JP Morgan Chase & Co.

Good morning, ladies and gentlemen. Welcome to JPMorgan Chase's fourth 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 now 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. This quarter, the firm reported net income of $13 billion and EPS of $4.63, with an ROTCE of 18%. These results included the previously announced reserve build of $2.2 billion in CCB related to the forward purchase commitment of the Apple Card portfolio. Revenue of $46.8 billion was up 7% year-on-year on higher markets revenue as well as higher asset management fees and auto lease income. The increase in NIIX markets was primarily driven by higher farm-wide deposit balances and revolving balances in card, largely offset by the impact of lower rates. Expenses of $24 billion were up 5% year-on-year, predominantly driven by higher volume and revenue-related expenses and compensation growth, including from office hiring, partially offset by the release of an FDIC special assessment accrual. Turning to the full-year results, I'll remind you that there were a few significant items in 2025 which are listed in the footnote. Excluding those items, the firm reported full-year net income of $57.5 billion, EPS of $20.18, revenue of $185 billion, with an ROTCE of 20%. And in terms of the balance sheet, we ended the quarter with a standardized CG1 ratio of 14.5%, down 30 basis points versus the prior quarter, as net income was more than offset by capital distributions and higher RWA. This quarter's higher standardized RWA is driven by increases in lending across both wholesale and retail, including the Apple Card purchase commitment, which contributed about $23 billion of standardized RWA, partially offset by lower market risk RWA. You'll see that sequentially, the advanced RWA is up more significantly than standardized. And as you know, our SCB is now at the 2.5% floor, which makes advanced RWA more relevant, so we have added it to the page. The Apple Card transaction's advanced RWA contribution was about $110 billion, based on the sum of expected drawn balances and undrawn lines on closing. The elevated level of advanced RWA is temporary and is expected to reduce to approximately $30 billion in the near term. Moving to our businesses, CCP reported net income of $3.6 billion, or $5.3 billion, excluding the reserve bill for the Apple Card portfolio. Revenue of $19.4 billion was up 6% year-on-year, predominantly driven by higher NII on higher revolving balances in card and a higher deposit margin in banking and wealth management. A few points to highlight. Consumers and small businesses remain resilient. We continue to monitor leading indicators for any signs of stress, and despite weak consumer sentiment, trends in our data are largely consistent with historical norms, and we are not currently seeing deterioration. Across income groups, Debit and credit sales volume continued to perform well, up 7% year-on-year. For the full year, we had strong growth in our franchise with 1.7 million net new checking accounts, 10.4 million new card accounts, and record households in wealth management across digital and advised channels. Next, the CIB reported net income of $7.3 billion. Revenue of $19.4 billion was up 10% year-on-year, driven by higher revenues in markets, payments, and security services. Even with more color, IVPs were down 5% year-on-year, reflecting a strong prior year compare and the timing of some deals that were pushed to 2026. In terms of the outlook, we expect strong client engagement and deal activity in 2026, supported by constructive market dynamics, which is reflected in our pipeline. Markets, fixed income was up 7% year-on-year, with strong performance in securitized products, rates, and currencies in emerging markets, largely offset by lower revenue and credit trading. Equities was up 40% with robust performance across the franchise, particularly in crime. Turning to asset and wealth management, AWM reported net income of $1.8 billion with pre-tax margin of 38%. Revenue of $6.5 billion was up 13% year-on-year, predominantly driven by growth in management fees on higher average market levels and strong net inflows, as well as higher performance fees. Long-term net inflows were 52 billion for the quarter and 209 billion for the full year, positive across all channels, regions, and asset classes. In liquidity, we saw net inflows of 105 billion for the quarter and 183 billion for the year. And we saw record client asset net inflows of 553 billion for the year. To finish up the fourth quarter results, corporate reported net income of $307 million and revenue of $1.5 billion. Before I go over the outlook, I want to make a few points on non-bank financial institution lending, given the attention it received last quarter. When we look at NVFI lending internally, we use a narrower definition than what the call report uses. Our definition focuses on exposure to non-bank financial institutions that is collateralized by the loans the NVFIs are making to end borrowers. At the top of the page, we've provided a reconciliation of the regulatory definition, our definition, and as you can see, that results in excluding, for example, subscription lending to private equity funds, resulting in about $160 billion of exposure as of the fourth quarter. We've also given you categories of the exposure that we believe are a bit more intuitive and mapped to recognizable industry categories and business models of the NBFIs. Now, looking at the bottom left, you can see that even though our narrower definition produces a smaller absolute number, the growth over the last seven years has been quite significant no matter how you look at it. And the drivers of that growth are well understood in terms of market dynamics and regulatory pressures. In terms of risk, on the bottom right of the page, We've given you some detail on the structural features associated with different versions of this lending and the different asset classes. Given the significant amount of credit enhancement involved in this activity, as well as the absence of a traditional credit cycle during the period, it's not surprising that when we look at the loss history since 2018, we've only seen one charge-off, one related to apparent fraud. Stepping back, in light of the growth and the novel elements of some components of this activity, we are quite mindful of the risks. Given the structural protections, you would generally expect losses in this NBFI category to appear either as a result of additional instances of fraud-like problems or as a result of a particularly deep recession that erodes all the credit enhancement. In that scenario, losses associated with traditional lending to end borrowers would likely be the greater concern for the industry. Now, turning to the outlook for 2026, we continue to expect NIIX markets to be about $95 billion. The drivers we explained last quarter remain largely the same, so I'll cover them quickly. As usual, the outlook follows the forward curve, which currently assumes two rate cuts. Offsetting that is the expectation for continued loan growth in CARD, although slightly less than last year as the revolved normalization tailwind is behind us, as well as modest firm-wide deposit growth. For completeness, we expect total NII to be about $103 billion for the year as a function of markets NII increasing to about $8 billion due to lower funding costs from the rate cuts, which you should think of as being primarily offset in NIR. On expense, as we told you at an industry conference in December, we expect 2026 adjusted expense to be about $105 billion. Broadly, the expense growth continues to align with where we see the greatest opportunities across our businesses. The details of the thematic drivers are listed on the page and are broadly consistent with what we've told you before. On the slide, we've shown you 2024 and 2025, as well as 2026. and called out the foundation contribution in the FDIC special assessment. In adjusting for those, the 2026 growth looks a bit more in line. So, 2026 in isolation clearly represents meaningful expense growth in both dollar and percentage terms. And that growth reflects our structural optimism about the opportunity set for the company when we look through the cycle, as well as some optimism about the near-term revenue outlook. More generally, The environment is only getting more competitive, and so it remains critical to ensure that we are making the necessary investments to secure our position against both traditional and non-traditional competitors. To wrap up on credit, we expect the 2026 card net charge-off rate to be approximately 3.4% on favorable delinquency trends driven by the continued resilience of the consumer. 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 comes from the line of Glenn Shore with Evercore. Your line is open.

