Okay. For important disclosures, please see Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosure. The taking of photographs and recording devices is not allowed unless you're authorized. If you have any other questions, please reach out to your MS representative. I am just so delighted to say, Jamie, Jamie Dimon, welcome back to our conference. We're so delighted to have you with us today.
Thank you.
Everyone knows Chairman and CEO of JPMorgan Chase, just such a thrill. Thank you very much.
Happy to be here, Betsy and Tim.
I did want to kick off by saying congratulations on your 20th year of running JPMorgan and delivering industry-leading profitability with ROTCE of 17% + over each of the last seven years. You know, we could pull that back in the Excel spreadsheet quite longer if we wanted to. Really, 20 years of just consistent, strong industry-leading performance. It's really a thrill to have you here. A question I wanted to just kick off with is just to understand a little bit more about your management style. Before we get into the outlook and the numbers and all of that, I thought this would be a really great opportunity, first off, to ask the question, what do you attribute JPMorgan's outperformance to?
Yes. First of all, welcome everybody. If you knew my management style, you should probably have my management team up there, and they would probably disagree with everything I'm about to say. We're just, we, the team, is pretty, we're just relentless on just about everything. We meet all the time. We go through the issues. I think the first thing, and I really do mean it, is I get into business, not understanding the numbers, get them right. People do not allocate properly. They're not honest about their lost leaders. They give credit to parts of the company that do not deserve credit. Nothing wrong with having a lost leader. You know, at what level do you look at the business and manage the business? You aggregate everything. You know, it's very hard to do.
People often inside a company fight for the credit of revenues and expenses and one set of books, proper allocations, proper capital, and then just real discipline around that. Even around that, it's like each thing has its own, are you thinking about, you know, if you ran, take a small segment of JPMorgan, the small business credit card, you're competing with American Express. They are three times our size. If you were running that business, I'd be asking you, what are they doing better? How do you need it? What's your, you need capital, your technology, your marketing. Very often a unit like that will have no marketing. You know, I'm a fanatic about, are you doing your marketing? How are you getting paid for? What's the ROI? What's the returns? Do you do what they do?
You do it over an extended period of time, constantly curious and assessing what you, everyone else is doing. Morgan Stanley, Goldman Sachs, you know, Stripe, PayPal, we go around the world and we look at what DBS is doing, HSBC, so you're always kind of measuring how you're doing so you don't get kind of complacent, arrogant.
you were less, you invest fairly relentlessly, on all those things, people, technology, and then you try to have an open environment, which I think is the part that gets rid of the politics and BS that a lot of you know all about, you know, when people, the meetings are, you know, run for the boss and not run to uncover and discover and, you know, they're not more than curiosity and tell the whole truth, nothing but the truth, you know, trying to make someone look good, that everyone should contribute, that everyone who should be in the room is in the room, that all the dead cats are on the table. Actually, at lunch with someone today, he said, we do not have any dead cats. We have a few wounded ones. We will put the wounded ones on the table.
You know, where are we creating internal conflict that's hurting our ability to do things? And then just do that relentlessly and don't overreact to the market. You know, the markets go up or down, and don't overreact to the economy. We don't know what the economy is going to do. Don't overexpose yourself to risk that you don't fully understand. You know, risk is always hidden somewhere. You're always trying to like suss them out, and you just got to do that as consistently as you can. Have a little fun, get on the road, see your clients, ask them what, whether people do better than us.
Looking for opportunities for growth, how are you addressing that?
Yeah. I think we're in a very fortunate position. I remember, you know, I'm going back years, you know, even when I was at Travelers and then Citi and then Bank One and then JPMorgan. Remember there's this constant chatter about end game winner. Who's the end game winner? We have to merge. We have, and they did. If you look at these banks, and mergers are hard socially, physically, you know, getting systems and technology right and cultures right and management teams right, they often do not work. You know, Chemical, Chase, Manny Hanny , Bank One, WaMu , Bear Stearns . Yeah, we had all of that. There is no business we're in, and I think this is a good thing, where we cannot grow organically.
The first thing I ask you when you come in the room is, what are you doing to grow organically? You know, usually, management teams start to BS about M&A. You know, we're not as big as them. We really should think about, or, you know, inorganic growth. What are you doing to grow organically? And organic is hard. You find, you find, I really do mean this inside companies, huge resistance to it by the existing sales force, the existing management team. You know, you know, it doesn't fit the budget. We'll disappoint the analyst community. I'm never like that. Are you doing all the things you need to do to build a great business? Period. Hiring people, technology, marketing, stuff like that. Then we'll explain it to our shareholders why we're doing this and what we hope to accomplish.
