Hey, guys. So welcome back, welcome back. We have the charismatic CFO of JPMorgan.
Good morning.
Jeremy Barnum joining us. Welcome.
Thank you. Happy to be here.
Absolutely. So let's just stop, or rather start, at the top of the house. We're not stopping in. There's been some organizational changes to start the year, with Daniel, Jen, and Doug's roles all changing. Maybe talk to us about what this implies for how the company is run. And what does Jen's statement about not wanting to be considered CEO for now imply, if anything, about succession timing?
Yeah, sure. So let me start by talking a little bit about Daniel. So I think the good news about Daniel's announced retirement is that he's actually going to be around with us for a while. So we're still going to benefit from his counsel and his wisdom. But for me personally, just to say that he's been a critical figure in the kind of second half of my career. I've learned a lot from him. He's been a big supporter of mine. And I'm personally going to miss him when he does eventually finish retiring.
I think as a firm, we've really benefited from some particular strengths that he has: the clarity of his thinking, his grace under pressure, his sort of level-headedness, the depth of his insight, his deep experience in markets all around the world, which are kind of an essential factor, feature, differentiating feature of our franchise, so he will definitely be missed. With respect to Jen, she's actually speaking at a dueling conference today, so I will let her speak for herself on that front, but I think more importantly, going back to your question generally in terms of what it means for the company and for succession, the answer is not much different, ultimately. I think, obviously, we talk a lot about the depth of the talent, the depth of the bench, and obviously, we're well aware as a company, given who we are.
I think this is true for any company. But I think for a company like ours, it's particularly important. And I think for a company like ours, with a CEO like Jamie, it's particularly important to have succession be an essential aspect and an essential strategic priority of how the company is run. That's obviously a top priority of the boards. And I'm not on the inside of those discussions. But my impression from the outside is that the level of focus and thoroughness and discipline with which the board is thinking about questions of succession is as high as ever. And so it is, on the one hand, some significant changes with some important people. And again, we will certainly miss Daniel's input when he eventually retires. But at the same time, we have a very deep and strong bench.
The focus on succession is as clear and as strong as ever.
So, just pivoting topics a little bit. If we could dig into your favorite topic, net interest income. You did.
What did you mean, net interest income ex- markets?
That too. So your net interest income guide of $90 billion ex-markets and $94 billion firm-wide, are you still expecting a mid-year trough at this point, Jeremy? And assuming one cut mid-year, what does your exit run rate look like?
Yeah. So broadly here, there's not much change from what I said at earnings. So if you recall, we have some cuts at the end of 2024, annualizing into 2025. And I think at the time of earnings, we had roughly one cut in the curve. It's about the same, maybe. I haven't checked this morning, but one or two cuts, roughly. Not a lot different. And so we've got a little bit of a headwind from those cuts in the results for the first half of the year. And then as we see sort of robust, maybe not robust, but as we see deposit growth sort of reasserting itself as a function of various factors, as well as loan growth and so on, that kind of takes over in the second half of the year. And so the sort of trough narrative is essentially still in place.
Really no meaningful change there. Obviously, super sensitive to all the assumptions, in particular to the trajectory of the policy rate. But again, with those taken as a given for the sake of argument, that is kind of the central case. And then if it changes, it changes. In terms of your point about the exit rate, I think one way to think about this is that at our size, we kind of round to the nearest $500 million. So if you kind of think about it on a quarterly basis, we wouldn't be talking about a trough narrative unless the fourth quarter NII was going to be at least $500 million higher than some other number. And so if you multiply $500 million times four, you get kind of $2 billion of run rate difference.
So I don't want to get into formally guiding on quarterly exit rates, even though I know that that's a useful way to look at the world. Just because if you think about it, even something like card late fee, depending on how that does or doesn't come through, those types of items can be kind of lumpy in any given quarter. And the annualized effect of that can be kind of big. But just for context, that's kind of one way to think about it from an exit rate perspective.
That's helpful. Thank you. What's not helpful is I was not approved for a stage rabbit. I think that last.
