JPMorgan Chase & Co. earnings

Management highlights

### Firm-Wide Financial Performance - The firm delivered net income of $16.9 billion, EPS of $6.14, and a return on tangible capital (ROTC) of 23%. Excluding significant items, revenue rose 15% year-on-year. - Expenses totaled $27.3 billion, up 15% year-on-year, driven by volume/revenue-related expenses, front office hiring growth, and labor inflation. - Credit costs totaled $2.5 billion, with net charge-offs of $2.4 billion and a net reserve build of $149 million. - The end-of-quarter standardized Common Tier 1 (CT1) ratio was 14.1%, down 20 basis points quarter-on-quarter. Risk-weighted assets (RWA) increased by approximately $103 billion driven by higher financing activity in markets and traditional lending growth. - The Board approved an increase in the quarterly dividend to $1.65 per share, effective Q3 2026. ### CCB Operational Highlights - Consumers and small businesses remain resilient, with strong spending growth supported by higher tax refunds and a solid labor market despite elevated inflation and gas prices. - Average deposits rose 3% year-on-year and 2% quarter-on-quarter, driven by over 500,000 net new checking accounts added in the quarter. Client investment assets rose 21% year-on-year. - The firm refreshed the Sapphire Preferred card in Q2, following successful product refreshes over the prior 12 months. ### CIB Operational Highlights - The IB deal pipeline remains robust, with current healthy activity encouraging further deal flow, though conversion remains dependent on market conditions. ### AWM Operational Highlights - Performance was driven by higher management fees from higher average market levels, strong net inflows, investment valuation gains, higher loan balances, and increased brokerage activity.

Guidance

- Full year 2026 net interest income excluding markets (NIIX markets) is now guided to ~$96.5 billion, and total net interest income (NII) is guided to ~$105.5 billion, with markets NII now expected to reach ~$9 billion (an upward revision). The upward revision to NIIX markets is driven primarily by higher-than-expected deposit balances across consumer and wholesale segments, with a smaller contribution from slightly higher forecast rates. - Full year 2026 adjusted expenses are now guided to ~$107.5 billion, an upward revision driven by higher volume and revenue-related expenses from stronger-than-expected activity and revenue performance. - The full year 2026 card net charge-off rate is now guided to ~3.2%, reflecting better-than-expected consumer credit performance. - The long-term target of reaching 15% retail deposit market share in the U.S. remains unchanged; the firm expects this to be a natural outcome of ongoing strategy execution, not a forced near-term target.

Segment performance

1. Consumer & Community Banking (CCB): Net income of $5.3 billion, revenue of $20.3 billion, an 8% year-on-year increase. It contributed 33.6% of total firm revenue. Key performance drivers included higher card net interest income (NII) from higher revolving balances, higher operating lease income, and higher auto, asset management, and wealth management fees. 2. Corporate & Investment Bank (CIB): Net income of $9.7 billion, revenue of $24.9 billion, a 27% year-on-year increase. It contributed 41.2% of total firm revenue. Investment banking (IB) fees rose 30% year-on-year with particularly strong equity underwriting performance. Fixed income markets revenue grew 6% year-on-year, while equities markets revenue rose 86% year-on-year driven by dynamic market conditions, strong client flows, and balanced performance across cash and derivative products. 3. Asset & Wealth Management (AWM): Net income of $2 billion, revenue of $6.9 billion, a 19% year-on-year increase, with a 38% pre-tax margin. It contributed 11.4% of total firm revenue. Long-term net inflows reached $50 billion, AUM totaled $5.1 trillion (up 18% year-on-year), and total client assets reached $7.7 trillion (up 19% year-on-year), driven by higher market levels and continued net inflows. 4. Corporate: Net income of $4.2 billion on revenue of $6 billion, including specified significant items. It contributed 9.9% of total firm revenue.