Hi, thanks very much. So I want to ask on the stablecoin issue. This week, we're going to have some markings up and talk in Congress. I saw the ABA letter this week talking about the immediacy of the issue and whether or not they can close the loophole on interest on stablecoin. And I think they estimated that, or Treasury estimated that it's like 6.6 trillion of bank deposits could be at risk if they don't close that loophole. So my question is, it was written from the ABA standpoint, the community bank standpoint. Is there any reason why it wouldn't be all banks, you specifically, and then how big of a deal for the banking system if they're not successful closing that hole because it does put people at risk of not having insurance and all that stuff. So I'll let you all pine. Thanks.

All right. Okay. Thanks, Glenn. I guess I'll start by saying you probably know more about this than I do, and I think Marianne is really the expert at this point, and she – did give some comments about this at a recent industry conference. But I'll give you my brief take broken into a couple of pieces. So one, you know, it's worth saying, although it's not directly responsive to your question, that as a company, we've been quite involved in the whole blockchain technology space for some time and through our Connexus offering are doing a bunch of kind of really cool stuff across both wholesale, As you know, we launched our first tokenized money market fund. And so that's a capability that we've developed over a long period of time. We are really cutting edge in Gerson there. And we're kind of using that kind of across the whole company as we engage more in that ecosystem. On a related point, also, I think in CCB, you know, we're plugging in a little bit more to a crypto ecosystem and You know, we have an agreement with Coinbase, and it's going to, you know, be possible to buy crypto in the CCB ecosystem, too. So I say that all by way of saying that, like, we see the interesting developments in the space of technological innovation. We're engaged. We're watching. We care. I would just add one quick thing.

That letter was signed by the ABA, the FSF, the ICBA. It was all banks. It wasn't a handful of banks. Okay.

I didn't actually know that, so helpful. And I think that what I was going to say narrowly about that point is there is a two-part answer to your question. One, I think it's very clear, and it's in the spirit of the Genius Act legislation and everything that we're advocating for, that, you know, the creation of a parallel banking system that is sort of, you know, has all the features of banking, including something that looks a lot like a deposit that pays interest without sort of the associated credential safeguards that, you know, have been developed over hundreds of years of bank regulation is an obviously like dangerous and undesirable thing. And so that is the core of our advocacy. Your narrow question of like if this doesn't turn out the way we're arguing it should, what is the risk to banking system deposits? I actually think that's a pretty complicated question and it involves a lot of nuances about where does the money come from, where does it go, what securities are purchased from whom, what is the impact on system-wide deposits, and how does that sort of move between consumer and wholesale? But clearly there is some risk for some firms, maybe for many firms, and some version of a threat to the business model. And I think, you know, we always embrace competition, so this is not about saying that we don't want to compete, but it's about avoiding the creation of a parallel ecosystem that has all the same economic properties and risks without appropriate regulation. And so, you know, and the final point to say, I guess, is that, In the end, all of our thinking around this from a customer perspective and from an investment and from a franchise perspective is organized around the question of what actual benefit does the consumer get. So as much as like the technology is cool and there's interesting stuff there, in the end you have to ask yourself, how does this actually make the consumer experience better? And in the cases where it does, you know, we either need to get involved or improve our own service offering. In the case where it doesn't, sometimes it's a little bit of a solution in search of a problem. So I think the question of the risk to existing business models and banking system deposits needs to be looked at through that lens. But it's obviously an important question, and our CCP folks are spending a lot of time on it.

I appreciate that. I have a very short, narrow follow-up. You noted that 1.7 million net new checking accounts opened for the year, and deposit growth is small, but I also noted the 17% growth in client investment assets. Is that all of it, or are there other things at play that's limiting deposit growth despite all this great checking account growth?

Oh, interesting. So, I think what you're saying implicitly is, like, is the reason that growth in checking account balances is relatively muted that sort of investment flows are competing that away in some sense? Good question. I would say partially, but not really. I guess the broader narrative is about sort of a tension between the very robust franchise growth, which you've alluded to with the 1.7 million net new accounts, offset against the resistance, albeit at a much lower level of yield-seeking flows. So, to the extent that you consider flows into investments yield-seeking flows, I think there is a relationship between the two, but I would probably put more traditional yield-seeking flows higher up the list relative to investments, but it's clearly both. And so, yeah, as we talked about over the prior few quarters, like the level of yield-seeking flows dropped off a lot, but it's not zero. And so, as we talked about last quarter, when you combine that with a slightly lower savings rate and a couple of other dynamics, that sort of moment where we were expecting the balance per account number in CCB was to start growing again has just been pushed out a little bit. And so that's the reason, you know, that we talked about previously, I think last quarter, that our expectations for consumer deposit growth in 2026 are lower than they had been in our scenario analysis at Investor Day. And that remains the case.

All right. That was awesome. Thank you. Thanks, Glenn.

Thank you. Our next question comes from Ken with Autonomous. Your line is open.