You had to have that reviewed by PETA for the ethical treatment of animals and funding.
Absolutely, so we could not.
I could not.
I could not pull a rabbit out of the hat during the NII discussion. So I apologize for that. But I made that joke because they made the same joke last year about JPMorgan pulling NII rabbits out of a hat. So let's just maybe go back to your 2024 NII outlook, because it did change materially throughout the year. So how much of that change was due to the change in the rate outlook versus changes in your own assumptions on how the balance sheet would react?
Yeah.
Where were you guys most off on your assumption?
Yeah, and it's funny. The rabbit out of the hat theme carries with it the implication that we sort of did something different to generate that result, but in reality, as you're kind of hinting, it was primarily passive effects, ultimately, so let's sort of break it down. I think the biggest single factor was the yield curve. We remain relatively sensitive to that. We certainly were last year, and we still are now, and so I think at the time that we originally gave the guide, we had something like six cuts, and then we wound up seeing four cuts. And the timing of the cuts was a little bit different, so all in, I think the difference between our originally assumed average IORB for the full year and what eventually materialized was something like 40 basis points.
So all else equal, if you use the EAR as your kind of estimation method, and we obviously always caution you against taking that too seriously. But as a starting point, you can use the disclosed EAR. You can gross it up a little bit for some of what we've discussed about the kind of empirical EAR and betas being a little bit lower than modeled betas, et cetera, et cetera. You would probably conclude that just based on that 40 basis points difference in IORB, the realized NII X market should have been $1 billion or $1.5 billion higher. So then what's the rest? So another important piece of the rest is what happened to deposit rate paid.
So in other words, essentially, the marginal beta on that extra 40 basis points was quite a bit lower than we would have otherwise assumed and what's embedded in the EAR assumption. In other words, the deposit franchise outperformed contingent on the level of rates. And then on the rest of the balance sheet, in terms of balances, both on the asset and the liability side, the net of loan growth and deposit growth was probably a slight tailwind at the margin contributing to the difference. But broadly, it's about rate sensitivity and the performance of the deposit franchise, which was the biggest driver of the difference. And obviously, I talked about passive effects. Obviously, the Fed is clearly a passive effect.
I think the performance of the deposit franchise is a testament to the strength of the franchise that's been built and the resilience of that, which has been a theme for some time now.
So speaking of the deposit franchise and going back to looking forward, what kind of deposit growth and beta is implied in your 2025 outlook?
Yeah. So maybe we can take a step back and just look at the system for a second. So it's been an interesting kind of six or nine months where we've actually seen more system-wide deposit growth than you might have otherwise thought you would get in a world where you still have QT as a headwind. And I think part of that is explained by significant draining of RRP, as well as modest loan growth in the system. So from here, what do we have? So we still have QT continuing, albeit I think Fed minutes have it ending maybe the taper finishing in the middle of the year. Some people think it'll be a little longer. But at some point, that will get removed as a headwind. At the same time, RRP is currently fairly well drained.
So that may be less of a tailwind to system-wide deposits at the margin, although there could be some tax season effects there. So we'll see how that plays out. We also are back into debt ceiling mode. And that brings the whole TGA angle into it. So if TGA needs to get drawn on because of debt ceiling dynamics, that could actually temporarily contribute to system-wide deposit growth and could conceivably bridge the absence of RRP supplying deposits until the end of QT. So you've got some different moving parts that could interact in different ways. And then generally, even though I would say loan growth generally remains relatively modest, we are in a slightly more enthusiastic moment, I guess, and generally in the business world. And so you might see loan growth has a little bit of a tailwind to system-wide deposits, all else equal.
We'll see how all of that comes together. But I think there's a credible thesis for modest deposit growth from here, as we talked about at earnings. And then in terms of betas and pricing, I'm not going to get into broad statements about pricing, as we always say. Our deposit pricing is fundamentally driven by the competitive environment. But I think what we've seen looking back is that the sort of yield-seeking flows in our deposit franchise have definitely abated. We'll see if that remains the case. But all else equal, we kind of feel like our strategy has played out relatively well.
