds, et cetera. The more you invest, the more the ecosystem creates a moat for you in the company because you know more about the client and you know more about the adviser so that each and every day, when the sell-off happened today, you can know immediately who you should be calling, what you should be -- we talked about it at our operating committee today. What you should be grading if your stock drops 5% while you're sitting in a meeting, like how do you be thinking about that? That stuff starts to be highly fine-tuned but not just AI alone. And so we had a deep dive on an AI question that I had with [ Dave Frame ] and his team last week, who runs a global private bank. And one of the things that AI will do is it will take what you say to it and it will take it seriously. And so if a client says, "I don't like fixed income or I don't like bonds." And you find that their portfolio just continues to morph into things without fixed income of any kind or any ballast to their portfolio. That's not the right answer, but that's where AI will go. And so you need the combination of really smart AI and then really smart advisers to say, you need to counteract what it's what you're feeding the AI in order to give the right advice. It would be the same thing on whether you stay private longer or you go public or all these things like -- so there's a very intentional way that we are creating our AI systems here in JPMorgan where we take the best of the models outside and over cocktails, I think it's really important. You talk to [ Teresa ] and [ Laurie ] and [ Derek ] and the whole team because embedding it in what we do takes the decades of experience that we have fine tunes it to help our people get smarter, better, faster, cheaper, quicker, all that stuff and then creates the thought that as a client, the more you know about me, the more you see what my questions are, how could I ever not be with you because somebody else doesn't have all that information and all that history. So I think again, it just goes to the original question that Mike asked, which is you're an endgame winner if you are heavily invested in these areas and you obsess about it every single day, which is like what you would feel if you walk to any of the floors right now.

And there was a thing in that paper that said, a relationship business might be dead if the relationship is just a human faced fiction. That's not what this is, right? So when our customers come in for advice, whether at the beginning of their journey, whether it's later on, whether it's a company, they're coming in to get like real advisory and real help and the human in the loop is definitely is a part of that.

Manan Gosalia, go ahead.

Manan Gosalia, Morgan Stanley. Marianne, can you talk about the international opportunity in your business? And how do you size that on both the deposit side and the lending side?

Yes. So I mean, we're at the relatively early stages of the consumer -- international consumer expansion, although very excited about it. So remember, we really only launched in the U.K. in 2021. So we're an infant in that context. And we aim for a multi-country digital bank at the intersection of banking and investing that sort of differentiates on service and value. We have seen really great momentum in the U.K. And so in the U.K., we have 2.8 million customers and $35 billion deposits. Obviously, there are some limitations to how much you can grow in the U.K. if you don't want to become a ring-fenced bank. And so we're not at that stage yet. What we're doing is expanding our product offering and deepening into primary relationships and looking for primacy. And we're entering Germany in the second quarter of this year with a savings-led proposition. And so we're in the early stages. So we're not declaring this as a goal of some number of deposits. We're looking for primary relationships. We're looking for value for our customers and value for us. JPMorgan Personal Investing is also a really important part of that. So we bought an asset, we've integrated it, rebranded it, JPMorgan Personal Investing. That's also scaling really nicely at $12.5 billion of assets under management and integrating that with banking, delivering on self-directed delivering on pensions is a big part of it. So we're early, early days right now. Very, very, very good momentum. We're super excited. There's no one in this company, including Jamie that is more excited than me about the proposition of having tens of millions of engaged European or international we've seen it above. Hundreds of millions, [indiscernible] of millions. We'll get to hundreds of millions.

All right. We'll take one last question for the break. Ken?

Marianne, can you talk a little bit -- Jeremy mentioned that credit is in good shape and expectations as the fine but remain alert. Talk about both sides of the K, I think there's more questions today about the top end of the K then there's even been about the bottom end of the K of late. So just what might be you looking for in the data that could be at least different than just unemployment rate? And how do you see that -- the trends on the top and the bottom evolving?

