JP Morgan Chase & Co.

Good morning, ladies and gentlemen. Welcome to JPMorgan Chase's third quarter 2024 earnings call. This call is being recorded. Your line will be muted for the duration of the call. We will now go live to the presentation. The presentation is available on JPMorgan Chase's website. Please refer to the disclaimer in the back concerning forward-looking statements. Please stand by. At this time, I would like to turn the call over to JPMorgan Chase's chairman and CEO, Jamie Dimon, and Chief Financial Officer Jeremy Barnum. Mr. Barnum, please go ahead.

Thank you, and good morning, everyone. Starting on page one, the firm reported net income of $12.9 billion, EPS of $4.37, on revenue of $43.3 billion, with an ROTCE of 19%. Touching on a couple of highlights. In CCB, we ranked number one in retail deposit share for the fourth straight year. In CIB, both IB fees and markets revenue were notably up year-on-year, reflecting strength across the franchise. In AWM, we had record quarterly revenues and record long-term flows. Now turning to page two for the firm-wide results. The firm reported revenue of $43.3 billion, up $2.6 billion, or 6% year-on-year. And IIX Markets was up $274 million, or 1%, driven by the impact of balance sheet mix and securities reinvestment, higher revolving balances in card, and higher wholesale deposit balances, predominantly offset by lower deposit balances in banking and wealth management and deposit margin compression. NIRX markets was up $1.8 billion, or 17%, but excluding the prior year's net investment securities losses, it was up 10% on higher asset management and investment banking fees. and markets revenue was up $535 million, or 8% year-on-year. Expenses of $22.6 billion were up $808 million, or 4% year-on-year, driven by compensation, including revenue-related compensation and growth in employees, partially offset by lower legal expense. And credit costs were $3.1 billion, reflecting net charge-offs of $2.1 billion and a net reserve bill of $1 billion, which included $882 million in consumer, primarily in card, and $144 million in wholesale. Net charge-offs were up $590 million year-on-year, predominantly driven by card. On to balance sheet and capital on page three, we ended the quarter with a C2-1 ratio of 15.3%, flat versus the prior quarter, as net income and OCI gains were offset by capital distributions and higher RWA. This quarter's RWA reflects higher lending activity, as well as higher client activity and market moves on the trading side. We had $6 billion of net common share repurchases this quarter, which in part reflects the deployment of the proceeds from the sale of Visa shares, as we have previously mentioned. Now, let's go to our businesses starting with CCB on page 4. CCB reported net income of $4 billion on revenue of $17.8 billion, which was down 3% year-on-year. In banking and wealth management, revenue was down 11% year-on-year, reflecting deposit margin compression and lower deposits, partially offset by growth in wealth management revenue. Average deposits were down 8% year-on-year and 2% sequentially. We are seeing a slowdown in customer yield-seeking activity, including in CD volumes, and expect deposits to be relatively flat for the remainder of the year. Client investment assets were up 21% year-on-year, driven by market performance, and we continue to see strong referrals of new wealth management clients from our branch network. In home lending, revenue was up 3% year-on-year, driven by higher NII, partially offset by lower servicing and production revenue. Turning to card services and auto, revenue was up 11% year on year, driven by higher card NII and higher revolving balances. Card outstandings were up 11% due to strong account acquisition and the continued normalization of revolve. And in auto, originations were 10 billion, down 2%, while maintaining strong margins and high quality credit. Expenses of 9.6 billion were up 5% year on year, predominantly driven by higher field and technology compensation, as well as growth in marketing. In terms of credit performance this quarter, credit costs were $2.8 billion, driven by card, and reflected net charge-offs of $1.9 billion, up $520 million year-on-year, and a net reserve build of $876 million, predominantly from higher revolving balances. Next, the commercial and investment bank on page five. The CIB reported net income of $5.7 billion on revenue of $17 billion. IB fees were up 31% year-on-year, and we ranked number one with year-to-date wallet share of 9.1%. In advisory, fees were up 10%, benefiting from the closing of a few large deals. Underwriting fees were up meaningfully, with debt up 56% and equity up 26%, primarily driven by favorable market conditions. In light of the positive momentum throughout the year, we're optimistic about our pipeline, but the M&A regulatory environment and geopolitical situation are continued sources of uncertainty. Payments revenue was $4.4 billion, up 4% year on year, driven by fee growth and higher deposit balances, largely offset by margin compression. Moving to markets, total revenue was $7.2 billion, up 8% year on year. Fixed income was flat, reflecting outperformance in currencies and emerging markets and lower revenue and rates. Equities was up 27%, reflecting strong performance across regions, largely driven by a supportive trading environment in the U.S. and increased late quarter activity in Asia. Security services revenue was $1.3 billion, up 9% year-on-year, largely driven by fee growth on higher market levels and volumes. Expenses of 8.8 billion were down 1% year-on-year, with lower legal expense predominantly offset by higher revenue-related compensation and growth in employees, as well as higher technology spend. Average banking and payments loans were down 2% year-on-year and down 1% sequentially. In the middle market and large corporate client segments, we continue to see softness in both new loan demand and revolver utilization, in part due to clients' access to receptive capital markets. In multifamily, while we are seeing encouraging signs in loan originations as long-term rates fall, we expect overall growth to remain muted in the near term as originations are offset by payoff activity. Average client deposits dropped 7% year-on-year and 3% sequentially, primarily driven by growth from large corporates in payments and security services. Finally, credit costs were $316 million, driven by higher net lending activity, including in markets, and downgrades partially offset by improved macroeconomic variables. Then, to complete our lines of business, AWM on page 6. Asset and wealth management reported net income of $1.4 billion, with pre-tax margin of 33%. For the quarter, revenue of $5.4 billion was up 9% year-on-year, driven by growth in management fees on higher average market levels and strong net inflows, investment valuation gains compared to losses in the prior year, and higher brokerage activity, partially offset by deposit margin compression. Expenses of $3.6 billion, or up 16% year-on-year, predominantly driven by higher compensation, including revenue-related compensation and continued growth in our private banking advisor teams, as well as higher distribution fees and legal expense. For the quarter, long-term net inflows were $72 billion, led by fixed income and equities. And in liquidity, we saw net inflows of $34 billion. AUM of $3.9 trillion and client assets of $5.7 trillion were both up 23%, driven by higher market levels and continued net inflows. And finally, loans were up 2% quarter-on-quarter, and deposits were up 4% quarter-on-quarter. Turning to corporate on page seven. Corporate reported net income of $1.8 billion. Revenue was $3.1 billion, up $1.5 billion year-on-year. NII was $2.9 billion, up $932 million year-on-year, predominantly driven by the impact of balance sheet mix and securities reinvestment, including from prior quarters. NIR was a net gain of $155 million, compared with a net loss of $425 million in the prior year, predominantly driven by lower net investment securities losses this quarter. Expenses of $589 million were down $107 million year-on-year. To finish up, let's turn to the outlook on page eight. We now expect 2024 NIIX markets to be approximately $91.5 billion and total NII to be approximately $92.5 billion. Our outlook for adjusted expense is now about $91.5 billion. And given where we are in the year, we included on the page the implied fourth quarter guidance for NII and adjusted expense. And note that the NII numbers imply about 800 million of markets NII in the fourth quarter. On credit, we continue to expect the 2024 card net charge-off rate to be approximately 3.4%. So, to wrap up, we're pleased with another quarter of strong operating performance. As we look ahead to the next few quarters, we expect results will be somewhat challenged as normalization continues. But we remain upbeat and focused on executing in order to continue delivering excellent returns through the cycle. And with that, let's open the line for Q&A.

Thank you. Please stand by.