1. JPMorgan Chase Q2 2026 Earnings Overview [18]

JPMorgan Chase reported strong financial results for the second quarter of 2026, with significant growth in net income, earnings per share (EPS), and return on tangible common equity (ROTC).

1.1. Key Financial Highlights for Q2 2026 [31]

  1. Strong financial performance was reported, with a net income of $16.9 billion, an EPS of $6.14, and an ROTC of 23% [31].
  2. Revenue increased by 15% year-on-year when excluding significant items [32].
    1. This growth was primarily driven by higher markets revenue, increased asset management fees in Asset & Wealth Management (AWM) and Consumer & Community Banking (CCB), and higher investment banking revenue [33].
    2. Higher deposit and loan balances also contributed to revenue growth, though this was partially offset by the impact of lower interest rates [33].
  3. Expenses rose by 15% year-on-year to $27.3 billion [34].
    1. This increase was mainly due to higher expenses related to volume and revenue, growth in front office hiring, and labor inflation [34].
  4. Credit costs totaled $2.5 billion, including $2.4 billion in net charge-offs and a $149 million net reserve build [35].
  5. The standardized Common Equity Tier 1 (CT1) ratio was 14.1%, a 20 basis point decrease from the previous quarter [36].
    1. This decrease occurred because net income was more than offset by an increase in risk-weighted assets (RWA) and capital distributions [36].
    2. The RWA increased by approximately $103 billion, largely due to increased financing in the markets business and growth in traditional lending [37].
  6. The board plans to increase the quarterly dividend to $1.65 per share, effective in the third quarter [38].

1.2. Performance Across Business Segments [39]

  1. Consumer & Community Banking (CCB) reported a net income of $5.3 billion [40].
    1. Revenue increased by 8% year-on-year to $20.3 billion, mainly due to higher card Net Interest Income (NII) from increased revolving balances, as well as higher operating lease income in auto and asset management fees in wealth management [41].
    2. Consumers and small businesses showed resilience despite high gas prices and inflation, supported by higher tax refunds and a strong labor market, leading to robust spending growth [42].
    3. Average deposits grew 3% year-on-year and 2% quarter-on-quarter, driven by over 500,000 new checking accounts [43].
    4. Client investment assets increased 21% year-on-year due to market performance and strong inflows [44].
    5. The Sapphire Preferred card was refreshed in June, following other successful product updates [45].
  2. Corporate & Investment Bank (CIB) reported a net income of $9.7 billion [46].
    1. Revenue grew 27% year-on-year to $24.9 billion, reflecting strong performance across all businesses [47].
    2. Investment Banking (IB) fees were up 30% year-on-year, with double-digit growth across all products, particularly in equity underwriting [48].
      1. This performance was boosted by large Equity Capital Market (ECM) deals and accelerated M&A transactions, with a robust pipeline suggesting continued healthy activity [50].
    3. In markets, fixed income revenue increased 6% year-on-year, with strong performance in credit, currencies, and emerging markets, partially offset by lower commodities revenue [52].
    4. The equities business had an exceptionally strong quarter, with revenue up 86% year-on-year, driven by dynamic market conditions, strong flows, favorable trading in derivatives and cash, and increased client activity in Prime [53].
  3. Asset & Wealth Management (AWM) reported a net income of $2 billion with a pre-tax margin of 38% [56].
    1. Revenue increased 19% year-on-year to $6.9 billion, driven by growth in management fees from higher market levels and strong net inflows, as well as investment valuation gains, higher loan balances, and increased brokerage activity [57].
    2. Long-term net inflows were $50 billion, with continued strength in fixed income and equity [58].
    3. Assets Under Management (AUM) reached $5.1 trillion (up 18% year-on-year), and client assets were $7.7 trillion (up 19% year-on-year), both driven by higher market levels and net inflows [60].
  4. The Corporate segment reported a net income of $4.2 billion on revenue of $6 billion, including significant items [61].

2. Full-Year 2026 Outlook and Strategic Discussions [62]

JPMorgan Chase updated its full-year 2026 outlook, anticipating higher net interest income and expenses, while also discussing the sustainability of strong investment banking and markets performance.

2.1. Revised Full-Year 2026 Outlook [62]

  1. Net Interest Income (NII) excluding markets is now expected to be around $96.5 billion [62].
  2. Total NII is projected to be approximately $105.5 billion, with markets NII increasing to about $9 billion [62].
  3. The adjusted expense outlook is approximately $107.5 billion, primarily due to higher volume and revenue-related expenses driven by activity levels [63].
  4. The card net charge-off rate is now expected to be around 3.2%, reflecting better-than-expected consumer and credit performance [65].