Yes. So we have -- I mean, I don't actually have risk. We have an entire pack of leading indicators across the board that we look at but some obvious ones like payment rate in card still look in line with expectations. Typically, we -- when subprime auto was a debate, Auto is at the top of the payment hierarchy for consumers, people need their cars. And so when they default on their cars, you usually see that they've already started defaulting on unsecured credit. We're not seeing any of that. And so early -- like roll rates, early roll rates are steady. Year-over-year delinquencies are down. Everything looks pretty solid actually goes right now, I can't see any word. And so we're not seeing any new trends. Now on the K-shape, if we look at the bottom end, and I think this is what Jeremy was talking about earlier, we are seeing a continued separation between the sort of higher earners and lower earners, but we're not seeing deterioration at the lower end. So we're still seeing everything is solid. And nothing is that so out of track from pre-pandemic trends as to be concerning. So as we sit here today and remember in card, which is the elephant in the room for us, the first 6 months of next year is already baked. We shifted our guidance down at the end of last year, the losses of between 3.3% and 3.6% and we're going to come in at the lower end of that range so far, all things being equal.

All right. Thank you. We will now take a short break. [Break]

Please take your seats. Our program is about to begin. Welcome to the stage Jamie Dimon.

So I can see a bunch of people down here. I didn't realize that. I'm going to go right to Q&A folks, but I don't have to describe it many times over cocktails. It's arthritis, own spurs, old injuries, they had to get fixed because it was killing me. I hope it worked.

Okay. Mike, you've been very quiet so far. So why don't you go ahead?

We were thinking it was a curling injury? Let's just go right to the big -- you have so much excess capital. This is a unique window for you to do a deal, do something different. I know the company update is push the gas on what you've been doing all along, we get it. But sometimes, you get opportunities we have the capital, there's liquidity in the market. You're the #1 position, you're expanding in Europe. So what about buying a payment firm or non-U.S. bank or when you think about your pool of possibilities, what's in that pool?

Yes. Look, that's a great question because obviously, inorganic is very important. I think the most important thing that you guys are shareholders and represent shareholders. We can grow organically in every business we're in. Organic growth is hard, but it's your way, your culture, your people, your technology, any merger you do. Any one of them, you are talking about consolidating systems and people and back offices, the comm schemes and cultures and they're hard. I like the fact organic works. And I will make a prediction, we can deploy all that $40 billion to $50 billion organically over the next 5 years. That's what I believe now. And I believe that to be true because of [indiscernible]. So [indiscernible] comes sitting over here. I hope you guys talked about over cocktails, but we said $10 billion of investment, well, we could do $20 billion. And the deployment of capital, I think, will be much faster SRI. I think the opportunities in markets and investment banking globally are pretty large. It's very hard. We look at -- and Mary mentioned that she looks a lot of stuff, I'd love Mary to buy something if it makes sense. But if it doesn't make sense, I see George here and [indiscernible] pill back there. These guys have the ability to just to grow and hire people. David Frank can hire people and Martin [indiscernible] on and -- and we like that. So yes, we'd love to do something that. Payments I would look at all the time. We've done several. Some did not work, as you know, but that doesn't mean we wouldn't try again. In commercial banking, investment banking, it seems very hard to meet it growing ourselves organically wouldn't be better. And you're hiring -- you take other people's books and other people's systems and other people's credit and their loans and stuff like that. And then they didn't mention it, but technology, there are some examples. We're putting $30 million into payments technology can create incremental revenues of $60 million or $70 million perpetually. So -- and we're doing that. That's in those numbers you saw.

So organic growth, I get it. So what's your scorecard to measure your company's success using AI or technology? Is it revenues per employee should go up 10%, 20%, 30%? What metrics can we see on the outside other than just the end result market share to know that you're spending that $20 billion this year wisely.

Of the $20 billion or AI?

I mean just generally, what's your scorecard.

AI, I think they all spoke about it. We were 6,000 applications. And we never come to you guys and said, "Well, here we spend another $10 million on the global FX system to create this amount of revenue to justify it." And we simply can't do that. every single thing we do in AI and technology like in AI their NPVs. Some are revenue enhancements, some are cost of voyage, some are risk and fraud. Some -- there are some things in GenAI do not we can measure it. We don't give a credit in terms of that because it's too vague. Like we have LLM model, 150,000 people use it every week. They think they're saving 4 hours a day. That's not an MPV. We don't see the 4 hours a day in terms of reduced headcount like that. So we look at all of it. And it's deeply embedded in what we do. And that's true [indiscernible] project. I think the harder thing to measure has always been tech projects. That's been true my whole life. It's also been true my whole at the tech is what changes everything, like everything, going to mainframe, going to servers, going to speed, going to -- when I take 5 days to do a trade and equities and $0.25, and now it's seconds and not even pennies anymore. So that's tech, it is all tech.