And so in the absence of indicators that we need to do something different competitively to continue executing on our strategy of preserving and protecting primary bank relationships, we would imagine that the approach would be similar to what it's been in the past.
And just a follow-up to this. Did higher for longer impact at all, you think, any of the dynamics that you laid out? And specifically to JPMorgan, it's been a while since investors have seen a neutral rate of not zero. How should we think about your neutral cost of deposits with a higher neutral rate?
Yeah. It's a really good question. And it's something we're thinking about too. I personally kind of was not thinking that we were going to see a yield curve that implied a policy rate at 4% or above for all 10 years of whatever. It was all like, oh, when are the cuts going to start, the inversion, whatever. When are we getting back to 2.5%? And now the answer is, apparently, according to the forwards, not at any point in the foreseeable future. So that does change a little bit how we think about what the deposit franchise looks like in that kind of sustainable fashion. Marianne's talked a little bit about this.
We had said that if you look at the number that we disclosed in the CCB segment, the CCB deposit margin number, which obviously includes the FTP and the benefit, the liquidity value of those deposits, that that number we had thought sustainably was something like 2.25%. But what's interesting is that that 2.25% number was a number that we kind of believed in the context of a 2.5% policy rate. So it's kind of like if the new normal policy rate is something more like 4%, then the question is, OK, on that extra 150 basis points of policy rate, what is the marginal beta for the consumer deposit franchise? And we don't really know the answer to that question, kind of like on a sustainable through-the-cycle basis. But it's probably not 100%.
In other words, it's probably not the case that the incremental cost of deposits between 2.5% and 4% policy rate is 150 basis points.
Right. Yeah.
So yeah, all else equal, that does suggest maybe a slightly higher margin on a slightly more sustainable basis. But it's a very competitive market. And there's a lot of things that can change. And so we do always keep that in mind, very much in the front of our mind.
Switching topics, your expenses have continued to increase. And as per usual, JPMorgan has invested back in the business. That said, you did strike a slightly different but notable tone on your last earnings call, expressing a desire to, quote, "live within your means." What does that mean for you guys? And why the change in tone, especially given your material level of excess capital?
Yeah. So there's not some big dramatic thing here. I see it mostly as a housekeeping issue. But let me start by saying that this really has nothing to do with the excess capital. This is fundamentally just about expenses as defined. In that context, a few things. So obviously, we are going to continue investing in all the areas that we've talked a lot about investing. And in particular, in the areas I think I was on stage here, I want to say like three years ago or something, where we kind of laid out a little bit of our thinking about expenses in terms of shorter term, medium term, longer term, higher confidence, housekeeping, more kind of like long-term skunk works style projects or whatever. So the category of stuff where you invest money, and with near certainty, you get revenues associated with that.
It's kind of the obvious categories that you all know. It's building out branches, hiring advisors, hiring bankers, et cetera. That stuff, full steam ahead, we're still doing it, no question. Elsewhere, what we've kind of said is if you take a step back and you look at the headcount growth that we've had as a company, going back to, say, 2019, for the sake of argument, I think it's something like we've added 60,000 heads as a company. Now, that was for very good reasons. Some of it was acquisitions. Some of it was healthy growth in new areas that we telegraphed. Some of it was directly volume related, all good stuff, and all directly contributing to the strong current performance.
But at the same time, whenever you add that many people into a complex organization in a complex environment, I don't know, five years is not that short a period of time. But it's a lot of people. And it was also an unusual time. We had the pandemic during that period. So you have to believe a priori that some amount of inefficiency is introduced in that process. And in that context, we think it's kind of healthy to say to people, you know what? Let's just take a breather. It's not some radical thing. It's not some big austerity measure. It's simply saying, all else equal, you've got a bunch of resources. You've got some things you need to get done.