Thanks. Hi. Good morning. Hey, Jeremy, you mentioned when you were talking about the, you know, the expense outlook that there's obviously, you know, part of the investment cycle there. You mentioned that the revenue growth outlook in there also looks pretty good. I was just wondering, and we can see that in the volume-based parts of the growth, but I'm just wondering, you know, you have your NII outlook. We have your expenses. What parts of the fees are you expecting to be strong? You mentioned some deals pushed out in IB. If you can kind of just help us flavor, you know, kind of understand, like, just where the biggest drivers of fee revenue growth are going to be as you look across the businesses to help us kind of, you know, fill in a little bit. Thank you.

Yeah, good question. So, and I sort of chose my words carefully there because I think there are two versions of this in terms of expenses and investments in terms of, like, short-term versus long-term. So, Narrowly, when you look at 2026, we do show you their volume and revenue-related expense, which what we traditionally describe as good expense, and certainly that is a driver of the overall growth in expenses. We do also note in there that a significant chunk of that is auto lease depreciation, which is, you know, essentially should be thought of as primarily a counter-revenue item or whatever. So, you know, there's some optimism about the fee environment embedded there. To answer your question directly, breaking down 2026, I obviously don't want to kind of break our tradition of not guiding on fees slash NIR given how market dependent they are and volatile they are. But, you know, you won't be surprised to hear that we're obviously optimistic on investment banking fees generally. I would say on markets, we're very optimistic about the franchise and the environment is quite supportive, but it was an exceptionally strong year this year. So, As we always say in markets, the number will be whatever it will be, and we'll fight to make it as big as possible. And on the rest of the kind of fee items, the sort of broad wealth management, asset management across both CCB and AWM, again, you know, we're very optimistic about, you know, the position of the franchise there and the associated implications for fees. But we're a little bit cautious about sort of market appreciation drivers in given kind of where we're launching from and given the type of year that it's been this year. So it's a little bit of a balanced story, I would say, in terms of fee outlook for 2026, not for any particular negative reason, but just because, you know, 2025 was so exceptionally strong. And then just to briefly pivot to the larger point, the distinction I'm drawing to is the relationship between 2026, you know, projected expense growth and the associated 2026 revenues versus the broader category of investments in long-term growth of the franchise, kind of the top bar of the page across, you know, bankers, branches, product capabilities, et cetera, which is also a reflection of optimism, but long-term optimism that, you know, this is a franchise that rewards investment across all of its parts.

Excellent. Thank you for that, Jeremy. And, you know, the follow-up to that balancing act also is I think you guys have been more than fine not counting on positive operating leverage every year. How do you balance where your efficiency ratio versus your ROE outputs are, given that you're still in this, you know, really strong, you know, upper team zone that is obviously still generating tons of capital and allowing you to do a lot with the company?

Yeah, I mean, I guess I would sort of anchor my answer on that one on the word output that you used. So on a couple of dimensions, so if you remember my investor day presentation, we talked a little bit about, you know, the way that we think about capital deployment sort of across the descending stack of marginal return opportunities and the fact that, you know, we will very much deploy large amounts of capital below 17% because the alternative is to buy back stock at implied returns that are much, much, much lower than that. And that's a good thing. We don't apologize for that. And we think it's shareholder accretive. And so for that reason, we really are starting to pivot much more to really discuss the through the cycle ROGCE target as simply an output of like our overall business strategy and the intelligent deployment of our financial resources and our investments across the entire opportunity set. And in some respects, that's also true about the efficiency ratio. You know, in the end, We do what we need to do to compete. We invest what we need to invest to secure the future of the company and to drive the revenue growth that we need to drive. And, you know, as long as what we're doing is still expected to be long-term profitable, in some sense, you know, the efficiency ratio is a bit of an output. Jamie always says that, you know, perennially expanding, you know, the notion of You know, constant operating leverage mathematically implies perennially expanding margins, which is an obvious impossibility in a highly competitive business that we operate in. So it is a good sanity check. You know, when that number drifts high, maybe you have to look a little harder at your expenses and make sure that everything that you're doing is, you know, what you want it to be with the maximum possible efficiency. But we sort of do that all the time anyway. So that's what I would say in response to that.

I would just add that capital is invested to get a good return through the cycle, which means sometimes you have a better efficiency ratio, sometimes you have a worse efficiency ratio. It's kind of more of an outcome of the decisions you make.

100%.

Thanks a lot. Thank you. Our next question comes from John McDonald with Truist Securities. Your line is open.

Thanks. Good morning. I wanted to ask a little bit about the credit card business. I guess first, in terms of the Apple Card acquisition, maybe you could talk about the attraction of that business to you guys, both the actual book and also what you're hoping to get out of the co-brand partnership and the platform more broadly.

Yeah, absolutely. So let me start by pointing out what I think is obvious but is worth saying in light of you know, how much attention this deal has gotten, which is that, as you say, like, from a narrow perspective, just in terms of the portfolio and the transaction, this is, you know, an economically compelling transaction for us as a co-brand deal. And I think someone described it, you know, as a win-win-win for all three parties. And I think that's very much how we feel about it. So that's a good starting point. And then in addition to that, You know, obviously, you're talking here about a partnership with a firm, Apple, that is, you know, a leader in, you know, payments innovation and user experience. And it's obviously like a very compelling distribution channel for Card. And so, it's going to be challenging for us. You know, the integration is going to take two years for a reason. We feel confident that we'll get it done successfully, and I think the process of getting it done in the narrow sense is going to make us better. Just generally accelerate and challenge our, you know, modernization agenda and the user-friendliness of everything that we do in the card business. And beyond that, you know, we'll see. We'll see what comes out of the partnership. But obviously, you know, anyone should be thrilled to be in a partnership with Apple.

Okay, thanks, Jeremy. And then maybe you or Jamie could provide some thoughts on the idea of regulators putting caps on credit card APRs, just potential impacts on the industry and how you would think through strategic reactions as a big issuer.