So just one last one. The AI, [ Scartrade ], some people think that JPMorgan is going to be a victim very cocktail napkin explanation. Why is JPMorgan an AI winner when somebody in the market today, this week, the last couple of weeks, thinks that you and the banking industry will be a loser.

Yes. No, look, look, the -- in my view, we will be a winner. But at the end of the day, if you look at 100 areas, we'll be a winner in 75 and maybe a loser in 25. There are some very smart people out there who are cherry picking very narrow parts of the ecosystem. That could be your rent payments that could be lower income accounts that could be cross-border payments, and they may very well succeed. It doesn't mean we can't do it, and we will try to do it, but I think you might lose them some. But another area is we've always had the strategy to use technology to do a better job for our customers. And we're quite good at it, use our technology to do a better job for our customers. If you look, Marianne spoke about it, but she made a list of new products and services over the last 10 years, it's extensive. From wealth management, self-directed investing to really direct deposit to better use of debit cards, [ Zelle ] didn't exist, 7 or 8 years ago. Pays, which we're putting a lot of money into today through a very specific stuff, we're investing a lot of money that's solving a lot of the problems people talk about. And we're completely prepared to pivot on some of these issues.

All right. Glenn Schorr, go ahead.

Wanted maybe just a quick follow-up on that one. So part of the last handful of weeks, I would say there'd be a release and then everyone runs and says, "Oh, who has that type of exposure and try to [indiscernible]. " my question is broader than that. And I'll just keep it to JPMorgan, but if you want to opine on the rest of the industry, great. So as technology comes and as it changes people's opinions in certain markets, how do you specifically re-underwrite the loans you have, the assets you own for new risks that get presented into the market. I mean you're doing that all the time, but I'm curious in this age of AI. And then what can you do about it? You have loans on your books, you have customers, I'm just curious on how you adapt your exposure.

I should point out, if you take credit, and this has been true for most credit cycles is always a surprise in a credit cycle. And even if credit cycle is normal. So you have a recession, you have rising credit losses. The surprise has often been which industry. You didn't expect newspapers in 2000, [ Marin Buffett ] businesses. You didn't expect utilities and phone companies in '08 and '09. And this time around, it might be software because of AI. And that -- and we've already talked about there's a moving tectonic plates underneath that caused the industry to be challenged. You'd be shocked about what you guys have been through on software, loan by loan, name by name, customer by customer, to look at what it means for us, what happens if they were downgraded, what happens to their ecosystems and things like that, trying to forecast it forward. So we are completely confident we may get core a little bit in that, too. We're not immune from missing the industry. But it wouldn't be enough to change our credit losses that much. I mean, it will be part of that curve. And I agree with what Troy and Doug said about the credit cycle. I'll just add one other thing. You got to look at the credit cycle is if -- when it turns, and it will turn, that's when people will be surprised more about what industry, what types of credits? And also, in my experience, there's always been people who do a bad job at it and people do a good job at it. And that's what people are trying to guess today, and I'm not sure you can actually see in today's numbers.

Ebrahim, go ahead.

Sticking with AI, I think at [ Davos ], you talked about maybe the policymakers to think about banning layoffs due to AI. Given just your sort of lens with which you're seeing the adoption of AI, just talked about if we think about 2 or 3 years from now, do you see the risk of high job losses that the governments of the United States, Rest of the World need to be prepared for an address? Or do you think the risk is overstated.

