JPMorgan Chase (JPM) at Barclays Global Financial Services Conference Notes

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Millennials are the single largest population in the United States at 76-78 million

I said I’d talk a little bit about millennials and their importance to the Company. And I think actually they’re important to all companies at this juncture…  between 76 million and 78 million but the most important takeaway is that they’re now the largest single population in the United States. Gordon Smith – CEO Chase, Consumer & Community Bank

 

Millenials spend much more time and money than other populations on travel, entertainment, and dining

Again consistent with some of the things that you will have read, they tend to spend much more time or much more money and obviously time on experiences and we see a little bit in our own data. So this is both credit and debit card data from Chase for 2015 and just simply compares the millennials against all of the other populations and you will see in the travel, entertainment and dining categories that they outspend. Gordon Smith – CEO Chase, Consumer & Community Bank

 

Gordon Smith points to employment and housing market as indicators of a strong economy

The general points that I would make on the economy overall is I think if we look at the employment situation which looks very strong and we look at the strength of the housing market, still take the economy as we move towards the back quarter of the year is looking particularly strong I think right now and there are different points of view out there. Gordon Smith – CEO Chase, Consumer & Community Bank

 

JPM has renewed credit card cobrand relationships with United, Southwest, and Amazon for an undisclosed period of years

And you can see from terrific brands like United, Southwest, and Amazon, we’ve had those businesses partnerships for 15 to 25 years and have recently renewed them for an undisclosed duration. That means don’t ask. Gordon Smith – CEO Chase, Consumer & Community Bank

 

Digital wallets have not yet significantly impacted consumer spending

And you can see here in terms of just on the left hand side of the page we took kind of Apple, Android and Samsung Pay and look for kind of away and it is in usage and again it just reiterates that yes customers are aware of it, but it hasn’t yet grown to be a meaningful component of consumer spending. But that does not mean that it will not be. Gordon Smith – CEO Chase, Consumer & Community Bank

 

Auto loan portfolio has improved since JPM decided to reduce subprime lending for auto finance; yet, 21% of originations have a loan to value ratio greater than 120.

Auto origination, so the percent of originations with FICO of less than 680, in 2008, we were at about 31%. The first half of 2016 we’re at 19% against the industry, which is at roughly 50%. So, in I think the first quarter of 2013 we made the decision that we would substantially pull out of the subprime lending space here for auto finance… you see a percentage of originations with a loan to value of greater than 120 and with very consistent with where we’ve been and substantially less than the industry at 21%. Gordon Smith – CEO Chase, Consumer & Community Bank


SK Additions:

Gordon Smith – CEO Chase, Consumer & Community Bank

Millenials start families much later

“They also tend to kind of start you know from research we’ve done, they tend to start families much later, they start owning a home later than certainly the baby boomers do. So there are some you know very real differences which are important as you think about kind of product design and targeting but some real differences that we see in our data.”

Credit card and auto delinquencies migrating slightly higher but not cause for concern

“Term repeat to credit trends, I know that’s an area that’s all of your focused on and we’re too and always have been, credit card net charge off rate and the 30 plus delinquency rate migrating very slightly higher, but nothing in any of the delinquencies that I see as a concern at this stage. We said that we would target plus or minus 4.25 on a net charge-off basis for credit cards. Everything looks to be consistent with all the expectations that we set and as loans continue to grow and we continue to penetrate with more acquisition we would expect to see the lost numbers begin to slowly rise overtime. Auto migrating a little faster back to more pre-recessionary rates if you like, but still looks very strong entirely consistent with our expectations and our expectations are consistent with all the return targets that we have set for you overtime”

Added 1m new credit card accounts with Freedom unlimited card

“If we go now to Page 21, we recently launched Freedom Unlimited, well I guess we launched it at the end of the first quarter now, so reasonably recently. But from the first quarter through the end of August, we acquired more than a 1 million new customers with the new product. So, we had originally slated this particular release for later in 2016 we could see there was a gap in the market and in our product lineup, so we accelerated it. And as we say have added 1 million new accounts since its launch.”

We feel confident in the business that we’re bringing in

“So, why aren’t we scared, we take those numbers apart in intense detail. So, we take every single vintage that we have and we look at this every quarter and other people look at it almost on a daily basis. But I think each vintage every quarter we break each vintage into deciles. We look at the performance of the worst deciles particularly the bottom two or three deciles and compare those to prior vintages and all of that data suggests that we’re bringing in really good quality customers. So if any of that was to change, I’d be here telling you that we were not growing as quickly as we are, but we feel confident with the quality of the business that we’re building.”