JPMorgan Chase & Co. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Financial Results: Fourth quarter net income $13 billion, EPS $4.63, revenue $46.8 billion (+7% year on year). Full-year net income $57.5 billion, EPS $20.18, revenue $185 billion, ROTCE 20%. Balance sheet: standardized CET1 ratio 14.5%, down 30 basis points. Apple Card transaction impacted risk-weighted assets (RWA) with standardized RWA ~$23 billion and advanced RWA ~$110 billion, expected to reduce to ~$30 billion.
• Business Insights: Consumers and small businesses remain resilient; monitored leading indicators with no current deterioration. Debit and credit sales volume up 7% year on year. Full-year franchise growth includes 1.7 million net new checking, 10.4 million new card, and record wealth management households.
• Nonbank Financial Institution Lending: Narrower definition of nonbank financial institution (NVFI) lending excludes subscription lending to private equity funds (~$160 billion exposure). Growth over 7 years due to market dynamics and regulatory pressures. Low loss history since 2018, but mindful of risks associated with potential fraud or deep recession.

Segment Performance

• DCP: Net income of $3.6 billion (or $5.3 billion excluding Apple Card reserve build), revenue $19.4 billion (+6% year on year). Driven by higher net interest income (NII) on card and deposit margin in banking and wealth management. Key highlights include 1.7 million net new checking accounts, 10.4 million new card accounts, and record households in wealth management.
• CIB: Net income $7.3 billion, revenue $19.4 billion (+10% year on year). Higher revenues in markets, payments, and security services. Investment banking fees down 5% year on year due to prior year comparison and deal timing. Markets: fixed income +7%, equities +40%.
• AWM: Net income $1.8 billion, pretax margin 38%, revenue $6.5 billion (+13% year on year). Growth in management fees, net inflows ($52 billion quarter, $29 billion full year), liquidity net inflows ($105 billion quarter, $183 billion full year), and client asset net inflows $553 billion full year.
• Corporate: Net income $3.7 billion, revenue $1.5 billion.

Guidance

• 2026 Outlook: NII excluding markets ~$95 billion, total NII ~$103 billion. Expenses ~$105 billion, aligning with growth opportunities. Card net charge-off rate ~3.4% due to consumer resilience.
• Markets NII: Driven by forward curve (2 rate cuts), offset by loan growth in card and modest deposit growth.
• Expenses: 2026 adjusted expense ~$105 billion, aligning with business opportunities despite competitive environment.

Risks

• Stablecoin Issue: Potential creation of parallel banking system without regulation, risk to bank deposits and business models. Need for consumer benefit assessment.
• Credit Card APR Caps: Imposition could lead to reduced credit access, especially for subprime, impacting industry and JPMorgan.
• Geopolitical and Macro Risks: Large deficits, geopolitical tensions, and potential economic impacts on banking operations.

Question and Answer

Q: Stablecoin issue and impact on banks A: JPMorgan involved in blockchain, Connexus offering, and Coinbase agreement. Concern about parallel banking system without regulation, risk to deposits and business models.

Q: Deposit growth vs investment assets A: Partially due to yield-seeking flows and lower savings rate, delaying consumer deposit growth expected in 2026.

Q: Fee revenue growth expectations A: Optimistic on investment banking, markets, and wealth management fees, but cautious due to strong 2025 performance.

Q: Apple Card acquisition A: Economically compelling, partnership with Apple for innovation and distribution, integration taking 2 years due to different tech stack.

Q: Credit card APR caps impact A: Could lead to reduced credit access, especially subprime, with dramatic impact on industry and JPMorgan, depending on details.

Q: Macro backdrop and risks A: Short-term macro positive, but geopolitical risks, large deficits, and potential economic impacts to navigate.

Q: NII ex markets and balance sheet growth A: Card loan growth and deposit mix drivers, with modest wholesale and consumer deposit growth expected in 2026.

Q: Tech spending and AI A: Tech spending to support growth, including AI for efficiency and competition, with focus on staying ahead of competitors.

Q: Credit card interest rates and communication A: Little communication from administration, focus on contingency planning and potential negative impacts.

Q: Loan growth and credit outlook A: Modest loan growth expected, with cautious credit outlook in corporate lending, but no concerning signs yet.

Q: Consumer deposit competition and AWM growth A: Competitive deposit market, AWM has strong flows and growth due to product innovation and adviser hiring.