I didn't -- I wasn't about banning my office. Going to be [indiscernible] for us. we are going to deploy AI as best we can to do a better job for our customers. That's what we are going to do. We're not going to put a head in the sand. We're going to do it at a very detailed level. We're going to go bottoms up. We do a top-down, it's really incremental type of things. We already have huge redeployment plans for own people. In fact, we spoke about it today, and we have to up that a little bit. So we can take people who were displaced and we have displaced people from AI, and we offer them other jobs. They're usually well trained and highly talented, very good at things. And so we're going to do it ourselves. What I was mentioning when I was asked that question in [ Davos ], this is now public policy. This is not JPMorgan I'm talking about. This is what do you -- I gave a specific example. What have -- I think there are 2 million commercial truckers in the United States and there are lots of other examples you can give, there's a thought exercise, and you can push a button, eliminate all of them, and they make $120,000 on average save fuel, save lives, save time and more efficient system, less destructive highways, all that beautiful stuff. Would you do it, if you put 2 million people on the street with the next [indiscernible] there are jobs available, that next job is $25,000 a year stocking shelves. And I was saying, that's kind of like really bad, kind of like civilly should we a society agreed? I don't think so. I was talking about the business and government and they should start thinking today, not when it happens, what would we do to deal with the issue, it's got to be business in government. I would give you the example in that case, maybe you phase it in over 5 years. And during that 5 years, you have time to retire people, income assistance, relocate retrain, but you have to have systems to actually work. We actually had a thing called trade adjustment assistance that was put in place, I think when Clinton was President and it didn't work. But society has got to think through what it wants to do if this becomes a kind of problem. I'm not predicting it's going to be a problem. I'm going to be saying now is the time to start thinking about what you do if it does.

And I ask that just because from a bank's perspective, even today, the concern was if there are mass layoffs to AI, does it become credit card defaults, auto defaults as white collar job losses. And I'm wondering if that conversation is happening today or not between businesses and policymakers?

No, the conversation [indiscernible] happens today. It's just more fear and things like that. And I do think, ultimately, will create more productivity, but it could create another derivative effects like you just said. Absolutely, laying those people up will cause a problem, even if it creates more productivity in society. And that's why society got to think this through a little bit. It may happen faster than we can adjust to it like it took years for farms to adopt tractors and fertilizers. It took years for electricity to be put into cities, this may happen faster, and therefore, we should be prepared. But you guys, you're all smart right, what you think the policy should be. Don't just ask.

All right. Were you going to ask questions today? Mike Mayo, go ahead.

What do you think about the competitive environment today versus other periods? I mean you've highlighted or Jeremy slide has -- this is the most competitive period before the global financial crisis. And you know as well as anybody, this is when stupid things are done, right? You have foreign banks that are back. You have all the regional banks are back after problems in 2023. Everybody's front footed, everyone's playing offense, and now you have to compete against these same players just by spending more, hopefully, in your mind, getting more market share. I mean, how do you think about this competitive world?

Unfortunately, we did see this in '05, '06, '07, almost the same thing. The rising tide lets all boats, everyone was making a lot of money, people leveraging to the hilt. The sky was the limit. Yes, I think you're absolutely correct. And I think today, the rising tide is [indiscernible] boats. My own view is people are getting a little comfortable that this is real. These high asset prices and high volumes and that we won't have any kind of problem whatsoever. So we're quite cautious about that. We stick to our own rules. So you -- we have to -- these guys lose business because we don't want to underwrite a leverage loan. So be it. We're not chasing anything. We will not do stuff the wrong way for the wrong reason. But I would say competition is tougher than that. So all of our main competitors are back in the United States, in Europe, the Japanese are back here. I mean everyone is back. I think that's good. It's good for the world, et cetera. I don't know how long it's going to be great for everybody. I see a couple of people doing some dumb things. They're just doing some things to create NII or say they're winning in the markets business or something like that. But the competition is much more than that today. I mean, it is all -- it is tons of payments companies is [ Chime and Revolut ], PayPal, [ Stripe ] and built and ramp and its automated companies, it's everywhere. And even the tech side from all the traditional banks, some are doing a great job. In fact, we've got our assets kicked in certain parts. So I won't go through and I won't give names. So we got beat, beat badly. So we should be very cautious of that. This has been -- we're still going to win in a big time. We're going to -- every now and then strike out, but it's a lot. And then when we do a lot of this investing we're talking about, we have to do something to put $30 million tech thing to do a better job on a client starters or somebody that we're going to do it. And then we were trying to be very disciplined about it, but we have to compete at that level, too. We can't just put a head in the sand and say that doesn't affect us. That's what we saw with [ Stripe ] when it came out. So what we said with PayPal. That's where we saw with cash, okay? So we're not going to do that.