Instead of having the response to any new thing that you need to get done, be it to hire more people, try to get it done with the people you have by either being incrementally more productive or reprioritizing or being creative in some way. And so that's kind of what we're doing. And there are some obvious exceptions to it. Obviously, we're not going to compromise safety and soundness. Obviously, if the second line of defense needs resources to comply with fortress principles, they're always going to get to do that, cyber, whatever it is. So no one should misinterpret this as us taking any risk on the core operating principles of the company. But it's, at the margin, a statement of, let's take a breath and optimize what we have for some period of time.
So you referenced how you talked about expenses in the past. You've also mentioned market share opportunities as one allocation for investment spend. Could you maybe detail where you think the yellow and red market share areas are that you've identified? And are they spread across your businesses? Or do other businesses have more of an emergent need for investment spend?
Yeah. I mean, I don't think anything is emergent from our perspective. This is stuff that we've talked about for some time and is core to kind of how we run the company. I think many years ago in the CIB, Daniel coined the notion of, look, we're big, we're broad, we're complete, we're diversified, we're at scale. And part of what that means is that when you look at our share positions in aggregate, they tend to be kind of bright green on the kind of red, green, amber scorecard. But while a lot of that speaks to real accomplishments and strength of the franchise and actual excellence, in some cases, it just reflects the benefits of size and aggregation.
And so if we're really going to be hard on ourselves and really find new opportunities to grow, we've got to go one level down, two levels down, three levels down, and look for the kind of reds and ambers behind the greens, as he always said. So we do that everywhere. And there are different dynamics in different parts of the company. So if we start with consumer, for example, consumer is a very green franchise overall. We obviously have excellent deposit share positions, excellent card business, excellent business banking across the board. But even there, you've got some nuances. As you well know, when it comes to the consumer deposit franchise, we've been expanding in new markets. Those markets aren't fully seasoned.
And therefore, as you go underneath the covers, you have a lot of places where our share is much lower than our national average, where we see no reason why we can't take share there and have that contribute to growing the overall share of the deposit franchise even more. The card business is obviously a fantastic market-leading franchise. But we're doing new stuff in Connected Commerce, engagement, new opportunities. So there's a lot going on there as we continue trying to compete in what is, in fact, a very competitive market. And then obviously, the heavily discussed wealth management opportunity, where when you think of who we are as a company, the capabilities that we have, the brand, the footprint, the nature of our relationships with all the households in the United States, we are quite underpenetrated in that kind of affluent wealth management space.
We know it's a tough business, but the strategy is working and starting to pay dividends, and so we're quite confident that that is a place that rewards investment. If you sort of move to the asset and wealth management space, kind of similarly, but from a different point of maturity, our private banking franchise is a fantastic franchise that offers an amazing value proposition, and we've seen that as we add advisors to there, that gets and private bankers, that pays off, that gets rewarded, so that's another area of investment. In asset management, there's a lot of different initiatives going on, but actually, we think that the private capital stuff that we do, if you think about it through the lens of infrastructure or real estate, is arguably sort of underdiscussed in a world where everyone's talking about private credit these days.
But there's probably more stuff that we can and should be doing there, so that's an area. And then in the CIB, I'm always a little bit reluctant to go into too much detail on the CIB because the reds and the ambers in investment banking or in trading are often quite granular and often potentially involve hiring specific human beings to do specific things in specific geographies or sectors. And I don't want to telegraph that to the world. But that's BAU. It's discipline, and we want to continue doing it. And then you know well, the other investment areas in the CIB, international expansion in the sort of smaller corporate segment is a priority.
The payments and custody and fund services franchises, we continue to invest a lot in product development and technology there, as well as some geographical expansion potentially in payments and so on and so forth. So in reality, a pretty consistent theme in terms of investment areas to continue growing from a position of strength.
Is it easy to distill everything that you said into a singular statement on whether or not JPMorgan is focusing more on balance sheet-light businesses versus balance sheet intensive?
