JPMorgan Chase’s (JPM) at Morgan Stanley Financials Conference

Gordon Smith – Chief Executive Officer of Consumer & Community Banking

Growth in credit across the ranges

“…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 think the economy actually looks very good and we’re seeing that growth as I say across all the credit range. ”

Reserves are being rebuilt in credit cards

“…we are now in a cycle where reserves are being rebuilt, they are not being released in credit card, I guess across most players – across most players in the industry, but going back, we have guided that we’ve typically have underwritten the newer vintages towards plus or minus 4.5. It will take us a while to get there, but we will see, we and the industry will see a rise in losses and the reserve builds to go with rise in losses and with rising loan growth…people still seem to be surprised that we are at the end of that cycle that we have never seen in the 50 years of lending money on credit cards, I was not there the whole 50 years, but we have never seen losses this low, and then I will begin to migrate back up to more the historical averages over time and it will take a while to get there.”

They are harnessing the power of big data

“we have an organization called Intelligent Solutions, which just brings the enormous power of all the data that we have to help target who are the right customers for the products that we have. That has significant financial returns because we are able to invest their marketing dollars in the right way. So the power of big data is really clear for us.”