And then one follow-up. Just philosophically, I mean, this had been described as a commoditized industry for decades. And I thought the 3 most important words I heard today just reiterating, it's not just price. I think Mary, you said that. But I think that's your theme throughout the firm. So when you say it's not just price, and this goes back to the AI argument, like the excess profits, the intermediation fees will all be going down to 0 and why should people pay that and JPMorgan make money from that. So describe what you guys mean when you say it's not just price, in ways that I could explain to somebody who's not in the business.

There are certain things which are completely commoditized, but it's not just price, it just take an FX rate. If you don't kind of give the best price at that split second, you will lose the trade. But we have to build the system to do a better job there. We create more global flows that actually create the better price. We have research and all these other things that we do that make -- and we'll spend the money and the technology just for that trading desk to create it. But Marianne said it like take trust and advice. We treat your data well. We don't -- we want to charge you fairly if you're sending your data outside, there's been a big point of ours about open banking. We want them to use your data properly. We don't think you will -- how many of you use some outside services for your payments. They're taking all your transaction data or your card data, all your and there's a liability shift. We want you to know about it, and I want you to be able to go on the screen and decide what you give them, how you give them, when you give them, what the durations we give them. So we are a trusted adviser to people. If you're a private -- I'm sure some of you might be private bank clients, you trust our adviser to do the right thing in the right way. If we make an error, we're the first people to say, we're sorry, and we owe you. We build the best voice systems, the best scam systems, the best [indiscernible] and we want to be paid for it. One of the things about banking and I've told for years the cost of -- just giving you a checking account is like $200, [ fixed ] a year. So when I hear people say deposits are free, deposits aren't free. That's how you get paid for the $200 a year of fixed cost. There's the same dynamics in credit card. It's called APR, but just to give you the account to do the credit, to give you add to daily payment systems to balance out your payments has a cost. So building the best and then take in our businesses, this is a generalization in the wholesale businesses, you were generally paid by the task or the product to service okay? And you have to compete at that level. But at the end of the day, these clients when they close up on a Friday night, and they want a $20 billion bridge loan to do something like EA they get hundreds of people working around the clock for them. That's what they want. It wasn't just the best price. In fact, we had a client in stage that are senior leaders in you're saying about one thing I learned about how we should treat at JPMorgan, it's not the basis points, is what you do for us day in and day out, year in and year out. And we're also there for them in good times and bad times. Remember, we did not fail in '08 and '09. We build out a lot of companies, in fact, almost a few countries, if you look at it, so we're really good. We're trustworthy [indiscernible]. We're decent. We're great citizens and communities and people like that, too. And obvious saying the wholesale, so you get paid by the trade or by the ticket or by the M&A fee or something like that. It's very episodic, but it's not necessarily bad. But in the consumer business is actually a packaged product. So when you have a consumer account, you get the debit card for free, you get this for free, you get ATM for free, you got branches for free. You get Wealth Management for free, you get SDI for free. You get all these things for free as part of that. So it's a bucket of beautiful things we're giving you, and then we -- and then we -- we're going to do a better job. So take SDI. I don't know if Chris is in the room. We're going to give you order flow. So when you pay -- when you use our self-directed investing, we're going to run it through JPMorgan's institutional systems and give you the best price probably in the world with no markup which is not with payment for the flow is. It's not the breast price in the world and you get a markup. And so we're going to give you the best. And we're going to put it up on the screen. We going to show you the execution, the cost the seed and that may mean some of the people it means something to me because of between the fourth right.

Right [ Manon, ] go ahead.

Jamie, with the changes coming at the head of the Fed, there's talk about another round of QT. How do you expect QT will impact JPM and maybe also the broader banking system.