That does not mean we shouldn't be doing M&A. I've always thought that M&A, you know, I learned this way back from Sandy Weill, you get so smart by looking at other companies, you know, and then you're going to make mistakes. We've made a couple of doozies in M&A. We've had a couple of real winners too, and that makes you smart. You know, and then you're looking at the adjacencies, you know, what can you build? You know, it's hard to, in some business, it's hard to buy something. It's in our main business that we did First Republic. There are adjacencies in all of our businesses where you, I want our people to be looking for them.
You know, I don't want them to tell me, because it's happened in one of these deals that, you know, we're pushing people to do deals. I would never push someone to do a deal. I'm pushing them to look, to think, to, you know, to analyze, to come back, to suggest. And then, you know, if those make sense, we'll do those too.
During Investor Day, we did take a look at the track record of ROTCE again, every single year, last seven years, 17%+ . And then within the organization, you've got some business units that are above and some that are sub, right? How do you think about improving that ROTCE from here? Is it a function of putting more capital towards the above?
I want to give you some numbers. You guys, you asked some great questions after the Investor Day. The two questions that came in, I said, those are really great questions to Jeremy Barnum and Mikael Grubb and do not answer them. That's like TMI. I mean, we're only going to tell you so much. We do tell you an awful lot. You know, we give too much information sometimes. First, I want to point out we have, I think there are 12 competitors we use in our proxy and stuff like that. They're all the ones you know. In the last 10 years, including JPMorgan, how many times has a company earned 17% ROTCE or better of 120 company years? It's like 10. I am saying that out of, you should be very thoughtful when you set targets.
How many earned under 6% where we get no payout? I get no payout, my stock, my stock, my restricted stock. It was like 25 or 30. If you look at the spread, it is pretty wide. Of the 10, we were six of them or something like that. Cap One was in that group. Morgan Stanley was in that group. Goldman was in that group once, twice, something like that. If you go to the 10 years before that, okay, how many were over 17%? It was like 30 years, 30 times. How many were below 6%? It was like 20 or 30 times. A lot. Of those 30, the companies that earned over 17%, half of them went bankrupt. I just, I have deep respect for competition. They are coming, they are coming everywhere. They are smart. Wells is back. Citi's back.
Goldman never left. Morgan, Morgan never left. You have Stripe. You have, you know, you have to assume there's competition. So we're not going to change the 17. I think it becomes irresponsible. I remember when Citi did that, you know, they were earning probably the best returns of everybody. They were number one in every single category. They were being pressured to, they called it increase the operating margin. If you increase your operating margin too much, then people like me are going to come in and your margin is my opportunity. That quote's from Jeff Bezos, by the way. That is why I think about it. We invest, we earn, we're cyclical. Some of those years it was, we didn't, we earned over 17%, but we were over-earning on mostly on credit and a little bit of NII. I'm just quite respectful.
That's if we, if you do 17, anyone here got like a 12 PC in front of them? Do 17% compound for 40 years and tell me the number. I mean, do it, like start with 100, 117, 100. Are you doing it? Oh, could someone do that number? I just want to tell you, if you did that number for 40 years, you would probably be in the market cap of 100% of America. Okay. Let's be respectful about what 17% is. I hope to still do 17. Now the range of companies. Jeremy put out a really neat chart and I forgot how many businesses were in it, but you know, we have like, depending on, you look at 40 businesses, I don't know what detail he did. Some do not earn 17. That does not make them bad.
You know, you can have a business earning 14 that's very steady, very good. And there are a few like that that, you know, just, and put the mortgage business hasn't earned 17%. I mean, if you add it all together, it's probably lost money in the last 50 years combined. And it's a shitty business, you know, and, you know, and it's being made worse by regulators and rules and regulations. And, but I think we can eke out, you know, a decent return there over time and we're, we're working in that. But some of those businesses, and we don't, and you also can't allocate capital. If you said to me, can I allocate capital to all those businesses? I can allocate capital to a handful of them, not the others.
The capital allocation to the others is an outcome of sales and decisions you're making and things like that. It's not an input. Whereas I could input it into, if I wanted to go to certain credit or certain markets, I can input that. We're quite conscious of that and how you earn capital over time. You know, which is, by the way, is also seasonal. There are certain things that are not seasonal, but you're in a cycle that, you know, you probably will get better and some will probably get worse.
Okay. So as we're thinking about capital.
The organic growth is the most important. You know, if you can earn 17% and grow organically, that is, that's where the value comes from. I mean, just do the numbers. If you were earning 17% and you can't grow, then you're a bond, you know, and you'll trade at a 6% yield or something like that. That is a whole different issue.
