JP Morgan 3Q15 Earnings Call Notes

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Marianne Lake – CFO

Mixed underlying results

“Underlying results were somewhat mixed on the back of market conditions.”

Trading business able to do well where there was volatility, but it was pretty slow where there wasn’t

“we did pretty well where there was volatility. And where there wasn’t, it was more about, to your point, more about low levels of activity, people on the sidelines. So it was just tougher to make money because less was happening, rather than anything else more significant than that.”

We would say the economy is doing pretty well

“we would say that the U.S. economy is doing pretty well there. We’re seeing good demand for loans in the consumer space and reasonably good sentiment in the business banking space, and our core loan growth numbers do show that. So there’s nothing particularly funky in the loan growth numbers. We do our very best to show them in the right light.

The jobs report was still 2x what is required for stable unemployment

I would take a slightly different perspective on the jobs report, the non-farm payrolls, and not to sort of overthink it, but while I know it was somewhat lower than people were expecting or possibly hoping for, it still at around 140,000 was almost two times what would be required to have stable unemployment. So, you know, it’s only one report too, you can’t overreact to it.”

Credit quality of portfolio is quite high

“Our portfolio quality is really getting quite high. We’re fighting through most of the significant risks. So, reserve releases will be more modest and a little bit more periodic. And several hundred million dollars next year, maybe 300 plus or minus, but not significantly more than that.”

Not expecting material reserve increases in energy in the next quarter

‘Obviously I’m not saying that there may not be any net incremental reserve build, but we’re not expecting them to be significant. A lot of companies have tried to adjust their expense basis and otherwise help their position. So if energy prices stay around these levels and recover slowly, we’re expecting net not to have material incremental reserves in the next quarter. We may see some.”

Trading business was fine in China because were not directionally positioned

“there was a lot of volatility, particularly in China in the second part of or the last part of the second quarter. We were — we did pretty well, we helped our clients, we didn’t have significant open risk position, we weren’t very directional, so we were able to do well in that situation. Also in the reverse, also on currency moves. So really — it really is the comment I made about we’re here to serve our clients. They were transacting. We were able to do risk intermediation [interj] for them. And so we kind of made money on both ends.”

Jamie Dimon – CEO

There are good expenses and bad expenses

“I’ve spoken my whole life about good expenses and bad expenses. You know, bad expenses are wastes, things you don’t need, you don’t [inaudible] through processing, things like that. But we want certain expenses to go up. When we find marketing opportunities in card, we’re going to spend. If the investment bank does better, the comp accrual [ph] is going to go up. So that’s how we run the Company. It’s not ever going to change”

70% financial institution?

” it’s happened that JPMorgan built a global corporate investment bank, 70% of it is financial institution and 30% corporate. We easily could have been built the other way around, it’s who you focus on over time. So when I say over time, it might be quite easy for us to say over five to six years, let’s focus more on the corporates and less in financials, and that will affect your GCIB fairly substantially. ”

Explaining the process for energy loan redeterminations

‘ the reserve-based lending, you basically take essentially current prices, you discount at a discount rate, you assume expenses, you have to really engineer your cores [ph] and things like that, and you see if you can make — roll over the loan at a sound, call it 65% LTV, and we think it’s pretty good.”

We’re here to lend to clients, particularly in tough times

“That’s what we’re here for, to lend to clients, particularly in tough times. You can’t be a bank that every time something goes wrong you run away from your client.”