JP Morgan 4Q16 Earnings Call Notes

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JPMorgan Chase’ (JPM) CEO Jamie Dimon on Q4 2016 Results

Will get some regulatory relief

“Not going to change our plans very much because we don’t really react that much to the weather, because we grow to add bankers and stuff you know you have to do it through a cycle. I do think of it as regulatory relief. You will see banks be more aggressive in growing opening branches in new cities, adding to Loan Portfolios, seeking out clients they don’t have so I’m hoping to see a little bit of that too but they will wait for regulatory relief.”

We don’t react to the weather

“Not going to change our plans very much because we don’t really react that much to the weather, because we grow to add bankers and stuff you know you have to do it through a cycle. I do think of it as regulatory relief. You will see banks be more aggressive in growing opening branches in new cities, adding to Loan Portfolios, seeking out clients they don’t have so I’m hoping to see a little bit of that too but they will wait for regulatory relief.”

Lower tax rates will eventually be competed away

“And just on the tax side, so you understand generally, yes if you reduce the tax rates all things being equal to 20% of something eventually that increased return will be competed away. That is a good thing, so it’s not a good thing for JP Morgan Chase per se but it’s a good thing for the world, it’s a good thing for growth and a lot of studies actually show the beneficiary of that is wages and so it’s important to understand that good tax policy is good for growth and the country in general. It’s not just good for companies that will eventually be competed away”

You’re not going to know for nine months or a year on the tax stuff

“Listen you aren’t going to really know for probably nine months to a year exactly what it is so I wouldn’t worry too much about it and just remember the most efficient companies do benefit from things like this more than others.”

Marianne Lake

Credit performance remains strong

“Finally credit performance remains strong, with a net charge-off rate of 11 basis points, driven by a couple of oil and gas names largely reserved for. And we saw a modest increase in loan loss reserves driven by some ex-client downgrades. In CRE, we had no net charge-offs, and we reiterate three quarters of this portfolio is multi-family lending, to own as a stabilized Class B and C properties in supply-constrained markets. And the remainder is real estate developers that we know well, and we continue to be disciplined, and limit exposures to riskier segments of the market.”

Will grow loans in 2017 but maybe a little bit slower

“Yes, so I think the way to think about it, and again, I think we talked a little bit about it last quarter, and you maybe see it in the fourth quarter. So we’ve been growing our loans in the 10-15%, we revised that to be at the top end of that range so we’ve been growing at around 15% core loan growth, the fourth quarter was 12%. So I wouldn’t call it a deceleration per se, but know it is a little bit lower so I think going into 2017 our expectation is that we would continue to grow loans strongly but possibly at the lower end of that range rather than the higher and of course, to a degree it will depend upon our mortgage portfolio but we intend to continue to add to that too, so sitting here today I’d say more high single 10% plus or minus and we’ll give you more updates at Investor Day.”

So far there has been more risk appetite from clients

“With respect to trading, Jamie said that we don’t look at the first couple of weeks, but so far so good and what I would tell you is we said this before where a client flow oriented business and there will be a lot of micro and event-driven activity and as long as it’s not discontinuous, we should be able to inter immediate transactions with our clients and so far, generally there’s been more risk appetite in the investor days but that can change very quickly as we saw in previous quarters so we will be there to support our clients and if they are active, everything should be good but it can change quickly.”