When you think about this panoply of businesses that you're running, is there any in particular that you would like to see larger as a percentage of total or maybe some businesses that, yeah.
I think that every single one can grow organically. So in the commercial, in the commercial investment bank, I think middle market, innovation economy, multifamily, basic investment banking can grow, payments can grow, custody can grow, markets can grow, you know, in markets and investment banking, it's a battle. I mean, that's like trench warfare. But I think we can actually add market share over time, you know, in consumer, in auto, mortgage, credit card, consumer, business banking, Chase Wealth Management, Connected Commerce, which is the new kind of travel stuff we're doing. I think they can all grow. And asset and wealth management, we can grow assets under management. We grow private banking clients. And we're, and we have other, and each one we have initiatives to grow, you know, a little bit more like workplace over here, you know, new distribution over here, new products over there.
Sometimes it's the technology. If you, the technology will give you the ability to grow the business. If you don't have the, you know, the new product, new digital thing, you're not going to be able to grow. In each one of those, we hope to grow. We're not going to succeed in all of them, but that's what our hope is.
In technology, I have to ask the question about AI. Is this something that could be a game changer for you in terms of your already industry-leading expense ratio, right? Your expense ratio is lowest, which is the best, amongst coverage that I have at least. I'm wondering, does AI drive that?
See, the issue with AI, whenever you have something that you have, that, so AI will drive it, but everyone else has it too. Is it going to change the competitive nature? Now, if we deploy it better, faster, and quicker, yeah, then we can have slightly higher returns. My experience has always been other people catch up. Remember, even smaller banks, when they get AI, they can do it themselves, you know, and they're going to get it from Fiserv or FIS or Salesforce or stuff like that. It is not like the game is, oh, the big guys are simply going to own it. They're not, you know, you're going to have to fight out for it. I also point out, this is just an important distinction. I, we have a lot of CRM systems.
We have a lot of clients. If you came in and looked at some of them, you'd say you would not be happy because that's not exactly right. You're not doing it. It's hard to transfer across the company. You know, why did you do two systems? You should add one, all, and all true. If you're a community bank, what's your CRM system? What is it? It's the banker. I know her. I know her kids. I know her parents. I know her business. I know when your kid goes to school. I know where they go to school. I get them the credit card they need. I don't need a CRM. I know all the businesses down the street. I know who they are. I know which ones are good citizens and which ones aren't good citizens, you know.
There are not competitive advantages that have nothing to do with AI. AI may help us compete that way. Yeah, I do think we'll deploy AI. I think, you know, we get rated as we're very good at it. Though when I meet, I often think, you know, we're not doing enough. You know, we're not getting the benefit. We're not, you know, we haven't added enough projects. We haven't done things. We put up that chart for you guys that showed, I think we spent $2 billion on it. Roughly, we say the benefits are about $2 billion. There are some things we do, there's no benefit. We're doing it because we just think it's kind of table stakes. There are other ones like in fraud, risk, marketing, prospecting, idea generation, note taking.
Yeah, we use AI and we can kind of identify specific categories of benefit, which we should do. We should always justify it to ourselves, but not overdo that. I mean, I've been at meetings sometimes where people, you know, they have all these people out trying to do NPVs and, you know, what was the benefit of digital account opening a consumer? Well, you open it up, you save time, you gain accounts, you lost accounts, the NII is different. You'll spend the whole rest of your life. I was, I was something like that. I always say the same thing. Customer's going to want it. Just do it. Just move on. Don't do six months of NPV analysis.
The other thing you should do, should do the analysis because you'll spend a lot of discrete money on something that, you know, you're not sure it's going to pay off or not. Digital account opening is table stakes.
You invest 10% of your revenues in technology annually, roughly, right? $18 billion this year?
It's $18 billion, yeah.
Right. So as a result, I'm sure you're doing the ROI to make sure that that's got a good return.
Yeah. We do the ROI on a bunch of it, but not all of it. We do know we get benefits around $2 billion to pay for the $2 billion. I, you know, I think we're going to see more as people are going to spend more in AI for now. They're getting benefit, but the costs are also going. Some costs are coming down. The cost of running some of these models has dropped dramatically, but your usage has gone way up. It's still not perfect. You know, it takes up a lot of data time and compute power and, you know, management time just to go out there. I'm heading out to California after this and you get smarter every single time, but we are devoted to AI. I think it is real. I think it will change a lot of things.
I think the thing you should also think about is sometimes technologies do things that you don't, you know, the futurists figure out. You know, cars created suburbs or shopping centers, you know, it wasn't, you didn't have shopping centers that had cars, you know, and so there are other things that take place because there's AI. I don't know what those things are, but you could look at it, you know, I, so the guy from Klarna was on stage at one of JPMorgan's events and said, you know, when you have agents and they're going to be searching for the best price and the best thing, all your banks are dead. Okay. I said, thank you. I don't think that's true, but I think he missed a couple of major points because we already compete on price all the time.