Yes. I loved [ Al ] and Jeremy's alphabet soup, very good complement to my spaghetti chart and that they were brave enough to do it, okay. They're out of Stockholm, they're out of jail at this point. First of all, I'm surprised that they're calling it not QE. They do another $40 billion a month. They're doing that because they recognize, as Jeremy mentioned that when we have to hold $1 trillion of cash and model securities unencumbered which cannot be used to facilitate transactions in the marketplace, which are basically risk-free that if they don't provide the reserves in the marketplace, there will be a problem like we had in February of '23 and February '19 and February '18, it's just so predictable, and it will happen again. So I think they recognize that QE does affect sometimes it's hard to exactly measure how it affects like if you do a lot of QE, does it show in wholesale, showing consumer does it up? And all analysis at first shows up in wholesale and leaks into consumer. It takes over time and things like that. Whatever it is, we'll deal it. So when JP -- more is not sitting here saying whether they do it or don't do it or whatever they're the Fed is going to change how we serve a client. We will serve a client, we'll get our returns, we'll do okay. That to me is adjusting the financial architecture to the company so we can serve you properly. It may change how we price certain things and stuff like that. I think they're right to talk about more narrow banking. I think that the balance sheet of the Fed is too big. They've lost $1 trillion. They did air into DEI, climate, social policy. I think it all -- they took their eye off the ball on interest rate exposure, which is what happened to Silicon Valley Bank and First Republic it was interest rate exposure, and it was too much HTM securities. And he mentioned we have almost $500 billion that we have collateral posted the fed every day that we can go if we had to do it. We do that so we're a sound, secure bank that you would never have to question this. A lot of those banks didn't do it because it costs money. And I would question whether -- obviously, it was their own decision on their part. So I think it will be okay. And I think -- and if I remember correctly, [ Keven Morse ] came out and said that it will take a year for them to do the work in the study to tell us how they're going to change those policies. I don't think they're going to do anything that's like unwise and too quick that's going to cause a lot of promotion. If they reduce the size of the balance sheet of the Fed, they have to change those rules. They cannot reduce the balance sheet of the Fed and not change LCR and liquidity rules. And I could show you numbers they cannot do without change those rules. To me, I'm righting about my Chairman's letter, I believe that we can create a safer system, capital and that capital is not issued almost anywhere that creates more capital to be used, more loans deployed, more liquidity deployed that's actually safer than we have today by changing post-failure rules pre-failure, at point of failure and after failure in a way that you don't have to worry about if the bank fails, I think that could be done. I hope they put their best brains to work because that's where they come up with. And I can come up with a lot of ways it right now. In fact, I was the banks would just fund all these problems because we end up paying in a really bad way when it goes to the FDIC.

Okay. We have a question on the zoom, Gerard Cassidy, please go ahead and mute yourself.

Thank you, Mikael. Jamie, the outlook that you have described today and your colleagues is quite positive for JPMorgan as well as the industry. At the risk of sounding like a [indiscernible] , can you tell us when you look around corners, what are you looking for in terms of risks that could be out there that are not apparent to us today?

Yes. Well, I'm not -- I think if you listen closely, they said, pipelines like accordions, everything they're writing times that's an all boats. I'm not quite optimistic about the year. okay? We know -- and Jeremy had the chart up there that there are all these tailwinds. The One Big Beautiful Bill, bank deregulation, other deregulation, animal spirits, faster permitting. I think some of the stuff that's being spent I think it's all going to drive growth this year. Our economists say it, we all say it, it may have slight inflationary effect. At the bottom of this chart, in geopolitics, global deficits, trade issues, [indiscernible] in the world, those are long-term things that may affect the economy, but they could be harsh. And if you read history books, there are a lot of examples where you get surprised. So we don't run the company hoping for good times. We don't run the company just thinking they're bad times. We run the company look at a full range of possible outcomes so that regards to the outcome we can serve our clients day in and day out. We are adults. If our ROE goes to 10% next year on one of these scenarios, we are completely fine. It will make no difference to the future [indiscernible]. In fact, I would tell our people, I said before, if and when that happens, our opportunity will be bigger. As Mike says, to buy something or deploy capital or people can or something like that. So there will be a cycle one day. I don't know when is going to be a cycle. I don't know what confluence events will cause that cycle. My anxiety is high over it. I'm not assuaged by the fact that asset prices are high. In fact, I think that answer the risk, and that was on your chart too. And then you feel stupid everyone coining money and everyone's great so I have wonderful things going to be. It's still stupid I feel the same way it does feel really good. And then when I think about all the factors taking place I like to take a deep breath and say, watch out.