It's a good question. And I know we've sort of talked about that in the past in terms of, oh, in a world where the math is that you get disproportionately punished, to be provocative in a somewhat non-linear way, for certain types of balance sheet intensive growth as a result of the construct of the GSIB surcharge, then at the margin, maybe it makes sense to go a little bit balance sheet light. And we've said that, and we've done that in some pockets. But at the same time, when you take a step back, we're a bank. And we're in the business of using our balance sheet to support our clients. That is the core business in many parts of the franchise. And so I would describe this as an all of the above strategy.
I think there's a good manifestation of that as we look at the whole question of private credit in the CIB. There's a range of offerings there for clients that involve different levels of capital commitment, from no capital commitment to short-term capital commitment to long-term capital commitment. Our approach to that is to be completely product agnostic and capital deployment agnostic, obviously subject to earning the right returns, and focus on giving clients the best advice about what suits them, or if they have their own strong opinion, delivering the best execution for the solution that they want. We're very committed to kind of a product agnostic strategy there.
I think that's a good sort of proof point of the notion that when it comes to balance sheet light versus balance sheet heavy, again, subject to being rational about the use of the balance sheet, it's an all of the above approach.
I wanted to double-click on one of the investments that you mentioned, payments. What has JPMorgan gotten right here, and what do you think it could do better? I know it's a big focus for you guys, and I'm sure you want to accelerate your place in the ecosystem, so let's discuss this.
Yeah, so I don't know. Sometimes I get told that I err too much on the side of being self-flagellating. So we don't want to overdo that when we look backwards, and I think if you sort of just zoom out, take a step back, and look objectively at the state of the payments franchise, both the outlook and the history, it's a great story. It's an amazing story. We've grown a ton of share, and we made a specific decision about this business some time ago. It was sort of a very profitable business that involves a big installed base and very sticky, a lot of legacy infrastructure. It's well known what type of business this is, and when you've got those types of businesses, modernizing the technology and investing in new product development is hard. It's expensive. It's difficult. It's distracting.
You're not necessarily going to see the payoffs in the near term. Of course, the risk is that if you don't do that, you're basically just milking this thing while it kind of deteriorates over time and accumulates more and more and more and more technical debt until eventually you have a problem. We decided to kind of aggressively fight that and invest a lot in both modernizing the ecosystem and in product innovation and new stuff, et cetera, et cetera. When we sort of look at that in hindsight, I think we're extremely happy and confident that we kind of made the choices that we did in terms of modernization and kind of leaning into the technology agenda here. In terms of the innovation stuff, it kind of, as you would expect, fits into multiple buckets.
Some stuff has been just great through every conceivable dimension. Other things have been great branding, great relationship building, important learning experiences for us, not so much bottom line impact, but nice for the overall halo of the business. And of course, as you would expect, some stuff that we've done has been less than perfect. And you should be very skeptical of us if we claimed otherwise. But I think as we sort of look both backwards and forwards, this franchise is really one that we're quite excited about. And we feel good about what's in front of us.
Great. Perhaps you could give us an update on tech expenses. What's the 2025 number for tech expenses? What's driving that growth?
Yeah. Yeah. So I think we had said that 2024 was going to be something like $17 billion. And I think we wound up coming in a little bit under that, largely because we made some kind of tactical decisions about delaying hardware refreshes because of new generation of chips, which was going to give us a better sort of density and performance, price performance, value proposition, et cetera. So that resulted in sort of lower expense in 2024. And some of that gets pushed into 2025. So it's basically just timing. And that is one of the drivers. The rest of it, I would say, broadly is kind of like inflation and some amount of volumes, actually. Tech also has a volume component. And in a world where we're growing, we have volume-related tech expense.
Tech is one of the areas where we're kind of asking people to live within their means at the margin. There are going to be things that we kind of need to do no matter what, and that may involve some additional expense, but I think one thing that's true is we've said in the past that we'd probably reached peak modernization. Now, a little bit of a controversial point because we're always going to be modernizing, we always have, and we always will, but I do think there was sort of a moment where there was a lot of public cloud stuff, data center stuff, and there was a little bit of a bubble focus, and that remains a huge focus for us, and it's still kind of a top priority.