We're not, we're completely used to that, but I do think you will have things like that where it changes the business. It's not just an enhancement. It actually can eliminate it. You know, we have our eyes out for that. By the end of the day, here's what you have to do. You have to hold your money, move your money, invest your money, raise money, do it safely. We're going to be pretty good at that stuff, hopefully using technology to do a better job for you, faster and cheaper.
Oh, great. Thanks so much for that. That is on JPMorgan. Maybe we could talk a little bit about what you're hearing and seeing in the client arena, just from the perspective of what's the current.
Who was, it was Mike Santomassimo here.
Was this morning.
Yeah. I mean, congratulations. I mean, boy, they went through a long arduous road to get out of that thing. I think it was grossly unfair, by the way, for a million different reasons because punishment should fit the crime, not be something you do not understand at all what the punishment is. So my hats off to them and, you know, they've become, as you know, I always look at competitors. Well, they're back. They've got great bones. They're earning good returns. They've got ambition. They're back.
Okay. What about the client side? Yeah. Just wondering what you're hearing from corporates and you know, we've been through a volatile year so far.
Oh, we had moments of volatility. Yeah.
Okay. How are your conversations going with clients? What's the mood out there?
It's okay. You know, we've been in this offline for a long time, and, but I have the buts and I'm not going to let go of these buts. The consumer, you know, I have money, wages are pretty good, unemployment is pretty good. They're spending it. They've lost all the extra money from COVID, it's kind of gone. The lower end folks, you know, doing normal behavior, substitution, credit costs, credit losses, delinquencies, you see the numbers all gone up, but they've normalized, you know, and at the upper end of the consumer, you know, they're still doing travel and spending some money. Their jobs are there. Their home prices are way up. Their stock prices are way up. They're still feeling pretty good. Sentiment dropped. Sentiment came back. The stock market went down. The stock market came back.
and then the, and the corporate side, it's the same thing. They, you know, sentiment dropped. Sentiment's coming back up, but business is still okay. You see it in the earnings, the announcements and stuff like that. The, but the buts are real, you know, and I, and I am not trying to be negative. We spent $10 trillion and, you know, this notion that somehow when you spend $10 trillion, well, of course consumers have more money. We gave it to them. You know, of course business is doing better. The consumers spent the $10 trillion. That goes right through P&Ls for all, every industry out there.
and then we had QE, which, you know, QE, which we haven't had the real reverse is the real reversal is just starting, you know, in my view, like the first trillion or something like that isn't a big deal. The next trillion may be harder than you think or it's going to hit a point where it causes some consternation. and then you have all these, you know, really complex moving tectonic plates around trade, economics, geopolitics, and, and future factors, which I think are inflationary, military restructuring of trade, ongoing fiscal deficit. So it's okay. But whenever you say consumer sentiment, remember neither consumers nor businesses ever pick the inflection points. They never have. So, you know, if you're looking for that inflection point, because it really doesn't matter if it's up or down, it's a little bit, they're not going to tell you that.
You're going to see real numbers. I think there's a chance real numbers will deteriorate soon. You know, employment will come down, will come down a little bit. Inflation will go up a little bit. Hopefully it's just a little bit. I don't know the full effect of, you know, not adding a million, 2 million, people in our system every year. We added 8 million people. We just had to assume if 4 or 5 million were working in the prior four years. That's now zero. I don't know what that means in terms of, you know, obviously it may be why unemployment's staying low, but you know, at one point it can slow down growth. These are a lot of moving parts. You know, to me as a business, I just build the business.
I'm not going to worry too much about those fluctuations, except the big ones, you know, the military alliances, the global economic alliance that matters to the future of the United States of America.
When you say soon, why, why soon?
Because we see it a little bit today, which is the tariffs are just hitting. I think the last numbers I saw, it's about $1 billion a day. All these things were put in place, even at the lower numbers, are just starting to affect and hit people. You had a lot of people buying stuff ahead of time, both consumers and businesses for inventory. It's hard to see what that meant. You haven't seen an effect yet other than in the sentiment. Maybe in July, August, September, October, you'll start to see, did it have an effect? My guess is it did. Hopefully not dramatic. It may just make the soft landing a little bit softer as opposed to, you know, the ship go down.
How are you thinking about the leverage that your borrowers hold today? I mean, how much of a slowdown do you think they can handle?