Yeah, thanks, John. And I appreciate the way you framed the question, because the thing that I am sort of trying to avoid doing is spend a lot of energy or time speculating on the probability that this does or doesn't happen in whatever form it does or doesn't happen. So I think for the purposes of this call, and obviously you can assume that institutionally we'll be doing all the relevant contingency planning, but for the purposes of this call, given how little we know at this point, the way I would prefer to talk about it is just assume for the sake of argument that something in the general mode of price controls on credit card interest rates goes through what would be the consequences of that? And I think the first thing to say, which you obviously know very well, is that the card ecosystem is an exceptionally competitive ecosystem. It's among the most competitive businesses that we operate in. And that's true for all levels of borrower credit score, from high FICO to low FICO. And so, in that context, when you just basic economics, when you start with that as your starting point, you know, the right assumption is about what the response of the system is going to be to the imposition of police controls is not that you will simply compress the profit margins which are already at their sort of competitively optimal level and thereby pass on benefits to consumers. What's actually simply going to happen is that the provision of the service will change dramatically. Specifically, you know, people will lose access to credit like on a very, very extensive and broad basis. especially the people who need it the most, ironically. And so that's a pretty severely negative consequence for consumers and, frankly, probably also a negative consequence for the economy as a whole right now. I don't want to let this pass without saying that I think it should be obvious that that would also be bad for us. I'm not going to get into quantifying, but in a narrow sense, this is a big business for us. It's a very competitive business, but we wouldn't be in it if it weren't a good business for us. And in a world where price controls make it no longer a good business, that would present a significant challenge, clearly. Beyond that, you know, the way we actually respond would have a lot to do with the details, and I just don't think we have enough information at this point.

Okay. Thanks, Jeremy.

Thanks, John.

Thank you. Our next question comes from Betsy Grasick with Morgan Stanley. Your line is open. Hi, good morning.

Okay, so I just want to follow up to the last question is does it impact how you're thinking about the co-brand cards you have, the rewards cards? Because I think one of the media narratives here is that It would impact only revolvers, and I'm wondering if that's a view that you share, or is this an impact on the entirety of the card book?

Look, obviously, it would impact prime less than subprime. It would be traumatic on subprime. And some of the co-brands are a lot of subprime, et cetera. So you really have to go co-brand by co-brand. You would have to adjust your model for the added risk by this and ongoing price control and things like that. So, you know, if it happened the way it was described, it would be dramatic. You know, if it happened in a way which modified quite a bit, it would be less. And we don't know the number yet, but it would be very dramatic if it was just a cap.

And then on the Apple card, two years to bring on. Jeremy, you mentioned, you know, for good reason. Is this primarily a function of the technology that Apple Card was built on, right? Like, so as far as I can, I'm aware, the current offering had a built for purpose technology stack. And I understand, you know, I guess my question is for you, are you building out a whole new technology to enable that same interface with the users of Apple Card? Or are you able to take are you able to enhance your current system to enable the users to come onto your current system? Or is it under a whole new tech stack? Or are there other reasons why it's a two-year process?

There are no other reasons. If it was a traditional credit card thing, we could fold it in rather quickly and just put it in our systems. But it's not. They actually built a completely different integrated into iOS tech stack. And they did a good job. So it's good stuff. But we have to integrate that inside our system. And to do that, it's going to take two years and cost a bit of money to meet the terms and standards. Those terms and standards are actually quite good. We looked at them and said, that's good. Apple wants to take very good care of those customers. And a lot of those things will be built directly into our system. And we could obviously apply some of that customer service stuff in other places and And we want to do it right. And that's all it is. We have to rebuild what their tech stack is embedded into our system.

Excellent. Thank you.

Thanks, Betsy.

Thank you. Our next question comes from Erica Najarian with UBS. Your line is open.

Hi. Good morning. My first question is for Jamie. You know, Jamie, investors were feeling quite optimistic about the the fundamental macro opportunities for the banks in 2026, paired with deregulation, of course. And I think this weekend sort of shook their confidence, given the social media post about credit card rate caps, and of course, additionally, the DOJ subpoenas to Chair Powell. And investors kept saying over the weekend, we can't wait to hear what Jamie has to say about the 2026 outlook. So If you could start there in terms of how you're seeing the macro backdrop unveil in 2026 for the banking industry and how you're considering the risks, whether it's executive overreach or the geopolitical situation at the moment.

Yeah. So I'll answer the question, but I think when you're guessing what the macro environment is going to be, if you ask me in the short run, call it six months and nine months and even a year, You know, it's pretty positive. You know, consumers have money. There's still jobs, even though it's weakened a little bit. There's a huge, there is a lot of stimulus coming from the one big beautiful bill. Deregulation is a plus in general, not just for banks, you know, but they, you know, banks will be able to redeploy capital. But the backdrop is also important, but the timetables are different. Geopolitical is an enormous amount of risk. I don't have to go through each part of it. It's just a big amount of risk. It may or may not be determining the state of the economy. You know, the deficits in the United States and around the world are quite large. We don't know when that's going to bite. It will bite eventually because you can't just keep on borrowing money endlessly. And so, you know, early on fine, you know, who knows? And so, you know, of course, we have to deal with the world we got, not the world we want. And, you know, I've never, you know, we don't guess about the outcome. We serve clients. We serve them left and right. And we'll deal and navigate, you know, with the politics and the issues that we have to deal with around the world and stuff like that, and we're comfortable we can build our business. I do think if you look at things, you know, the rising tide is lifting all boats a little bit. I'm quite conscious of that and how I look at the numbers at least. But it doesn't mean it's not going to, it does not mean it's going to stop this year.

Got it. And my follow-up question is for you, Jeremy. Underneath the, you know, 95 billion of NIIX markets for the year, Could you give us a sense of what kind of balance sheet growth you think is underpinning that? And maybe some commentary on how you're thinking about, you know, deposit growth in, you know, 2026 relative to your earlier commentary about yield-seeking flows and how those statistics would compare to balance sheet growth of 8% in 25 and average deposit growth of 5% in 25.