But we're probably past the peak, which at the margin means that we create a little bit of capacity for the teams to shift their focus on products and features and things that aren't kind of tech for tech and so on. And that is one of the things that hopefully enables us to do a little bit more of the living within our means type stuff.
I wanted to switch topics on the consumer, of which you have a very good lens. We heard a lot yesterday from the monoline card companies on the health of the consumer and spending. And we'll be hearing from Capital One later today. What is your view on consumer health?
Yeah. As you know, obviously, I get this question essentially almost every earnings call. And I guess it's good, although less interesting for you guys, that the story just hasn't changed and remains, frankly, kind of boring, at least from our perspective, at least in the context of our consumer credit franchise. So fundamentally, charge-off rates, early roll rates, growth and revolving balances, cash buffers with consumers, all of that stuff is all kind of in line with our expectations and consistent with the consumer, who's fine. It's obviously not boomy, but it's fine. And the way I increasingly think about it is that as much as you kind of try to look around the corner and try to find interesting stuff or early warning signals, fundamentally, consumer credit, at least in our franchise, is about the unemployment rate.
In a world where the labor market is as strong as it is, the base case for consumer credit has to be solid until something changes. That is definitely the case for us right now.
We've talked a lot about normalized card growth. Hasn't quite happened yet in terms of what is typically defined as normal for the industry. What is your definition of normalized card growth, especially in context of a business where you've been heavily investing?
Yeah. Yeah. So we looked at this a little bit. I mean, obviously, last year, we had something like 12% card loan growth, which was definitely not normal. And so it does lead to the question, what is normal? So we looked at what we experienced kind of pre-pandemic. And that number was something like six%. So when you look at this year, we definitely don't expect, and we talked about this at earnings, we don't expect the same level of growth that we had last year. But it still should be above that kind of "normal" rate pre-pandemic. Going forward, what does normal mean? Who knows? I mean, I sort of alluded to this a little bit before. But it's a very competitive business. We're going to invest to preserve and grow share. You do also have probably card growing as a share of the economy.
There's a share of method of payment or whatever. There's a share nexus for us versus our competitors. There's a share of card as a percentage of the economy. We'll see what that looks like. The other thing is when you compare with the past, we had a pretty different strategy in card. Like six or seven years ago, there was a lot of balance transfer and stuff like that. We did a pretty significant pivot to our current strategy, which is very engagement-focused. We talked before about our investment and Connected Commerce and so on, which is all part of that strategy. Some significant part of the investment was associated with that pivot. As we go forward, we're going to continue leaning in hard to that. We're enthusiastic and excited about the prospects.
We'll see how it plays out from the growth perspective.
Here's a tough one. What's it going to take to revitalize the housing market?
Yeah. Lower rates, cheaper houses.
More houses, more of them.
More of them so that they're cheaper. Yeah. I mean, honestly, it's not complicated. Obviously, at this level of rates, the refi market is essentially nonexistent. And it's going to take significantly lower rates for that to change, given what the average coupon is out there. And yeah, we've got a housing shortage in this country. And affordability is not great. So that also means that the purchase market is also somewhat constrained. So between the lock-in effects, sort of relatively affordability challenges, and high rates, it's a challenging moment for housing. But we're still running that franchise, trying to be there to get people in homes, and trying to make it as efficient as possible and getting ready for the next cycle, so.
So I wanted to go into one of your favorite rabbit holes, regulation or.
This is a recurring rabbit theme here.
I know. Or I'll find something else for next year. In this administration, deregulation. So maybe talk broadly about maybe what you expect, how the new administration would impact future capital and liquidity requirements. And of course, supervisory practice is very important. And if you could give us your latest thoughts on there are clearly headlines on the DFAST in terms of the lawsuit and the Fed's own press release and some language and the parameters that they released in the stress test. So any insight on SCB and your favorite topic, G-SIB?
