JP Morgan Chase & Co.

Good morning, ladies and gentlemen. Welcome to JPMorgan Chase's fourth quarter 2022 earnings call. This call is being recorded. Your line will be muted for the duration of the call. We will now go live to the presentation. Please stand by. At this time, I would like to turn the call over to JPMorgan Chase's Chairman and CEO, Jamie Dimon, and Chief Financial Officer, Jeremy Barnum. Mr. Barnum, please go ahead.

Thank you very much. Good morning, everyone. The presentation is available on our website, and please refer to the disclaimer in the back. Starting on page one, the firm reported net income of $11 billion, EPS of $3.57, on revenue of $35.6 billion, and delivered an ROTCE of 20%. This quarter, we had two significant items in corporate, a $914 million gain on the sale of Visa B shares, offset by $874 million of net investment securities losses. Touching on a few highlights, combined credit and debit spend is up 9% year-on-year with growth in both discretionary and non-discretionary spending. We ended the year ranked number one for global IV fees with a wallet share of 8%, and credit continues to normalize, but actual performance remains strong across the company. On page two, we have more on our fourth quarter results. Revenue of $35.6 billion was up $5.2 billion, or 17% year-on-year. NIIX markets was up $8.4 billion, or 72%, driven by higher rates. NIRX markets was down $3.5 billion, or 26%, predominantly driven by lower IV fees, as well as management and performance fees in AWM, lower auto lease income, and home lending production revenue. and markets revenue was up $382 million, or 7% year-on-year. Expenses of $19 billion were up $1.1 billion, or 6% year-on-year, primarily driven by higher structural expense and investments. And credit costs of $2.3 billion included net charge-offs of $887 million. The net reserve build of $1.4 billion was driven by updates to the firm's macroeconomic outlook which now reflects a mild recession in the central case, as well as loan growth in card services, partially offset by a reduction in pandemic-related uncertainty. Looking at the full year results on page 3, the firm reported net income of $37.7 billion, EPS of $12.09, and record revenue of $132.3 billion, and we delivered an ROTCE of 18%. On to balance sheet and capital on page four. At the end of the quarter, with a C2-1 ratio of 13.2%, up 70 basis points, primarily driven by the benefit of net income, including the sale of Visa B shares, less distributions, AOCI gains, and lower RWA. RWA declined approximately 20 billion quarter on quarter, reflecting lower RWA in the markets business, which was partially offset by an increase in lending primarily in card services. Recall that we had a 13% CT1 target for the first quarter of 2023, which we have now reached one quarter early. So given that, we expect to resume share repurchases this quarter. Now let's go to our businesses, starting on page five. Starting with a quick update on the health of U.S. consumers and small businesses based on our data. They are generally on solid footing, although sentiment for both reflects recessionary concerns not yet fully reflected in our data. Combined debit and credit spend is up 9% year-on-year. Both discretionary and non-discretionary spend are up year-on-year, the strongest growth in discretionary being travel. Retail spend is up 4% on the back of a particularly strong fourth quarter last year. E-commerce spend was up 7%, while in-person spend was roughly flat. Cash buffers for both consumers and small businesses continue to slowly normalize, with lower income segments and smaller businesses normalizing faster. Consumer cash buffers for the lower income segments are expected to be back to pre-pandemic levels by the third quarter this year. Now moving to financial results, this quarter, CCB reported net income of $4.5 billion on revenue of $15.8 billion, which was up 29% year-on-year. You'll notice in our presentation that we renamed consumer and business banking to banking and wealth management. Starting there, revenue was up 56% year-on-year, driven by higher NII on higher rates. Deposits were down 3% quarter-on-quarter, as spend remains strong and the rate cycle plays out, without flows being partially offset by new relationships. Fine investment assets were down 10% year-on-year, driven by market performance, partially offset by net inflows. where we are seeing good momentum, including from our deposit customers. Home lending revenue was down 46% year-on-year, largely driven by lower production revenue. Moving to card services and auto, revenue was up 12% year-on-year, predominantly driven by higher card services NII on higher revolving balances, partially offset by lower auto lease income. Card outstandings were up 19%, Total revolving balances were up 20%, and we are now back to pre-pandemic levels. However, revolving