Sure. So, I mean, not to be pedantic here, Erica, but I'm going to pivot away from balance sheet growth per se and just talk about, you know, loans and deposits, recognizing that, you know, some non-trivial portion of balance sheet growth is coming from inside of markets these days, and the name on that stuff is, you know, variable and also not part of the NIIX markets. But taking a step back in terms of the big sort of balance sheet drivers and, you know, growth and mix drivers of the NIIX, Number one, you know, as the slide says and as I mentioned in my prepared remarks, card loan growth is still a driver. You know, I think we're expecting something like 6% or 7% card loan growth for 2026. So, that is lower than we've seen recently, obviously, but we've been talking about that for some time as a function of the normalization of the revolver account. So, that as a tailwind is largely behind us and what we have now is just Growth from, you know, overall system growth and consumer balance sheet growth as well as our optimism about share and client engagement, customer engagement across the car ecosystem. So that's one important loan driver. On the deposit side, you know, starting with wholesale, 2025 was an exceptionally strong year for wholesale deposit growth. So if we look to 26, we're still pretty optimistic about the wholesale deposit franchise and the payments franchise, you know, products, offerings, customer engagement, growth opportunities, et cetera. But it's going to be tough to beat the 2025 performance in wholesale deposit growth. So we have a more modest expectation for 2026 wholesale deposit growth. And then I touched a little bit on what we're thinking about consumer deposit growth earlier, but just to reiterate, You know, the narrative there is that the balance between what is very robust engagement and franchise success manifested through the 1.7 million net new accounts that were originated this year and the fact that the balances per account are sort of not growing quite as fast as we thought earlier in the year as a function of yield-seeking flows. that are much, much lower than they were at the peak, but are still not exactly zero. So there's a kind of tension between those two things. And at this point, we're sort of expecting that inflection in balance per account to kick in in the second half of 2026, at which point you would start to see kind of a reassertion of the consumer deposit growth, which would get us to, you know, modest deposit growth for CCB in 2026, but certainly lower than that 6% scenario that we talked about at Investor Day, which is stuff we already told you about last quarter and that Marianne has discussed.

Can I ask one more factor, which is the Fed, they don't call it QE, but they're talking about doing $40 billion a month to buying T-bills. That adds $40 billion a month into all things being equal to bank reserves. And most of that initially shows up in wholesale deposits and then maybe gets redeployed. So We'll see how that plays out, too. But it does create more liquidity in the system, which I should have mentioned is another tailwind for the economy. Yeah, no, that's exactly right.

And I think in our sort of crude framework, we, as Jamie says, would initially tend to assume that that growth in system-wide deposits would accrue to extremely high beta wholesale and is therefore not going to tend to be a big driver of the NII story going here, but it's significant in terms of the system and the functioning .

Does that conclude your question, Erica?

Yes, thank you. Yes, thank you.

Thanks, Erica.

Thank you. Our next question comes from Gerard Cassidy with RBC Capital Market. Your line is open.

Good morning, Jeremy. Good morning, Jimmy. Jeremy, thank you for the data on the MBFI portfolio. Can you share with us an expansion? You talked about the growth over the last seven years has been significant, and the drivers of the growth are you know, the market dynamics and regulatory pressures. Can you expand upon that to give us a little more color of, you know, what's behind that?

Yeah. Oh, you want to take that? Go ahead, James. Well, look, it is, we obviously do things that we think are safe and proper and stuff like that, but it is arbitrage. You know, we participate in that. We're better off from regulatory capital holding, you know, a AAA piece of something on top of something else as opposed to doing the direct loan itself. That's what it is. It's also arbitrage between banks and insurance companies, stuff like that, and that means some of that growth. One of the things I always tell the regulators is when you see arbitrage, you should look at it and always ask the question why, and you're better off doing it that way as opposed to another way. Yeah, exactly. There's nothing mystical about the loans that all these MBA bodies are making, and this stuff has been going on for a long period of time. It's just bigger now.

Yeah, exactly. On the point of nothing mystical, my version of that, Gerard, and part of the reason that I chose those words in the prepared remarks is to ask the question, well, like what's the narrative here if you go back in terms of regulation and, you know, competitive dynamics with the private credit ecosystem in particular and what has led to what and how has that all evolved? And I think, you know, it's well understood that in addition to the regulatory capital factors, there were also the leverage lending guidelines, which really did, meaningfully constrain bank lending into this type of space when those were released. And I think there's an argument to say that that, you know, seeded or accelerated the growth of this ecosystem in ways that otherwise might not have happened. But at some level, that is what it is. And I think as we've been talking about for the last couple years, there's no reason that we can't compete head to head in that space. So the whole, you know, direct lending initiative and the realization that in many cases what sponsors want is like a quick execution of a unit front structure where they don't have to negotiate with a syndicate, but other times they want to go through the syndication process. And that's why we really leaned in to this whole product agnostic strategy that we talked about. And at the same time, in the cases where we don't wind up being the lender, yeah, sometimes we're competing with these folks. Sometimes they're our clients. Sometimes they're both. and, you know, done properly as we talk about on the slide, we're very happy, you know, to be lenders to them. So it's all part of a, you know, competitive partner ecosystem and, you know, yeah, we just wanted to frame it out a little bit given all the questions last quarter.

No, that was very helpful. Appreciate it. As a follow-up question, you guys obviously have given us the guidance for NII with and without markets. And when you go back to the markets number in 2024, I think you guys put up about a billion dollars in revenues. You show us 25 at 3.3 and market conditions, of course, will impact your guidance on the 8 billion. But what's the strategy of growing that business from where it was in 24 to where we are today?

Yeah, good question. So a couple of things about this. So number one, broadly speaking, over short periods of time, that markets and AI number is going to fluctuate primarily as a function of rates and is liability sensitive. So, in other words, at higher rates, the number is lower. So, what we saw, if you sort of, and we show the number every quarter, if you plot the evolution of that number as a function of the policy rate, you're going to see that relationship very strongly. It's also true, I've pointed out in different moments, that part of the reason that we de-emphasize it is that if there are particular mixed changes in any given moment, you know, Brazilian futures versus cash or something, you know, high interest rate countries, you can get pretty big swings in the number in ways that have essentially no bottom line impact, which is the reason we de-emphasize the change. But third piece is just that, you know, as has been noted, the market's balance sheet has grown a lot. over time. And so as we extend more financing to clients, the size of this effect gets bigger, which is all the more reason that we find it useful to carve it out and make it clear that in general, short-term fluctuations don't have any bottom line impact. And Jamie wanted to add something.