That is a little more complex question. Most of the leverage you see in the world today is in governments and is extraordinary. Okay. And deficit levels are extraordinary. If you look at businesses, we do not have the leverage we had. You know, when you go to 2008, you know, you were talking about investment banks, not JPMorgan, leverage 30 or 40 to one. Hedge funds, quant funds, SIBs, there was leverage everywhere in the public financial system. You do not really have that. You do have some more leverage, particularly in private credit and with some of the banks on leveraged lending. That is probably a bigger % of borrowing than it was before. If you look at companies and look at, you know, EBITDA, debt to EBITDA, of course, the range is probably more in the upper end than before.
I think if you have a downturn, you will see more credit stress than people expect. It's just been a long time that we've had that. I'm not sure all that credit was all properly done. You know, my operating assumption is that some people do it really well, but not all. There'll be a little bit of a surprise there. You know, we see a teeny bit of deterioration. I know some people here said, you know, not really. We see a little bit, you know, middle market. I mean, I'm going to exaggerate the numbers. Losses for like eight years was zero. You know, and now we're seeing some, you know, and if you look at upgrades and downgrades, there are more downgrades than upgrades. You know, if you look at little things, but none of it's material yet. It will not be material.
If you look at consumers, their real, their real behavior follows unemployment. So if unemployment, their employment goes down, then you can see, you know, a little more stress on the consumer side.
Just a question on private credit. Obviously, at the investor you mentioned you would not be leaning into credit right now, but then private credit, I think you mentioned that the $50 billion could go to $100 billion or $200 billion that you are looking to invest into that ecosystem. Yeah. How do I square that?
There are two different things. We are a, we will do what the client wants. So we offer a client bank syndicated lending, other capital markets, or direct lending. There are differences. There are pros and cons. You know, direct lending is unitranche. It could be done faster, specialized covenants, one price, you know, as opposed to, you know, term A and term B and all that. They like it, obviously. They're willing to pay more for it. I'm not sure I would if I was a borrower, but you know, they're still paying 200 basis points more for that. I want you, the client, to decide. That's where our $50 billion comes from, that we can deploy a lot of capital there. Our deployment is an outcome of doing things right. We're not out here trying to deploy $100 billion.
If the business was coming in and it was good business and where we're very comfortable, yeah, we'd deploy more money. I still, but the second question is, do I think that now is a good time to buy credit if I was a fund manager? No. I wouldn't be buying credit today at these prices and these spreads. That's a different kind of concept. We're a bank. We still make loans to clients even when I think spreads are low. For us, the lending is an outcome. It's not an input. We're not trying to put money out there. Whenever I've heard that in credit, all my sensors go up. Credit is a tough game and it's been a very easy game for the better part of a decade.
It may not be the next decade.
Okay. Yes, you've been vocal on the potential risk at the long end of the curve. Anything there you want to remind us of?
No, it's just, you know, if inflation rears its ugly head, you know, or any form of stagflation, that will surprise people. You all can handle 4.5%, all of us can handle 4.5% 10-year bond rates and probably 5%, but 5.5% or 6% puts a lot of stress on people. All ratios. If you have a recession at the same time, that's when you have a credit cycle and all that kind of thing. As a business, my view is you should always be prepared for that, whether or not you think it's going to happen. I don't spend that much time guessing about what's going to happen in 2025 or 2026 or 2027, because our business is going to determine the loans we make, the growth, the outcomes.
You know, we try to run the company that whatever happens, we're actually doing the same thing every day. You know, we do trim our sales around credit. Every now and then you can do it a million different ways to be careful about it. You know, we basically just build the business to serve clients. We want more good clients. Another thing about private credit, which is important to us, is remember in general, when we do a loan, there are clients of the firm and we do a lot of other non-interest revenue business, not just NII. That's important to me. If it was just NII, you know, I'm not sure that I'd be that comfortable as a business doing that. As an investor, maybe, but not as a business.
Okay. Now, turning to the next couple of years, we do have one thing changing, it seems like, which is regulation. Jamie, I know since the great financial crisis, you've been asking for a holistic review of capital liquidity rule set. What do you think?
I think you're going to get some of that. You know, and I really do think it's time and I've urged them to take a step back, take a, and it's not what's happened. You know, you have regularly been whack-a-mole. This one doing this and this one doing this and this one doing that, adding to this and LCR and eLCR and TLAC and TLAC 2 and Tier 1 and, and G-SIFI and, and some of these calculations, I mean, they're through the looking glass. If you actually spend time on them, you say, what the hell is that? Like G-SIFI has not one risk-based measurement and no benefits for diversification. I mean, nothing, you know, and CCAR is dead wrong.
