Balance sheet reduced by $120B
“Year-to-date our balance sheet is down over $120 billion on a spot basis, driven by a reduction of over $100 billion of non-operating deposits across our wholesale businesses partially offset by continued growth in consumer deposits. We also saw a $36 billion reduction in trading assets and secured financing as we continue to make progress simplifying our balance sheet.”
Retail deposits may reprice much faster than in past cycles
“there are other people who have slightly different views, but we are expecting retail deposit to reprice higher and faster in this cycle than in previous rising rate cycles, given the competition so good high quality LTR compliant retail deposit, given the advancements in mobile banking, given the awareness in the general environment around low rates and the desire to participate in rising rates. So when we think about our sensitivity and our reprice, we model it in assumption that it’s going to be higher — somewhat higher.”
Loan growth strongest in mortgage, most competitive in middle market
“the one that is most challenging, but still growing is middle market. Fiercely competitive, competitive everybody is chasing that sector. But you can go through the businesses, so we had 6% loan growth, 6% to 8% loan and lease growth in Auto, 6% Business Banking, 19% core in consumer, 4% in commercial, so 3% core in card. So it’s solid to strong, pretty much across the board, most competitive in middle market and flattered by portfolio and mortgages.”
It’s likely that we may take another reserve on oil portfolio in second half, but we are happy with the way the credit cycle is progressing
“We built another modest reserve at this quarter, and we said we don’t — we might expect more reserves in the second half of the year, there’s another redetermination cycle in the fall and its — I’m not going to say likely, but its possible we’ll be selectively downgrading some time. If none of that is out of our expectations its completely sort of normal levels considering the cycle and how we think about the credit, we’re still very happy.”
Credit chargeoffs very benign, but reverted to normal levels in auto and slowing improvement in other areas
“credit like charge offs have been very benign across the wholesale space. They’ve reverted to somewhat more normal levels in auto. So I’m not expecting that to be big step changes in the underlying charge offs in the wholesale space. We’re continuing to see improvements at a slower pace in mortgage, but at 21 basis points we’re sort of getting down there. And Card well, its slightly above at the 2.6% above our 2.5%, its also pretty much getting there. ”
Expect reserve releases but not in the billions any more
“I would still expect there to be more reserve releases over the course of the next 18 months in hundreds of million of dollars in total, not billions any longer of course’
There is no way to operate other than to be prepared for very tough times
“we’re building there for the long run. As a risk management tool we’ve always said that the way we treat that is we will be prepared for very tough times. And I think it’s a mistake not to grow because you’re going to have tough times. I have never seen an economy didn’t have tough times. So, if you went back to United States when JPMorgan was building JPMorgan back to 1850-1860, look every single time that you panic because America had a recession, there would be no JPMorgan. So we’re not going to change.”
Officials in China are very responsive to changes
“What we’ve seen with the officials in China is that they’re very responsive to changes and you could argue whether they should have got in that involved in the stock market and you can’t manipulate stock markets and, but they’re very responsive to lending to — they have changed their reserve policies, their RMB policies, the QFII policies, the Hong Kong Shanghai Connect. Not everything they do is going to work, but they still seemed very committed to more and more market reform, more and more of taking SOE rationalization — SOEs and taking them public, so some market discipline there, creating more of a consumer society and what we’ve always said and I think they’ve the wherewithal to meet their kind of short-term objectives of growth.”
Jamie may not be on the call one day
“Before you all go, I just want to tell you one of these days I’m not going to come in this call. I’m not doing it because I want to avoid it, I don’t like it. And obviously if anything is important or really bad, I’m not going to ever try to avoid bad news here, because we like to tell the whole truth, nothing but the truth, the good, bad, and ugly. But Marianne has started to do such a good job that I’ve become unnecessary to be in all of them and I can obviously go do other things. So don’t be surprised if one of these days I don’t show up, don’t read anything into it. Thank you for being here.’