Yeah, we don't run the business at all trying to grow NII in particular, because we just look at the revenues created by the trade. Sometimes NII, sometimes it's a net revenue. But growing the business is important. We have the best fixed business in the world, one of the best equity businesses in the world. We have extraordinary people around the world. We grow the business by building technology, adding research, adding sales, you know, doing a better job in parts of the world where we don't have a great market share, where someone else is doing better than us. So, you know, if we're going to grow that business, we're quite good at it. It's critical to the capital markets of the world. And, you know, the capital markets of the world are going to grow dramatically over the next 20 years. So, you know, that's how we build a business. NAI is just an outcome. On itself, almost irrelevant.

Very good. Thank you.

Thank you. Our next question comes from Mike Mayo with Wells Fargo Securities. Your line is open.

Hi. I think I get it. Jake Morgan spends for growth. You're getting growth up 7% year-over-year in the fourth quarter, and you're willing to sacrifice returns for more growth, I guess because that increases SBA. But it is a wow, the $9 billion increase in expenses, your guide, year over year. And I get it that some of that is simply because revenues are likely to come in higher than expected. But if we could please have some more details on the rest. This is the first time we have a chance to address that $9 billion increase in expense guide. So maybe some areas. Jeremy, as far as tech spending, I think You went up $17 to $18 billion last year, went up even more after you include the savings that you achieved, and especially since your past peak modernization, where do you expect tech spend to be in 2026? And as it relates to AI, what was your spend last year and where do you expect that to go and what sort of payoffs? And then, Jamie, since you're upping the bar, upping the stakes with the $9 billion of investments, the degree of your confidence that you're going to get the desired returns and outcomes from that. Thank you.

We're not going to give, Mike, we owe you all as shareholders as much information we can give you, but we're not going to give you information which I think puts us at a competitive disadvantage. So we've been quite blunt with you guys. First of all, we try to put everything in there. Everything. So even the Apple spending was in there. Inflation is in there. The expectation that revenues might go up is in there. So if revenues don't go up, that number won't be as big. But for the most part, and tech is going to go up, but the good news is when we look at the world, we see huge opportunity. We're opening rural branches, which we think will be good. We're opening more branches in foreign countries. We're building better payment systems. We're adding better... personalization and consumer banking credit card. We're adding AI across the company, and those are all opportunities. And I understand your issue of concern about the nine billion, but I think you should be saying, if you really believe that they're real, you should be doing that. That's the right way to grow a company. And you look at the complexity of the world, the amount of capital requirements, the SRI initiative, I think that SRI initiative may be far bigger than we thought. And that's in there. You know, you'll be justified by the results, but we're not going to be given, you know, detail on every single thing, every single quarter. And you're going to have to, as part of this, trust me, I'm sorry.

All right. Well, I guess I could probably just leave it there. I do have a couple, a little bit more color if you want, Mike. I would also point out we do have company updates coming, so that's an opportunity to talk in a bit more detail on this. I do think we highlighted, you know, the vast majority of the major thematic drivers on the page, subject to Jamie's caveat about not giving away too much competitive information. Maybe I'll just do one minute of like a little bit of additional context. I think one thing that's notable is that we did do a big kind of living within our means thing last year, and we did that, and we're going to continue to do that. So I think as a company, we still, generally speaking, want to make sure that when someone needs to get something done, whether it's in technology or elsewhere, their first reaction is not hire more people. Having said that, you know, the process of, you know, emphasizing that a little bit more last year did give us some confidence that, you know, we were actually using resources optimally. And now as we look ahead, there's a lot that we want to get done. There's a lot that we need to get done. The Apple card is part of that, but there's other stuff too. And so at the margin, we are allowing ourselves to at least plan for some additional hiring and technology in order to support what Jamie's saying, like the long-term investment initiative, in particular in the businesses, where we need to develop and deliver products and features. And yeah, AI is a little bit of that, but there are other things too. There's maybe one other thing I would say, which I don't think is competitively sensitive and is important, which is that, you know, if you think about what's happened to the headcount of a company over, say, the last five or six years, it's grown a lot. And that happened during, you know, an obviously complicated period. There was the whole return to the office. hot desking, remote work, all the stuff. The end result of that is that the amount of real estate square footage over that period grew a lot more slowly than headcount. And at the same time, as we've decided as a company to be an in-office company, we've realized it's obviously the case that we need to provide employees a reasonable in-office experience. And that, in some cases, means a little bit of desensification and catching up on some space renovations around the world now. We're not just talking about Midtown Manhattan here. For all of our 320,000 employees, they were a little bit overdue. So I would call that a little bit of catch-up to the headcount growth. Jeremy, don't scare them. It's not a big driver. It's a very small number. It's a small number. Okay. But I think it's thematically.

Healthcare is $300 million. Yes. You know, and I just, you can go item by item, but everyone's going to have healthcare inflation, but real estate's a very small number, so we shouldn't. Yeah, I don't want to overemphasize it.

I just thought it was thematically interesting and not, I would say, competitively sensitive. So that's what we got. We may give you a bit more color on that company update.

All right, well, if I could just, yeah, I guess, as you know, for any analyst, it's trust, but verify, right? So if I could just try one follow-up, just what do you, Think about your tech spending or AI spending for 2026.

