JPMorgan Chase & Co. (JPM) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed outlook: while strong financial performance and optimistic guidance are highlighted, concerns about the Basel III capital proposal and its potential negative impacts, along with a cautious stance on private credit risks and geopolitical uncertainties, temper the overall sentiment. The lack of clear guidance on certain regulatory issues also adds uncertainty. Given these factors, the stock price is likely to remain stable, resulting in a neutral prediction.
Key Financial Performance
Net Income $16.5 billion, with an EPS of $5.94 and an ROTCE of 23%. This represents an increase year-on-year, driven by higher Markets revenue, higher Asset Management and Investment Banking fees, and higher NII due to balance sheet growth, despite the impact of lower rates.
Revenue $50.5 billion, up 10% year-on-year, primarily driven by higher Markets revenue, higher Asset Management and Investment Banking fees, and higher NII due to balance sheet growth, despite the impact of lower rates.
Expenses $26.9 billion, up 14% year-on-year, largely driven by higher compensation, including revenue-related compensation, growth in front office employees, higher brokerage expense, and distribution fees. The increase also reflects the absence of an FDIC special accrual release in the prior year.
Credit Costs $2.5 billion, with net charge-offs of $2.3 billion and a net reserve build of $191 million.
Standardized CET1 Ratio 14.3%, down 30 basis points versus the prior quarter, as net income was more than offset by capital distributions and higher RWA. RWA increased by $60 billion, primarily driven by the Markets business, reflecting higher client activity, seasonal effects, and higher energy prices.
CCB Net Income $5 billion, with revenue of $19.6 billion, up 7% year-on-year, driven by higher Card NII on higher revolving balances and higher operating lease income in Auto. Average deposits were up 2% year-on-year and quarter-on-quarter, driven by account growth and moderating yield-seeking flows. Client investment assets were up 18% year-on-year, driven by market performance and healthy net inflows. Home Lending originations of $13.7 billion increased 46% year-on-year, predominantly driven by refi performance.
CIB Net Income $9 billion, with revenue of $23.4 billion, up 19% year-on-year, driven by higher revenues across businesses. IB fees were up 28% year-on-year, driven by strong performance across M&A and equity underwriting, partially offset by lower debt underwriting. Fixed income was up 21% year-on-year, and equities were up 17% due to increased client activity.
AWM Net Income $1.8 billion, with a pretax margin of 35%. Revenue of $6.4 billion was up 11% year-on-year, driven by growth in management fees on strong net inflows and higher average market levels, as well as higher brokerage activity. Long-term net inflows were $54 billion, and AUM of $4.8 trillion was up 16% year-on-year. Client assets of $7.1 trillion were up 18% year-on-year, driven by higher market levels and continued net inflows.
Corporate Net Income $699 million, with revenue of $1.2 billion.
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Operating Highlights
Consumer and small business resilience: Consumer spend growth continues above last year's pace, with average deposits up 2% year-on-year and quarter-on-quarter. Client investment assets increased by 18% year-on-year, driven by market performance and healthy net inflows.
Home Lending: Originations of $13.7 billion increased 46% year-on-year, predominantly driven by refinancing performance.
Investment Banking: IB fees were up 28% year-on-year, driven by strong performance in M&A and equity underwriting, partially offset by lower debt underwriting. Fixed income markets revenue increased by 21%, and equities revenue increased by 17% due to higher client activity.
Asset & Wealth Management: Revenue increased by 11% year-on-year, driven by growth in management fees, strong net inflows, and higher average market levels. Long-term net inflows were $54 billion, and AUM increased by 16% year-on-year to $4.8 trillion.
Net Income and Revenue: The firm reported net income of $16.5 billion and revenue of $50.5 billion, up 10% year-on-year, driven by higher Markets revenue, Asset Management, Investment Banking fees, and NII.
Expenses: Expenses increased by 14% year-on-year to $26.9 billion, driven by higher compensation, brokerage expenses, and distribution fees.
Credit Costs: Credit costs were $2.5 billion, including net charge-offs of $2.3 billion and a net reserve build of $191 million.
Capital and Balance Sheet: Standardized CET1 ratio ended at 14.3%, down 30 basis points from the prior quarter due to capital distributions and higher RWA. RWA increased by $60 billion, driven by higher client activity and seasonal effects.
Basel III and G-SIB Proposals: Concerns raised about the impact of Basel III endgame and G-SIB reproposals, which could lead to a $20 billion increase in G-SIB capital by 2028. This may affect international competitiveness and increase the cost of credit for U.S. households and businesses.
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Risk or Challenges
Regulatory Changes: Concerns over the Basel III endgame and G-SIB reproposals, which could lead to increased CET1 capital requirements and higher G-SIB surcharges, potentially impacting international competitiveness and increasing the cost of credit for U.S. households and businesses.
Capital Requirements: Proposed rules could result in a $20 billion increase in G-SIB capital based on the current balance sheet, raising costs and potentially affecting the bank's financial flexibility.
Market Volatility: Developments in the Middle East could impact deal execution and timing in the Investment Banking sector.
Credit Costs: Credit costs of $2.5 billion, including net charge-offs of $2.3 billion and a net reserve build of $191 million, indicating potential challenges in credit quality.
Operational Expenses: Expenses increased by 14% year-on-year, driven by higher compensation, brokerage expenses, and distribution fees, which could pressure profitability.
