JP Morgan at Morgan Stanley Conference Notes

Gordon Smith – Chief Executive Officer of Consumer & Community Banking

Extending into lower prime areas because economy/employment look good

“Yes we have extended slightly into that lower prime, if you like segment, certainly not into sub-prime, but we have extended slightly our credit box. In about 2013 2014, everything that we read in the numbers we feel comfortable that we will get paid for taking that extra risk. We are going to sub-prime lending, but we are seeing growth actually across all segments and I think it is actually quite encouraging when we look at the economy, I am sure we will talk about that a little bit later on, but the employment situation looks strong, small business looks strong, and actually slightly improving I would say, slightly improving. So generally speaking, despite perhaps what you might read in some publications or the perspective that some people might take away from the media, I think the economy actually looks very good and we’re seeing that growth as I say across all the credit range. ”

Amazon is really an amazing company

” The Amazon relationship is a terrific one, a really terrific one. It is an amazing company. The way that they have thought about the business in every segment that they play in, they really understand the use of data, as we do, so it is a terrific partnership, it is in the co-brand product, it truly is a general-purpose plastic product, and we do see meaningful use of Amazon on that product. So that is in private label.”

Definitely not the time to be loosening standards in auto loans

“So, Jimmy I will go back to the way I described. I wouldn’t say that this is a moment of tightening and this is a moment of weakening – of loosening that’s something we are constantly watching. As I say, vintage by vintage. It is not in my opinion a time to be loosening your credit standards, no questions. I think the industry is at a point where it should be rigorously managing credit and so – and I hesitate a little bit because it sounds very binary between those choices and as I say it’s done well, it’s about being much more surgical than that, and to some degree honestly there is instincts involved.”