It's going to go up a bit. But, you know, Mike, we're building more payment systems. We're building more AI systems. We're connecting more branches, which means you have the higher network expenses. You know, we're doing all the things you want us to do. But the tech spend is always one of the harder ones to measure and evaluate. That's been true my whole life. You can imagine we're pretty detailed out of what we're doing, why we're doing it, are we delivering it on time. But there isn't an area where if you dug into it that you wouldn't say, yeah, you've got to be the best in the world in tech. But we spend money on trading. We spend money on payments. We spend money on consumer. We spend money on asset management. We spend money in corporate. We need to have the best tech in the world. That drives innovation. investment. It drives margin. It drives competition. A lot of it is consumer-facing, digital personalization, travel, offers, all these things, which we think are wonderful things. And I like the fact that we have these organic opportunities. I'm looking at it and saying it's a good thing that I can point out that we have in every single area, in every single part of the company, we can grow. In some areas, it's like trench warfare. Think of, you know, certain trading and investment banking. In other areas, we're kind of out front and we want to build the next generation of technology. But, you know, investment, the thing about, you've heard me talk about this before, you know, a lot of businesses, you build a new plant, you know, you capitalize it and then you expense it over to 20 years. And a lot of our businesses, everything gets expensed up front. It doesn't mean it isn't a good return.

And you're spending more on AI?

We will be spending more on AI. I think that AI... We will be spending more, but it is not a big driver. I do think it'll be driving more efficiency down the road. But I also point out about that, you know, efficiency, because other banks have to do it too, will eventually be passed on to the customer. It isn't like you're going to build three points of margin and get to keep it. You don't. You need to build some of these things just to keep up. And, you know, we have, you know, we look at, and we look at all of our competitors, but those competitors include all the fintech. You have Stripe, you have SoFi, you have Revolut, you have You know, you have Schwab. You have everyone out there, and these are good players, and we analyze what they do and how they do it and how we stay out front. And we are going to stay out front, so help us God. We're not going to try to meet some expense target, and then, you know, 10 years from now, you're going to be asking us the question, how did James Moore get left behind?

All right, thanks. You're welcome. Thanks, Mike.

Thank you. Our next question comes from Ibrahim Punawalla with Bank of America. Your line is open.

Hey, good morning. I guess maybe, Jeremy, a quick one to a follow-up on this whole credit card interest rates. I think you said, understandably, this would be very bad for the credit card industry. And J.P. Morgan, given that the President put out a timeline for Jan. 20th, is it fair for us to conclude there's been no communication from the administration to the banks or the industry on how they plan to implement this? And are you expecting anything over the coming days?

Yeah, I guess I just, this has happened so quickly, and there's just so little more of information, at least that I'm aware of, that I just think it's better to not answer those questions. I mean, it's entirely possible that in the last 12 hours, someone's spoken to someone. I don't know, but this is, happening very quickly in a sort of unconventional way, starting with a, you know, social media post. So I understand why you're asking the question, but I just don't have anything for you.

Got it. And just very quickly on capital, when we think about there's more updates coming on GSA, Basel, Endgame, probably over the coming months, when you think about the right level of capital, just in your seat, Do you think 200, 300 basis points of excess capital, wherever the regulatory minimum shakes out, is the right place to be, given all the risks that Jamie talked about, geopolitics, competitive landscape, et cetera? Or do you have a view on where in a perfect world you would want to operate the bank relative to where capital requirements shook out?

Okay. So, I want to be very precise in my answer to your question here, and there are a few pieces to it. So, let's start first with the fact that the rules aren't done yet, and there are some things that are still out there. And that there's, you know, periodically reference to a discussion about the right level of capital for banks or for the system. And our answer to that, which we've said frequently, but I'll just say it again, is that the answer to that question is do every part of the methodology across RWA G-SIB and stress testing correctly supported by data to get the right answer for that individual thing and whatever the sum of those things is for the system, for any individual bank is what it is. And it should very much not be a sort of goal-seeking exercise for some arbitrary number at the level of the system or for large banks or for small banks and certainly not for any given firm. I think the good news is that from what we're hearing and from what we understand, That is, in fact, the direction of travel from the agencies, and so that's encouraging. Let's see what happens. But, you know, in that context, an obvious example that we always talk about but is really just worth saying out loud again is G-SIB where, you know, at some point, you really have to ask yourself, you know, what is the right difference between the amount of capital that we should be required to hold and, you know, for example, a very large American regional bank especially given the, you know, enormous amount of progress that's been made over the last 10 or 15 years on resolvability and all other aspects of the framework. So, I won't give you the long speech about why G-CID is completely poorly conceived. Hopefully, that gets adjusted in a way that's reasonable, but it should be done correctly.

Do you want to jump in, Jim? Hey, look, we're going to end up with 30 or 40 or more billions of dollars of excess capital You know, we have tons of capital. There's no scenario where capital is going to be the issue. I think it's very important that you've got to look across the full spectrum of capital, liquidity, stress testing, and all these things about what can you do to make the system safer. And for a lot of these banks, it's not capital. You know, it's interest rate exposure, or it's liquidity, or it's resolution-related type of stuff. And so, you know, I think there's overly focus in capital and interest. So you're going to get to see as people respond to all the Fed, you know, APRs they put out, MPRs they put out, you know, what people think about capital. But I actually believe, and this is the important fact, that you can make the system with less capital, change liquidity, and make it safer. That's what we should be focusing on. Make it safer so you all don't have to worry about bank failures. And it isn't just capital.

Yeah, very much so. I do want to go back and answer your actual question just for the avoidance of doubt because you talked about kind of the right level of capital for us and where we want to run the company and you referred to like a few hundred basis points. And I think there it's very important to draw the distinction between what we think is the right amount of excess capital for us to carry now, given the risk that we see now in the short to medium term. We obviously have a lot of excess right now relative to basically any portion of final rules. And, you know, that feels more appropriate than ever, I would argue, given, you know, what we see out there in terms of the risks and potential opportunities to deploy in the event of a disruption. There's another version of your question, which is implicitly a question about long-term buffers, and that's what I sort of want to steer away from, because in the end, like, we're going to run the company at the right level of capital, and capital requirements are requirements. There's a larger discussion about buffer usability, so I just want to not leave any doubt about a sort of implicit 300 basis point management buffer, which is very much not the way we're thinking about that.