Right. So I'm sorry to disappoint you, but actually, the clock says six minutes and 15 seconds, and I think there's a version of the world where I spend the next half an hour speculating about all different ways that this could play out, and I think that, A, we don't have time, and B, importantly, I actually don't think it would be particularly productive. Because in truth, I mean, obviously, we're all looking at this very closely. Everyone's talking about it. It's not just banking. It's everything. It's all over the press every day. It's a shock and awe moment, and everyone is processing a lot very quickly, and that sort of therefore, it's tempting to spend a lot of time speculating about all the different ways that it could play out, but the truth, at least from my perspective, I just don't think we know anything.
Or to be more specific, I don't think I know anything that you don't know or that the audience doesn't know. We just don't know. And so we're going to have to see how it plays out. But we can maybe mark ourselves to market a little bit with some facts. So first of all, okay, new administration, we know that there's a strong bias in favor of pro-growth agenda. And at the margin, a strong bias against the administrative state broadly. Fine. We've seen, obviously, some appointments starting to get filled in. So they say personnel is policy. So we'll see how the different people in different jobs, what their priorities are. Of course, we've seen sort of the instructions that the CFPB has received. So we'll see what the implications of that are.
And in the end, from our perspective, we've been pretty clear about what we think is important. And I'll say it again. We want balanced, coherent regulation that is not reflexively anti-bank and that allows banks to play their appropriate role supporting the economy and supporting growth in the economy without in any way conflicting with the safety and soundness of the system. And things should be evaluated holistically and not sort of in this kind of death by a thousand cuts, increasing complexity every time you get a new rulemaking. So that is our core view about what we would like. It certainly seems like in the current moment, the chances of progress in that direction are higher than they were. And in the end, we've always said we will always work constructively with whoever is in power to further those goals. That was true in previous administrations.
And it will be true in this administration. Now, having said that, to your second part of your question around CCAR and DFAST, so yeah, we also have some new facts there. So just sort of quickly trying to do this efficiently. So the lawsuit, as you know, that was mostly just about preserving rights in the context of a statute of limitations. So let's hope that we see enough progress there that that progresses in a good direction sort of independently of the lawsuit. We see some evidence of that progress in the latest releases. So we have private equity moving out of the GMS into the MEV modeling, some slightly increased transparency. And I think just in the normal course, just because of difference in launch points, you have arguably a slightly milder scenario this year. I'm not sure how material that difference is.
I would just remind you, though, we talked about this before publicly, that there was a little bit of this data issue on some of the OCI stuff for us last year, and so we would have expected our SCB to be higher than it actually was. That wound up not getting changed, but it does look to us, based on the instructions and the templates, that that got sorted out this year, so all else equal, we would expect a headwind from that effect getting tidied up in our SCB this year. In the end, obviously, given the amount of excess capital that we have, it sort of didn't particularly matter last year, and it may not matter that much in this cycle either, but yeah, that's sort of the state of play there, and I guess you asked me about GSIB.
I think the GSIB thing goes back to the other point about we just don't know how things are going to play out. We had Basel III Endgame, new version, didn't get released, and now new administration, new personnel, GSIB rule. Is it going to get done holistically? Are they going to take some stuff off the table? The re-proposal on GSIB was a step in the right direction, but we still think more needs to be done there, so we're just going to have to wait and see.
So, two more questions. I'm going to get them both in. Talk about excess capital. You've mentioned, Jeremy, at the last earnings call about arresting capital growth if no opportunities arose. How has the bar for evaluating opportunities moved since your share price, given your share price and your previous very public reluctance to buy back stock?
Yeah. In the end, when you go back to where we were, it's worth remembering a lot has changed. So at the time, we had the original version of Basel III Endgame, a lot of extra capital required, some potential downside scenarios, a lot of economic uncertainty at the time, a lot of questions about what type of landing we were going to have, what type of recession we were going to have. And the stock price was such that it didn't neither that nor organic deployment at the time. It just, we talked at the time, not particularly compelling opportunities. We've always said whenever there's new rules, we're going to comply early. And so from that perspective, at the time, it made sense to, at the margin, retain capital and start accumulating the buffer that we thought we were going to need, as we always have, essentially. So yeah.
