JP Morgan Chase & Co.

quarter 2025 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 very much, and good morning, everyone. This quarter, the firm reported net income of $15 billion, EPS of $5.24 on revenue of $45.7 billion, and an ROTCE of 21%. These results included an income tax benefit of $774 million, which we describe in more detail in the earnings press release. On the next page, we have some more detail. The firm reported revenue of $45.7 billion, down $5.3 billion, or 10% year-on-year. And IIX Markets was down $185 million, or 1%, driven by the impact of lower rates and deposit margin compression, predominantly offset by higher wholesale deposits, higher revolving balances in card, as well as the impact of securities activity, including from prior orders. And IRX Markets was down $6.3 billion, or 31%, and excluding the net gain related to Visa shares and net investment securities losses in the prior year was up $1 billion, or 8%, driven by higher asset management fees, higher auto lease income, higher investment banking fees, and higher payments fees. And markets revenue was up $1.1 billion, or 15%. Expenses of $23.8 billion were up $66 million, and excluding last year's Visa stock contribution to the firm's foundation, was up $1.1 billion, or 5%, primarily driven by compensation, higher brokerage and distribution fees, as well as higher auto lease depreciation. And credit costs were $2.8 billion, with net charge-offs of $2.4 billion, and a net reserve build of $439 million. The build was driven by new lending activity, largely offset by a decrease in the probabilities that we attached to the adverse scenarios in the allowance estimation. Onto the balance sheet on page three, we ended the quarter with a CT1 ratio of 15% down 40 basis points versus the prior quarter, as net income was more than offset by capital distributions and higher RWA. This quarter's higher RWA is primarily driven by an increase in wholesale lending across both CIV markets and banking, an increase in other markets activity, as well as an increase in card loans. As you know, we completed CCAR a couple weeks ago, Under the current rules, our indicative SCB is forward at 2.5% and goes into effect in 4-3-25. Our new SCB also reflects the Board's intention to increase the dividend to $1.50 per share in the third quarter. Now let's go to our businesses, starting with CCB. CCB reported net income of $5.2 billion on revenue of $18.8 billion, which was up 6% year-on-year. In banking and wealth management, revenue was up 3%, largely driven by growth in wealth management revenue with deposit NII relatively flat. Average deposits were down 1% year-on-year and flat sequentially. Fine investment assets were up 14% year-on-year, driven by market performance and continued healthy flows into managed products. In home lending, revenue was down 5% year-on-year, predominantly driven by lower NII. Turning to card services and auto, revenue was up 15% year-on-year, predominantly driven by card NII on higher revolving balances, as well as higher operating lease income in auto. Card outstandings were up 9% due to strong account acquisition. In auto, originations were up 5%, driven by higher lease volume. Expenses of $9.9 billion were up 5% year-on-year, largely driven by growth in technology and auto lease depreciation. Credit costs were $2.1 billion, reflecting net charge-offs of $2.1 billion, relatively flat year-on-year, in line with expectations. Next, the commercial and investment bank. CIB reported net income of $6.7 billion on revenue of $19.5 billion, which was up 9% year-on-year. IB fees were up 7% year-on-year, and we continue to rank number one with a wallet share of 8.9%. In advisory, fees were up 8%, benefiting from increased sponsor activity. That underwriting fees were up 12%, primarily driven by a few large deals. In equity underwriting, fees were down 6% year-on-year. Our pipeline remains robust, and the outlook, along with the market tone and sentiment, is notably more upbeat. Payments revenue was up 3% year-on-year, excluding equity investments, driven by higher deposit balances and fee growth, predominantly offset by deposit margin compression. Lending revenue was down 6% year-on-year, reflecting higher losses on hedges. Moving to markets, total revenue was up 15% year-on-year. Fixed income was up 14% with improved performance in currencies and emerging markets, rates, and commodities. This was partially offset by fewer opportunities in securitized products and fixed income financing. Equities was up 15%. continued to see strong performance across products, most notably in derivatives. Security services revenue was up 12% year-on-year, driven by higher deposit balances and fee growth. Expenses of $9.6 billion were up 5% year-on-year, driven by higher compensation, brokerage and technology expense, partially offset by lower legal expense. Average banking and payments loans were down 2% year-on-year and up 2% quarter-on-quarter, with sequential growth primarily driven by new loans with larger corporates. Average client deposits were up 16% year-on-year and up 5% sequentially, reflecting increased activity across payments and security services. Finally, credit costs were $696 million, driven by bills in our CNI portfolio, including new lending activity and downgrades to a handful of names, partially offset by the scenario probability adjustment I mentioned up front. Turning to asset and wealth management to complete our lines of business, AWM reported net income of $1.5 billion with pre-tax margin of 34%. Revenue of $5.8 billion was up 10% year-on-year, driven by growth in management fees on strong net inflows and higher average market levels, as well as higher brokerage activity and higher deposit balance. Expenses, $3.7 billion, were up 5% year-on-year, driven by higher compensation, including revenue-related compensation, and continued growth in our private banking advisor teams, as well as higher distribution fees. Long-term net inflows were $31 billion for the quarter, led by fixed income and equities. From liquidity, we saw net inflows of $5 billion. AUM of $4.3 trillion was up 18% year-on-year, and client assets of $6.4 trillion were up 19% year-on-year, driven by continued net inflows and higher market levels. And finally, loans were up 7% year-on-year and 3% quarter-on-quarter, and deposits were up 9% year-on-year and 2% sequentially. Turning to corporate, corporate reported net income of $1.7 billion and includes the tax item I mentioned up front. Revenue was $1.5 billion for the quarter. NII was $1.5 billion, down $875 million year-on-year. NIR was a net gain of $49 million, up $148 million year-on-year, excluding the prior year's visa-related gain. Expenses of $547 million were down $32 million year-on-year, excluding the foundation contributions in the prior year that I mentioned earlier. To finish up, I'll touch on the outlook. You'll recall that at Investor Day, I made a couple of comments previewing the potential evolution of the outlook, so now let me formalize that and give you updated guidance. First, we now expect NII X markets to be approximately $92 billion, with the increase driven by changes in the forward curve and strong deposit growth in payments, security services, as well as balance growth in CART. Total NII guidance is now about $95.5 billion, implying $3.5 billion of markets and IOT. Second, on adjusted expense, we now expect it to be about $95.5 billion, primarily driven by the impact of the weaker dollar, which is largely bottom-line neutral. And finally, on credit, we continue to expect the card net charge-off rate to be approximately 3.6%. Reflecting on the quarter, while the environment remains extremely dynamic, in many ways, navigating uncertainty is the norm for both us and our clients. We're now happy to take your questions, so let's open the line for Q&A.

Thank you. Please stand by. Our first question will come from Christopher McGrady with QBW. Your line is open.