You know, I don't, I like stress testing and, and then of course, if you're going to fix CCAR and then, but you don't fix G-SIFI and then you do Basel III the wrong way or the fundamental review of the trading book, you, you get all this mismatch. The biggest question I ask is, what do you want? You know, did you want private, did you want, you know, leverage lending to leave the banking system? If they were geniuses and said, that's exactly what we intended, they should have said it. They don't want banks to make leverage lending, no problem. Let us know, we'll move on. I mean it. If you want banks out of the mortgage business, which is the most out of the mortgage business, just say it. We don't want banks in the mortgage business.
You know, Janet Yellen comes out and says, well, the banks, since the banks have moved out of the mortgage business because of the rules and regulations, we need a special facility to finance the brokers if something goes bad so they can fund all the securitization. I'm thinking, really? That's their idea? Forcing out of the system that has the liquidity into a system that has no liquidity and then the Fed steps in again? They should look at this stuff. They should look at it for international competitiveness. We are driving a lot of stuff out of the public markets. I'm not talking about private credit now, just public companies, 8,000 or 4,000. Is that what we wanted? And why is that? It's litigation, it's taxation, it's cookie cutter rules, it's ISS, it's the cost.
If you, you know, our 10-K, you know, every now and then I get an investor come and say, you guys, you're taking all those risks and what about this? You don't disclose that. I say, yeah, we do it. It's on page 144 of the 10-K. I mean, no one reads them anymore because they're so full of crap in there that I just, I look at what we've done. I'm just saying, but you're, where is this what we wanted? I don't think we did the right thing. I think they should fix it. Worse than that, I think we could have built a system. I mean, if I ran the FDIC, which is a mutual insurance company, it's a mutual insurance company. The losses are borne by us.
If I ran the FDIC with my CEO partners, we would reduce the risk that people were taking on interest rate exposure, like Silicon Valley Bank and First Republic. Wouldn't have happened. We could change certain basic things that would make it much easier for banks, make it easier for community banks. We don't. If, unless you're willing to sit back, just like I would do to a company, I don't justify everything we did the last 10 years. Take a sit back, do a real analysis, really think about it, have a lot of conversations. They should have a lot of conversations with bankers around the world and then, you know, try to improve and enhance regulations. Now you have in place a bunch of people who want to fix the regulations. I applaud that. I hope they do that.
I expect you'll see changes in SLR, maybe LCR window, you know, resolution recovery. You probably just throw the whole goddamn thing out since it doesn't work. 80,000 pages of shit. I just, the whole thing is amazing to me. And, you know, unless people have the ability to see things what they are, you're wasting your time. So, I'm hoping they do that, you know, and I think they will. I hope, I'm not looking for radical stuff. You know, we have $60 billion of excess capital, you know, it will probably become real excess capital, you know, which puts a little more of a burden on us to, you know, but they should do it because it's the right thing to do, not because JPMorgan wants it.
Michelle Bowman did say that they're going to be bringing together a group from banking, academics.
People actually know shit. Yeah, it'd be good.
Regulators in July for, you know, kicking off.
Some of these regulators I deal with have no idea about the real world. I'm being serious. They're pure economists who do models and they think those models are the real world. They're not.
Will you be there in the July session too?
If they invite me.
I.
I'd be happy to go. They all know what I think, so I write about it. You know, it's like I, and sometimes in excruciating detail. Yeah, I would like to be part of fixing the system and making it safer and helping the smaller banks.
Okay. So now onto the topic of excess capital. You just mentioned, you know, if this all gets done, maybe it will make that excess capital real.
Yeah, I think it will be real. Yeah.
What's the difference between real excess capital and the excess capital you have today?
Whatever. It's either 45 or 60 or 40. It doesn't matter. It's going to be a number. You know, even today, it really, it depends what they do with G-SIFI and some of this other stuff, but I'm hoping that a lot of that becomes excess. It doesn't even change anything for us because I've always known there was a point, you know, if they went through with Basel III and some of these other things, it would be, you'd need the whole, you'd need 40 or 50, which of course is absurd. I mean, you know, JPMorgan Chase has $600 billion of bail-in-able capital, equity and TLAC and stuff like that. And we've got $1.4 trillion of loans. I mean, what, where are they going with this stuff?
You know, I hear, oh, they should have 25%, that academic and Stanford, they should have 25% capital against loans. We have more than that. If you actually look at the numbers, if you look at RWA and stuff like that, who the hell can figure out what the hell they have, what most of that stuff means at this point. The hierarchy is the same. We're going to continue to pay our dividend. We're going to invest in organic stuff, maybe not more aggressively, but we've been doing that aggressively. I do think they can use up some of that over time. Then we look at, you know, if there are inorganic opportunities, which I'm not, there might be, but not enough to bend that curve probably, or at least not right now.