balances per account are still below pre-pandemic levels, which should be a tailwind in 2023. And in auto, originations were $7.5 billion, down 12%. Expenses of $8 billion were up 3% year-on-year, primarily driven by investments as well as higher compensation, largely offset by auto lease depreciation from lower volumes. In terms of credit performance this quarter, credit costs were $1.8 billion, reflecting reserve bills of $800 million in card and $200 million in home lending, and net charge-offs of $845 million, up $330 million year-on-year. Next is CIB on page 6. CIB reported net income of $3.3 billion on revenue of $10.5 billion for the fourth quarter. Investment banking revenue of $1.4 billion was down 57% year-on-year. IB fees were down 58% in line with the market. In advisory, fees were down 53%, reflecting lower announced activity earlier in the year. Our underwriting businesses were affected by market conditions, resulting in fees down 58% for debt and down 69% for equity. In terms of the outlook, the dynamics remain the same. Pipeline is relatively robust, but conversion is very sensitive to market conditions and sentiment about the economic outlook. Also, note that it will be a difficult compare against last year's first quarter. Moving to markets, revenue was $5.7 billion, up 7% year-on-year, driven by the strength in our macro franchise. Fixed income was up 12% as elevated volatility drove strong client activity, particularly in rates and currencies in emerging markets. while securitized products continue to be challenged by the market environment. Equity markets was relatively flat against a strong fourth quarter last year. Payments revenue was $2.1 billion, up 15% year-on-year. Excluding the net impact of equity investments, it was up 56%, and the year-on-year growth was driven by higher rates. Security services revenue of $1.2 billion was up 9% year-on-year, predominantly driven by higher rates, largely offset by lower deposits and market levels. Expenses of $6.4 billion were up 10% year-on-year, predominantly driven by the timing of revenue-related compensation. On a full year basis, expenses of $27.1 billion were up 7% year-on-year, primarily driven by higher structural expense and investments, partially offset by lower revenue-related compensation. Moving to the commercial bank on page 7. Commercial banking reported net income of $1.4 billion. Record revenue of $3.4 billion was up 30% year-on-year, driven by higher deposit margins, partially offset by lower investment banking revenue and deposit-related fees. Gross investment banking revenue of $700 million was down 52% year-on-year, driven by reduced capital markets activity. Expenses of $1.3 billion were up 18% year-on-year. Deposits were down 14% year on year and 1% quarter on quarter, primarily reflecting attrition of non-operating deposits. Loans were up 14% year on year and 3% sequentially. C&I loans were up 4% quarter on quarter, reflecting continued strength in originations and revolver utilization. CRE loans were up 2% quarter on quarter, reflecting a slower pace of growth from earlier in the year due to higher rates, which impacts both originations and prepayment activity. Then, to complete our lines of business, AWM on page 8. Asset and wealth management reported net income of $1.1 billion, with pre-tax margin of 33%. Revenue of $4.6 billion was up 3% year-on-year, driven by higher deposit margins on lower balances, predominantly offset by reductions in management, performance, and placement fees linked to this year's market declines. Expenses of $3 billion were up 1% year-on-year, predominantly driven by growth in our private banking advisor teams, largely offset by lower performance-related compensation. For the quarter, net long-term inflows were $10 billion, positive across equities and fixed income, and $47 billion for the full year. And in liquidity, we saw net inflows of $33 billion for the quarter and net outflows of $55 billion for the full year. AUM of 2.8 trillion and overall client assets of 4 trillion were down 11% and 6% year-on-year, respectively, driven by lower market levels. Finally, loans were down 1% quarter-on-quarter, driven by lower securities-based lending, while deposits were down 6% sequentially, driven by the rising rate environment, resulting in migration to investments and other cash alternatives. Turning to corporate on page 9. Corporate reported a net gain of $581 million. Revenue of $1.2 billion was up $1.7 billion year on year. NII was $1.3 billion, up $2 billion year on year due to the impact of higher rates. NIR was a loss of $115 million and reflects the two significant items I mentioned earlier. And expenses of $339 million were up $88 million year on year. With that, let's pivot to the outlook for 2023, which I will cover over the next few pages, starting with NII on page 10.

I'll take a sip of water. Okay.