JP Morgan 2Q16 Earnings Call Notes

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JPMorgan Chase’s (JPM) CEO Jamie Dimon on Q2 2016 Result

We do think that Brexit will reduce the GDP of the UK and EU but we are hoping leaders will be sensible

“So number one, we do think it will reduce the GDP of the U.K. and the EU a little bit. Obviously, that’s not going to affect our business plans. That will affect the economies a little bit. Number two, we know that it is going to create uncertainty for an extended time period. So we don’t think we can answer or make certain all these things you want to know, because there a lot of parties involved. We are hoping that political leaders are very sensible. It makes sense for both the EU and for Britain to think through the process to make it sensible whatever changes they make in order to give businesses time, I am talking about years, time to adjust to the new reality which we don’t know what it is. I think the most important thing is that we will continue in every single country to serve our clients, day in and day out and if it costs a little bit extra, so be it. I am not really worried about it. I wish it would be nice if it doesn’t create a huge turmoil. So I am hoping the EU is sensible”

Marianne Lake – Chief Financial Officer

No deterioration in credit outside of energy

“Although the oil and gas sector remains stressed and reserves will continue to be idiosyncratic, overall trends have been somewhat positive with oil prices continuing to stabilize and firming sentiment in the sector improving access to capital markets. In addition, outside of energy, we still have not seen contagion or deterioration in our wholesale or consumer credit portfolios.”

We continue to work on plans for a full range of Brexit outcomes

“as you know, the ultimate relationship between the U.K. and the European Union broadly and access to the single market and possible things specifically will likely unfold slowly and over an extended period, depending on when Article 50 is invoked. We continue to work on plans for the full range of outcomes, but we will be appropriately patient. The most important point is that we remain committed to fully supporting our European and U.K. clients across businesses and we will be fully able to do this.”

It’s too early to say how Brexit will affect us

“Brian, I know that everybody is keenly interested to hear what we have to say but the truth of the matter is, it’s very, very early days as the new government is just forming as we speak. Negotiations need to be given some time to unfold and take shape. And so it’s really too early to hypothesize. But we would hope that we can continue to operate where we are right now. But we will just continue to evaluate the landscape, as I am sure you will, over the coming weeks, months and quarters and plan accordingly. The most important thing is that we intend to continue to support our European franchising clients throughout.”

Loan demand still seems robust

” Our outlook for loan growth for the range of this year is to be at the higher end of our range. We said 10% to 15% core loan growth and at this point, demand still seems robust.”

A lot of the growth is in commercial term lending

“”a lot of that growth is commercial term lending and it is the case that we have the technology and the process that has speed and certainty of execution and competitive funding cost. So it is the case that if the value proposition that we are able to bring to clients that differentiates us, we are able to close in times that are a fraction of what the industry is. And secondarily, we are really concentrated on simplified supply constrained markets, low rent-stabilized. So these are not the same properties that had problems in the past. Since the previous cycle, we have looked carefully at the our underwriting and there are some things and some regions and some products that we either don’t do or do significantly less of. ”

The consumer is still in very good shape

” we obviously have own spend data to look at and it continues, the card spend is up 8% year-on-year, energy continues to be a tailwind for consumers, the labor market continues to be solid and improving and sentiment is still good, housing still improving. So I mean, really just looking at the same things you are looking at and we obviously have a slightly different lens to it, but all other things equal, consumers are in very good shape and demand is there for the products.”