Risks & headwinds

- While current consumer credit performance is better than expected, there is watchlist risk of consumer distress from ongoing elevated inflation and negative real wage growth for some cohorts, with overall consumer performance ultimately tied to labor market resilience. - There is risk of negative convexity in deposit betas at higher rate levels, where accelerating deposit outflows and increased deposit betas could sharply increase funding costs if rates rise meaningfully further. - There has been mild weakening of credit underwriting standards across some market segments, including looser covenants, more aggressive assumptions, and greater rollover/interest rate risk taken by some lenders, particularly in competitive segments like data center lending, which will lead to uneven performance in the next credit cycle. - Current regulatory proposals for Basel III endgame include flawed methodological choices that incorrectly inflate required capital via double-counting of operating and market risk, incorrect G-SIB surcharge calculation, and unfair treatment of short-term wholesale funding, which creates unnecessary capital drag if uncorrected. - While AI will generate efficiency gains, all market participants will benefit from AI, so most efficiency gains will ultimately accrue to customers rather than permanently expanding firm margins. - Elevated market activity and risk-on sentiment in capital markets may not be sustainable, and the exceptional combination of events that drove Q2 2026 equities markets performance is unlikely to repeat.

Analyst Q&A

• Q: An analyst asks about the recent leadership change that appointed two co-presidents and led to the departure of another executive, and if this changes the timetable for CEO succession. /

  A: Dimon clarifies that the board chose to appoint two co-presidents to prepare them for greater leadership responsibilities, and this change does not alter the existing succession timetable. The departing executive chose to retire after learning of the board’s new leadership plan, and there is no hidden agenda or change to the timeline for Dimon’s tenure.

• Q: An analyst asks about the sustainability of the currently very strong IB and markets activity, and how the firm is managing risk in the current risk-on environment. /

  A: Barnum notes that while Q2 results were boosted by some deal pull-forward and large exceptional transactions, the underlying IB pipeline remains robust, and stronger recent activity is attracting more market participants. He adds that the exceptional Q2 equities performance is unlikely to repeat, but the overall market environment remains supportive. The firm is balancing client service with appropriate caution given current complex market dynamics.

• Q: An analyst asks about the drivers of the upward revision to ex-markets NII guidance, and the drivers of the upward revision to markets NII despite higher rates (which typically lower markets NII). /

  A: Barnum explains that most of the upward revision to ex-markets NII comes from higher-than-expected deposit balances across consumer and wholesale segments, with a small contribution from slightly higher forecast rates. For markets NII, the upward revision despite higher rates comes from changes in balance sheet composition, specifically a forecast reduction in non-interest bearing assets that has a larger impact on NII than the rate effect. A small portion of the increase also comes from an internal equity reallocation to CIB that shifts NII from corporate to markets, with no impact on the firm-wide bottom line.

• Q: An analyst asks if the firm could see major efficiency gains from AI that allow for a leaner operating structure, similar to what other companies have announced. /

  A: Dimon confirms that JPMorgan is already using AI for nearly 1,000 use cases across the firm, with 50 high-impact use cases across risk, fraud, marketing, client service, and operations. The firm expects significant efficiency gains from AI, and has already reduced headcount by 30-40% in some discrete areas, with retraining support for affected employees. However, Dimon notes that all competitors will also access AI tools, so most efficiency benefits will ultimately flow to customers rather than permanently expanding the firm’s margins, and dramatic permanent margin expansion should not be expected.

• Q: An analyst asks about the firm’s strategy for share buybacks at current elevated stock prices, and if the firm would rather hold excess capital for a rainy day or pursue organic/inorganic deployment instead. /

  A: Dimon agrees that the firm should buy back less stock at higher prices and more at lower prices, and the firm currently prioritizes deploying excess capital for organic growth across all business lines. The firm sees significant organic growth opportunities across U.S. consumer banking, European digital banking, and global CIB, and is also open to prudent inorganic acquisitions in adjacencies that complement existing businesses. The firm’s core goal is to deploy capital to generate a 17% long-term return, rather than returning excess capital to shareholders for the sake of it.