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Guidance & Outlook
Full Year 2026 Net Interest Income (NII): The company expects NII excluding Markets to be about $95 billion. Total NII is projected to be approximately $103 billion, with market NII decreasing to about $8 billion due to rates, which is expected to be primarily offset in NIR.
Adjusted Expense Outlook for 2026: The adjusted expense outlook remains at approximately $105 billion.
Card Net Charge-Off Rate for 2026: The Card net charge-off rate is expected to remain at approximately 3.4%.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How does JPMorgan view the impact of the AI cash tool on deposit competition?
A:JPMorgan sees the AI cash tool as an early-stage product aimed at helping clients manage their money more easily. While it may increase deposit competition and squeeze margins, the company views it as part of a broader effort to provide value to customers. The tool is currently targeted at a small subset of clients with investments, and its impact is seen as experimental at this stage.
Q:What are JPMorgan's views on the Basel III capital proposal and its potential impacts?
A:JPMorgan is concerned about certain aspects of the Basel III capital proposal, such as RWA inflationary impacts and double counting of risks. The company hopes the rules will not make healthy businesses uneconomic. They highlighted issues like high-yield repo collateral and operational risk calculations as areas needing clarification. While they support addressing double counting, it is not their top priority as progress has been made.
Q:What is JPMorgan's outlook on consumer deposits and interest-bearing deposit costs?
A:JPMorgan expects consumer deposit growth to be in the low to mid-single digits, with some improvement seen recently. Interest-bearing deposit costs are expected to remain stable, with margins staying roughly the same for now. Seasonal factors like tax refunds have contributed to recent growth.
Q:What is JPMorgan's perspective on private credit and its potential risks?
A:JPMorgan does not view private credit as systemic, even in a recession. They believe losses in private credit could be worse than expected during a credit cycle but not systemic. The company is cautious about underwriting and ensures structural protections like conservative advance rates and diversification. They estimate their private credit exposure at around $50 billion.
Q:How does JPMorgan view the resilience of the U.S. consumer and potential risks from higher energy prices?
A:JPMorgan sees the U.S. consumer as resilient, with healthy credit performance and spending patterns. Higher energy prices have not significantly impacted consumer behavior yet. However, they caution that a weaker labor market could affect consumer credit performance.
Q:What is JPMorgan's approach to managing reserves and macroeconomic risks?
A:JPMorgan uses a model-based approach for reserve calculations, incorporating economic forecasts. They did not change scenario weights this quarter, and the weighted average unemployment rate in their allowance calculation decreased slightly. The company maintains a conservative bias in its allowance and will adjust if downside risks materialize.
Q:What is JPMorgan's outlook on loan and deposit growth?
A:JPMorgan expects modest loan growth overall, with stronger growth in the Card segment (around 6%). Wholesale loan growth is driven by markets and acquisition financing. Deposit growth is expected to be less robust than last year, but the core franchise remains strong.
Q:What are JPMorgan's views on AI's risks and opportunities?
A:JPMorgan acknowledges the risks of AI, particularly in cybersecurity, and is actively working to mitigate them. They see significant opportunities in using AI to enhance client services, reduce fraud, and create new business adjacencies. However, they caution against expecting AI to significantly improve efficiency ratios due to competitive dynamics.
Q:How does JPMorgan view the trading business and its recent performance?
A:JPMorgan attributes strong trading performance to excellent execution, client service, and increased market volumes and volatility. They emphasize the importance of serving clients and managing risks effectively. The company has been deploying more capital in trading, achieving healthy returns.
Q:What is JPMorgan's approach to capital management and deployment?
A:JPMorgan prefers to deploy capital in serving clients and building businesses rather than focusing solely on buybacks. They see significant opportunities in areas like infrastructure and global banking. The company is also exploring ways to optimize capital usage in light of regulatory requirements.
Q:What is JPMorgan's perspective on Investment Banking activity and pipeline?
A:JPMorgan sees the Investment Banking pipeline as resilient, with activity holding up well despite geopolitical uncertainties. Accelerated deal closures contributed to strong performance this quarter. They remain cautious about potential impacts on sentiment if geopolitical risks escalate.
Q:How does JPMorgan view the impact of higher-for-longer interest rates on credit markets?
A:JPMorgan believes higher-for-longer interest rates could stress leveraged companies during refinancing, leading to a more challenging credit cycle. They emphasize the importance of disciplined underwriting and are prepared for potential recessionary impacts.
Q:What is JPMorgan's stance on stablecoins and digital assets?
A:JPMorgan is actively innovating in payments and digital assets, offering features like programmable money and tokenized deposits. They support regulatory clarity and emphasize that stablecoins should be regulated similarly to traditional banking products to avoid arbitrage.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer to the question about the removal of double counting in the Basel III capital proposal. They acknowledged the issue but provided vague and unclear responses about its potential impact on the bank.
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Earnings Word Cloud
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employee brokerage
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JPM Transcript
JPMorgan Chase & Co. (JPM) Q1 2026 Earnings Call Transcript
Unknown4-14
The earnings call presents a mixed outlook: while strong financial performance and optimistic guidance are highlighted, concerns about the Basel III capital proposal and its potential negative impacts, along with a cautious stance on private credit risks and geopolitical uncertainties, temper the overall sentiment. The lack of clear guidance on certain regulatory issues also adds uncertainty. Given these factors, the stock price is likely to remain stable, resulting in a neutral prediction.
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JPM Slides
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Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