And we made some comments that, yeah, all else equal, deployment into buybacks doesn't look amazing right now. And in any case, we have other priorities. Fine. Now the world is very different. So economic situation, we got through that period of cuspiness. And to, I think, almost everyone's surprise, we had very much of a no landing. And now we sort of see modest growth into the future. And obviously, Basel III Endgame went from worst-case scenario to dialed-back scenario, but still kind of punchy, to nothing, to who knows. And in the meantime, we've generated a whole bunch of capital. So now, obviously, the stock is a lot higher. So it goes. But the capital hierarchy still applies. And buybacks are at the bottom of the list. But in a moment where we have enough excess, we're going to sort of follow the hierarchy and do our thing.
In the end, the current excess is still only something like 10% of the market cap of the company. We still think there may be opportunities to deploy it organically in interesting ways. We're, of course, going to remain disciplined about how we do that. And we'll see.
The base keeps going up. So that's good, right, in terms of the market cap. Final question, Jeremy. Previously, you've indicated that 2025 would be a year of rate normalization and a 17% return on tangible common equity would be unlikely to achieve. Consensus has you actually closer to 19%. Do you expect to achieve a 17% return in 2025? I always ask you this question every other call. What would it take for you guys to update the 17% through the cycle target?
Yeah. No, and I appreciate that question because it's an important one. So let me just go back. So for the purposes of 2025, I think you're referring to some comments, I think, that I made at third quarter earnings about what our prospects looked like at the time to hit 17% in 2025. Recall, I mean, it's kind of crazy. It wasn't that long ago. But a lot has changed. And so at the time, you had a lot of cuts priced into the curve and quite a bit of kind of, well, it was a less enthusiastic moment from a fee perspective. So now you've got a meaningfully different yield curve environment and a significantly more enthusiastic tone in terms of fee generation, all else equal.
So when you combine that change with the guidance that I gave at fourth quarter earnings for some core elements of the income statement, it's sort of not surprising that the consensus is where it is. And it's hard to avoid the conclusion that 17% is more achievable than it was at the time. So fair enough. Obviously, though, I need to give you the mandatory caveat that it's not in the bag. And in the same way that things have changed a lot, they could change a lot again. Rates remain a major factor. Fees are going to be what they are. And we'll see how it goes. But it's certainly a better environment now than it was then. In terms of the through-the-cycle number, and I guess we're out of time anyway, although time keeps getting added to the clock, which I kind of like. That's good.
It allows me to.
This is only for you.
Yeah. Thank you. I appreciate that. I love it. Now, so the through-the-cycle number is traditionally a thing that, as a company, we sort of discuss and discuss publicly in connection with Investor Day. So I don't want to preempt that here today. But what I'll say is that, first, 17% is an amazing return in what is a very, very competitive market. And so I just think there's going to be a bias to not revise that just on the basis that it is already an amazing number. And it's sort of a good opportunity to make a point that we always like to make, which is we are not actually in the business of maximizing ROTCE as a company. We are in the business of maximizing long-term shareholder value generation.
When you think about what that means with a lot of obvious nuanced corporate finance caveats about asset-specific cost of capital or whatever, but with the stock trading where it's trading, that's implying a somewhat lower cost of equity, all else equal. Therefore, a long-term shareholder value maximizing strategy would involve, a priori, some significant deployment of capital at levels that are significantly below 17%, which we would still see as meaningfully accretive to the franchise if it's actually good business. If only for that reason, that creates some sort of dilution bias in the number. When you combine that with all the other factors, in the extreme, actually, you can really start to think of it as less of a target, per se, i.e., less of an input and more of an output.
It's the consequence of running a shareholder value maximizing strategy with discipline across all the different pockets of the company. And the number kind of is what it is. And we'll see.
Great. I think we're out of time. Thank you so much, Jeremy.
Thanks, Axel.
Always a pleasure.
Thank you.