JP Morgan (JPM) Q2 2016 Earnings

posted in: Earnings Call, Notes | 0

JP Morgan (JPM) CEO Jamie Dimon on the implications of the Brexit

“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.”

JP Morgan (JPM) CFO Marianne Lake on how they are viewing the Brexit

“Uncertainty running up to the British referendum led to a risk off environment and following the decision, the markets were quite volatile as expected and volumes were materially higher in the immediate aftermath. The market functioned quite well absorbing the volatility and despite significant increases in volumes our systems were stable and we continue to support client activity with decent trading performance. With respect to next steps, 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. And while executing against certain of these options would be complex, ultimately we will protect the franchise and minimize any friction cost so that they will be manageable for the company.”

JP Morgan (JPM) CFO Marianne Lake on whether they are taking market share from European banks in wake of the Brexit 

“The share thing is going to become clearer with the rearview mirror than it is necessary a moment in time. It does feel like we are doing fairly well competitively not just against European bank, but just generally and not just in Europe, but generally because we, as you say, have continued to be there for clients across products across the globe. So I would say that we feel like we are doing fairly well. We will know whether that is share gains when we are able to actually look at that in the rearview mirror. But there is still plenty of competition out there. And so we are just focused on serving our clients the right way. But it does feel a little bit like we are doing well.”

JP Morgan (JPM) CFO Marianne Lake on the M&A environment

I will tell you that generally speaking uncertainty is not particularly conducive or constructive for M&A. But in this case I think there are some offsets. So I would start with, in terms of the actual strategic dialogue with CEOs and at the Board, cross border, it is as good as it’s ever been. And if you think about just the other factors that would be supportive of M&A, so like cheap financing globally, low organic growth, good multiples, solid economy in the U.S. and globally notwithstanding a bit of the steam taken out in Europe or the U.K., all of that should continue to be supportive for strategic M&A. Yes. So at the end of the day and currency could be supportive at cross-border activity. So there are puts and takes, uncertain that there will be some people who think carefully through the right timing and what to do. But at the end of day, the strategic proposition should ultimately win out in most cases