Right John McDonald, go ahead.

I just want to ask a general question and then a specific one. Generally, two of the other large banks or a few of the other large banks are considering combining the Chairman and CEO role and just get your perspective on why that's a good arrangement at a large financial institution. And then second, if you could comment a little bit on succession planning, your time line. Obviously, you continue to come in with a lot of energy and enjoy the job and how that lines up with the succession plan.

Yes. So I'll do that first because it's the easiest. I think I was told to say this very specifically. We're -- I'm here for a few years as CEO and maybe a few [indiscernible] Executive Chairman and Chairman, [ Penny ] whatever the Board wants to do it, whatever it makes sense for the company. That's what it is. Okay. I see that right. I've never been for or against Chairman and CEO. That's why you have a Board to decide how you properly structure a company. There are times they should be separate. There are times they should be combined. It is almost a nonissue. [ Steve Burke ] here our Lead Director or maybe in the Zoom, if you look at the authorities in the proxy of the lead director okay? They have all the authority of what you would call a Chairman, say in the agenda, calling meetings. But I think the most important thing that I've been trying to tell the FT who can never get the straight, they're obsessed with this issue in the U.K. it's that isn't the important thing. The important thing is does the Board have an open, honest conversation and not just with the CEO, with the management team every time they meet. So [ Dodd-Frank ] mandated that the Board has to meet without the CEO once a year. When I got to Bank One, I asked my Board, I was Chairman and CEO to meet with me every meeting without me every meeting. Every meeting or every single meeting since the year 2000, my Board meets without me in the room. Sometimes it's for 15 minutes, sometimes it's for 2 hours. Very often, they call me up afterwards with a little bit of help, advice coaching, things they want worried about, things they want to think about because I'm just trying to do the right job, and I know that I'm in the room, it may be hard for them to have their conversation. So I think things like that, which are not structural in chairman and CEO split, but are so much more important. Like that is that you should be asking about how does the place function. They also have total and complete access to -- they know -- I mean all the management team in this room, they know all of them but they really know the people up on stage and a bunch of other folks in this room like that you just sort of presenting and Jen who's here and Robin and Jeremy, and they know all of them. They have lunch with them, they see them, they present. I have never made a presentation that I can remember at the JPMorgan Board of Directors ever. And these folks do it. And I usually don't do it, I may even raise my hand and add, particularly when Jeremy says something which when you start taking those rabbit halls, I'm like, okay, let's. You're going to scare them , Jeremy. And I think those are the most important things, total access, total openness, so they feel like they're totally brief. They know what's going on. And most of us are just trying to do the best we can.

Do we have a last question is we have one from Steven Chubak.

So Jamie, you propose some recommendations on the regulatory side, GSIB surcharge was not one of those areas that was covered. I was hoping to get your perspective on what you think the Fed you consider in terms of changes to ensure that U.S. banks are, in fact, on a level [indiscernible].

We should do it the same way the Europeans do it. What they allowed was unethical and wrong. They were supposed to just GSIB from the beginning to the size of the global system and inflation, all stuff like that, and they did not. They should just go back to that. They shouldn't have American gold plating. They should give all that c*** and just do it. And even if they did all that, I mean, we changed the numbers, and I forgot how much 2% or something they should do the numbers the right way. That's all we've been talking for years. Do the numbers right way, stop playing games with artificial targets and we're just about right, show it. I mean I spoke for years of [ CCAR ] is not right. It is a dishonest disclosure of what our loss would be under things under a scenario like that. And I can then go tell the shares, it's wrong. And they should say it. that doesn't remotely remember resemble reality. So that's what they should do. And if they wanted to add and say we want to be more conservative in the rest of the world and add something, but they should do the numbers the right way. And I think they might. We'll see. Folks, thanks for taking time with us. We have cocktails. This floor -- on this floor and that way. Folks, thank you very much. Appreciate it.

Thank you for attending JPMorgan Chase's 2026 Company update. We will now conclude the evening with cocktail hour please make your way out of the presentation room and down to the 16th floor balcony. Our event staff will be happy to help direct you.