You know, buying back stock and we're buying back a little. I don't think we tell people what that number is. I think it was $7 billion last quarter. You do know, you know, we don't want to build up the excess, but I like buying stocks when they're cheap.
Your CET1 is at 15%.
I know. Yeah. That's the $60 billion excess.
Right. Right. So then, you know, the other side of this question is how long is it okay to hold this excess capital? And how do you, how do you deal with the trade-off between the opportunity cost?
I have no problem holding it at all. I look at it, if I owned 100% of the company, it would be nothing to me to own that. That's just earnings in store and cash waiting to be deployed. You could argue, raise your dividend, we've done it pretty aggressively, but I can't suck up that much, really. I've asked, I've surveyed a bunch of people, our folks have done it about, you know, special dividends. Most people think that doesn't work, you know. There basically we're going to be patient. We will find an opportunity to make real payouts for our shareholder. Just give us time. I don't want to look at an annual year or something like that.
Mm-hmm. Okay. As the environment rolls forward, maybe there'll be more opportunities.
Yeah. I think there will be opportunities.
I did want to see if there's any questions from the room here. Oh yeah. Wait for the mic.
Thank you for coming here today. Do you see, with all the kind of stuff that's been going on this year, that the future of the US dollar or, you know, strength in its financial systems is threatened in the future, or?
To keep this kind of simple, if we are no longer the military power of the world, the preeminent, and no longer the preeminent economy in 40 years, we will not be the reserve currency. It is directly related to that. Now, you, there is no replacement for it. If you were going to give you a dollar supported by rule of law, by the court, by the most prosperous nation the world has ever seen, by a central bank who is supposed to be independent and stop inflation, hopefully stop inflation, and military, you know, if all, you know, I tell people the military is an important part of what makes America stable. We are still the reserve currency. You know, we have heard it a little bit with certain sanctions and certain tariffs, but it will still be there. I would be cautious.
I don't think we should misuse sanctions or overdo, you know, America bullying of other countries and all like that for that reason. Again, it's going to be predicated on the other two things.
Okay. Yeah.
Betsy, congratulations on getting Jamie to your conference. Jamie, I loved your shout out.
She's one of the great analysts.
She is.
I have tremendous respect for her.
Thank you.
Jamie, I loved your shout out on Travelers. I was an analyst at [followed] 35 years ago. Your management style hasn't changed one bit. My question.
I'm still immature basically. Like.
I think I talk for a lot of people in this room. We wait for your annual letter every year to read it. What two or three annual letters do you wait for?
I always read Buffett's, Andy Jassy's, and Jeff Bezos. In my business, I would read Fairbanks. You know, I read, I mean, I read a tremendous amount and I read a lot of the research you all do and buy side and sell side and things like Grant's Interest Rate Observer. I just, I have Gloom, Doom, and Boom report and stuff like that. You always have to be thinking very carefully. I used to remember the, they do not do it anymore, the Outstanding Investor. I used to read that cover to cover. You know, some CEOs, they are pretty good. Others, it is just constant corporate problem. I do not read them.
Dick, yes, we have a mic coming to you. Thank you.
Thank you. Jamie, a lot of your competitors have programs, you know, one, well, one Goldman, one Bank of America, you know, one, one bank in New York. I think of JPMorgan as, as like not having to do that because.
What's a program?
Like where they're trying to get all the different parts of the business to cooperate and to share information and clients and promote, you know, using the whole company. I think of that happening very organically at JPMorgan in large part, you know, correct me if I'm wrong, because of, you know, kind of your management style and the culture you've created at the firm. The question is, how do you feel that that will persist, that culture will persist when you finally hand the baton off to, you know, the next leader of JPMorgan? Can the culture continue to produce the kind of results in sharing and lack of bureaucracy when you drop the mic?
Yeah. I think the answer is yes. It'll be different. All CEOs are different. They run places differently. I hope that they, you know, they've learned enough and they do enough that they do what I consider mostly the right way. They may be better than me in certain things, you know, and they may be worse than me in other certain things. I think the culture you're talking about, my management team meets and it starts right at the beginning, my first week at JPMorgan. I mean, the management team, you all got in a room and it was like, what do you do? Give me your reports. What do you do? What do you do? Share it. All the dead cats on the table. Get your numbers right. Come back on that one.
Follow up list, deep dives that we would do just constantly making that happen. Most of the people there have been part of that for 20 years now. If you ask them, they say, oh, they've, they, that's, that's embedded and ingrained in how we kind of run the company and just raise those issues. The issues themselves are always changing. You know, the nature of meeting and sharing and honestly assessing, that should not change.
When's the building going to be ready?