There should be no buffers And the fact is, these capital numbers are already set to handle maximum stress. That's how they're set.

That was very comprehensive. Thank you both. Thanks, Abraham.

Thank you. Our next question comes from Jim Mitchell with Seaport Global Securities. Your line is open.

Hey, good morning. I just want to ask about loan growth. Jeremy, as you pointed out, a lot of the growth has been driven by NDFI, and cards. But you know, we've seen three rate cuts in September, we have a few more expected deregulation is beginning to have an impact in areas like leverage lending, with more to come. So are you seeing any sort of, I guess, number one, are you seeing any early signs of a broadening out of demand across other categories like traditional CNI, mortgage or auto? And what are your expectations for 26?

Yeah, Jim, so a couple things about that. You know, I did actually hear that it was a pretty busy day in the home lending business on the back of what happened in the mortgage market. So, you know, maybe we'll actually start to see some pickup there. But, you know, obviously, there are still some larger dynamics in the housing market that will be a challenge there. So at a high level, when we look out to 2026, I still think that for CCB, you know, the story is really about card. I think in wholesale, if you set aside sort of markets lending for the sake of argument, I actually think we have what I would describe as a moderately optimistic outlook for loan growth in terms of traditional CNI and CIB. Now, obviously, you don't need to hear my speech about how in CIB, you know, CNI lending is an output, not an input. It's kind of a loss leader, whatever. But still, it does give you some indication of the level of client engagement and optimism maybe in C-suites. And I think the way that outlook of ours is built up for sort of like modest C&I loan growth outside of markets is a combination of sort of a generally optimistic outlook for, you know, frankly, the global corporate environment as a whole, as well as some optimism about our growth and expansion strategies in that space, which are significant and is one of the areas in which we're investing. And, of course, as we acquire new clients, while we don't acquire them for the sake of lending, the new clients often come with loans, and that's very much part of the strategy. So I would say broadly nothing that dramatic as a function of the lower rate environment in particular, but, you know, a modestly optimistic outlook.

Okay. And maybe just a follow-up on credit. We had some more charge-offs this quarter that seemed a little elevated, but NPAs came down in commercial. So just trying to think, what's your view there? Do you feel like with rates coming down and the outlook pretty solid, do you feel like still steady Eddie? Any improvement or any concerns out there on the corporate credit side?

Yeah, good question. I guess a couple nuances there. So the charge-offs this quarter were largely already provisioned, actually, which is part of the reason that we sort of explained the wholesale credit cost narrative through the lens of the net provision, because if you do charge-offs and allowance, it's a little bit non-intuitive. But when you do that and you look at the drivers of the provision, I think it's fair to say that at the margin, and it's a very small margin, I would point out, but It's more negative than positive, meaning downgrades are exceeding upgrades by a little bit, and we did make some, you know, parameter updates to assume slightly higher loss given default in the wholesale lending portfolio, which drove a little bit of an increase in the allowance. So I don't want to make too big a deal out of that stuff. It's pretty small in the scheme of things, and I definitely would not say that we're seeing anything concerning in a broader sense. And also, it's worth noting that when it comes to wholesale charge-offs, you know, the numbers have been running at exceptionally low levels for a long time, as the portfolio has also grown. So, simply bringing that back to slightly more normal through the cycle charge-off rates would still involve some increase in charge-offs. So, in other words, it's a wholesale version of the whole, like, normalization versus deterioration story that we were talking a lot about in card as the cycle normalized, with the caveat being, of course, that in wholesale, things tend to be a lot more lumpy. And, you know, at any given moment, you don't know whether something is idiosyncratic or a sign of a larger trend. But at a high level, I would say nothing that concerning. And it's not particularly, in my mind, driven by rate one way or the other.

Okay, great. Thanks.

Thanks. Oh, by the way, we lost Jamie. He had to go to another meeting, but you saw me for any remaining questions.

Thank you. Our last question will come from Chris McGrady with KBW. Your line is open.

Oh, great. Good morning. Thanks for squeezing me in. Jeremy, my question is on consumer deposit competition as rates come down, and we talked about, you know, loan growth showing some signs of life. I'm interested in your thoughts on incremental competition by market, product, peer, more or less competitive, anything you could add.

Thank you. I mean, that space is always very competitive, I would say, has been, you know, throughout this entire cycle. I'm, I wouldn't, I haven't heard anything recently to change that narrative one way or the other. You know, I mean, I think the larger point, of course, is that all else being equal, With a lower policy rate, you would expect yield-seeking flows to abate even further. Again, they're already at very low levels, but as we discussed previously when talking about the consumer deposit outlook, there's currently a little bit of this sort of standoff between this low level of yield-seeking flows and the pending return to growth of deposits per account. One thing that you might expect on SQL is that when the headline policy rate drops, it incrementally decreases the amount of yield-seeking flow pressure, aside obviously from the direct translation into lower CD rates, which is just . But at a high level, I would say I haven't really heard anything interesting or new beyond the background, ever-present factor of a very competitive marketplace.

Great. Thank you. And then a follow-up on AWM. The flows and margins remain very, very good. I'm interested in your thoughts about sustainability and opportunities for the greatest pieces of growth in the medium term.

Thanks. Yeah. I mean, I think, you know, AWM is one of the businesses where we're investing. You know, I think we've been optimistic there for a long time. We've been investing there for a long time. We've had a bunch of, you know, product innovation in the asset management space that's worked out very well and led to AUM growth. And, yeah, I mean, specifically, you know, obviously hiring advisors and bankers in the private bank has been a source of, you know, it's been very successful and we're continuing to lean in there quite aggressively. That franchise is doing great. Flows have been exceptional, and it's one of our areas of optimism for the future. Great. Thank you.

Thank you. We have no further questions.

Okay. Thanks very much, everyone. See you next quarter.

Thank you all for participating in today's conference. You may disconnect at this time and have a great rest of your day.