I'm pretty relentless on that. The building is September. I'm going to move in temporarily in September and then hopefully permanently in December of this year. I'm having a big, I was with the union guys, you know, I've been over there many times, and one of the big unions, there's like a thousand people out there and he's huge. And we built the best building in the best city with the best unions. I have to speak after this guy. I got up there and said, you built the best building in the best city. Oh, and he, oh, but he also said that, you know, and one day you're going to walk by this building with your families, you're going to look up and say, that's what I helped build. I ended by saying, I'm doing you one better, Gary.
I'm going to give you all a barbecue with your families, which we're doing sometime this summer to have, I mean, it's going to be thousands of people that come in and enjoy what they built. They did it 14 different, I think 40 unions, by the way. It was a labor of love for all of us. I mean, we all worked on it, you know, Marianne and Jen and Mary and Petno and Pinto and different parts of it. We had a fabulous time. It's going to be an unbelievable building.
Excellent. So the barbecue is set for August?
It's set. Yeah. Somebody can tell you the date though. Yeah.
No, no. That's okay. I just walk by pretty much every day. So I guess I'll.
Yeah, you'll see it.
Sense it in a variety of ways. Okay.
You think about cohorts of your customer base. How do you think about the, either the household or the individual that earns somewhere between $50,000 and $100,000 as it pertains to the costs to serve and then the opportunity, either short term or very long term as people grow in their careers?
Yeah. We have an awful lot of clients in that neighborhood. As you know, we are in all 48 branches now in rural. We are in LMI neighborhoods. We are in low income neighborhoods. We have products and service for them. There are some we do because they do not really make a profit, but we think it is a great product for the community. We do it. We are pretty conscious. That is why I used to point out that Durbin pushed so many people out of the banking system because one of the revenue streams for a bank, you know, this is true for a lot of business, not always a direct thing, but it was, you know, they took away $60 a year of debit fee, you know, and the cost of maintaining an account, so take an average checking account, it is $250.
It's like 80% fixed, you know, and the revenue you get is debit and some NII and stuff like that. Obviously NII is much lower on an account that's spending $20,000 and has, you know, $2,000 in there than something else. We specialize in that. We have credit cards for that group. We have what we call the starter segment. I think Marianne was talking about, you know, things going after that starter segment. You know, think of, get them when they're 18 years old and maybe younger because, you know, Venmo and Chime are getting much younger, a lower income. We may not try to compete with all of them, but we're pretty competitive on those sets.
Okay. Great.
Thank you. My question is on digital- first consumer banks. I'm curious, what does it take for those business models to generate 17% kind of returns? JPMorgan is launching one in Germany, digital- first consumer bank. What does it take to really become profitable in that business model?
Yeah. I'm not going to, I mean, you know, we study Revolut and Chime and Klarna and everybody else. I mean, you could do your own study. I think some can. I think some of the business models will be almost impossible. You know, the other thing you've learned about fintech, these folks, they're pretty good and they morph. They start here and they change that. If you remember correctly, Square came out with cash in the crisis. They said there's a new thing. It was a great thing. I always assume they're going to do other things. They're going to move up scale. They're going to add products. They're going to add services. For us, the goal, the long-term goal is that we have a hugely, we have a profitable digital bank, hopefully pan-European.
It wasn't meant just to be in one country or another. Remember, once you're in a European country, you have transportable licenses and things like that. We will be adding products and services to that bank over time. You know, and the capital, it depends if you look at capital because we're going to have hopefully some asset management business, things like that. I'm quite optimistic that it'll be a good thing more for the next generation than for, you know, the next five years. We should be working on that. The other thing, which I keep on telling my team is I'm not telling you you can't have physical plants, branches. If they came to me and said, we want to have a flagship branch in every major city in the U.K., you know, there's good logic. I'd be fine with that.
It might be a combination of both. Remember, I always looked at JPMorgan Chase. We do have competitive advantage. We have a lot of people go across border. We have a lot of wealthy clients all around the globe. We've got asset management products. You can go online now if you want to be a Chase Wealth Management client and get, you know, digitized, simplified versions of our research. You know, that's a, that's a billion dollars worth of research we do that we're giving to those clients. I think we're doing it in two forms, you know, a short form and a longer form. You can see the whole report or kind of a summarized report. I think those things over time are advantages.
You will be able to, I think sometime this year, move money from Chase U.S. to Chase U.K. You know, for people moving back and forth, which happens. They're, we're worried about doing it right for ourselves. You know, Revolut's worth $60 billion. I mean, I'd like to have some worth $60 billion. I don't know why we can't.
Excellent. Jamie, thank you so much for your time today.
Thank you. Good luck to everyone.