2.2. Sustainability of Investment Banking and Markets Performance [85]

  1. Investment banking fees were strong but not at "super peak levels," indicating room for growth [88].
    1. While some deals were pulled forward into this quarter, the pipeline remains robust, and current activity levels are encouraging more business [89].
    2. The firm expects activity levels to remain healthy, though conversion depends on market conditions [51].
  2. Markets revenue has been elevated, supported by increased financial resource deployment for clients [95].
    1. The exceptional performance in equities this quarter, driven by highly dynamic market conditions, is difficult to repeat [53].
    2. However, the overall market environment remains supportive [97].
  3. The market is currently "extremely risk on," and JPMorgan Chase aims to balance client support with appropriate caution given complex market dynamics [101].

3. Deposit Growth, Expense Management, and Leadership Changes [106]

JPMorgan Chase discussed its deposit growth strategy, the rationale behind its expense levels, and recent leadership appointments, including the elevation of co-presidents.

3.1. Deposit Trends and Market Share Goals [110]

  1. Wholesale deposit growth was strong in Q2 and the first half of the year, exceeding expectations [115].
    1. This growth is attributed to the strength of the franchise, winning deals, and taking market share, as well as the lending environment, particularly in the FFI space and data centers [120].
    2. Loans creating deposits is a dynamic that disproportionately benefits wholesale deposits [122].
  2. Consumer deposit growth is expected to be in the low single digits for the year, an unchanged expectation [123].
    1. This is a balance between robust net new checking account growth and yield-seeking flows impacting average balances per account [125].
    2. Strong net new checking accounts were observed this quarter, but the more hawkish rate environment means yield-seeking flows remain a factor and a potential risk [127].
  3. The firm remains confident in achieving its long-term aspiration of 15% retail market share [130].
    1. This goal is seen as a natural outcome of executing a strategy focused on primary bank relationships, branch expansion, deepening client relationships, and product value propositions [132].

3.2. Investment Cycle and Operating Leverage [135]

  1. The current investment strategy is a continuation of years of effort, with no expected changes [137].
  2. JPMorgan Chase is always investing because it has been successful, and the returns speak for themselves [141].
  3. The firm's strong franchise allows it to aggressively invest for the future to generate returns and solidify its competitive position, while still delivering exceptional current returns [144].
  4. The notion of perpetually increasing operating leverage is considered "crazy" for a company with great returns and margins [226].
    1. The firm prioritizes spending on opportunities with a positive Return on Investment (ROI), such as marketing [234].
    2. Some expenses are considered investments with good returns, even if they are short-term expenses [237].

3.3. Leadership Changes and Succession Planning [75]

  1. Doug and Troy have been elevated to co-presidents to prepare them for greater responsibilities within the company [79].
  2. This change does not alter the timetable for CEO Jamie Dimon's tenure [80].
  3. Marianne Lake decided to retire after learning about the plans for co-presidents [81].
  4. The board seeks a leader with strong management skills, people skills, analytical abilities, attention to detail, a commitment to culture, curiosity, heart, grit, soul, and work ethic [194].
    1. The ideal candidate should be able to travel, interact with operating centers, and engage with CEOs and prime ministers [194].
    2. The firm is "blessed with a lot of people who are great culture carriers across a broad spectrum" [198].
    3. The new leader needs to be flexible-minded to navigate a growing and complex global environment with 300,000 employees across various functions [205].
  5. Jamie Dimon expressed confidence in the current leadership team, including Jim Pipsack as Chief Operating Officer and Mary Erdo running Asset and Wealth Management, stating the company would be "fine" if he were to leave [207].

4. Net Interest Income (NII) Drivers and Regulatory Landscape [153]

JPMorgan Chase provided insights into the factors driving its upward revision of NII and discussed its stance on proposed regulatory changes, particularly regarding capital requirements.

4.1. Drivers of Upward NII Revision [153]

  1. The full-year NII (excluding markets) guidance was revised upward from $95 billion to $96.5 billion [154].
    1. This suggests a higher exit run rate for NII, assuming the yield curve follows current forecasts and deposit drivers align with expectations [156].
  2. The primary factor for the upward revision is deposit balances, across both wholesale and consumer segments [158].
    1. This includes the overall quantity of deposits and a mix shift towards slightly higher-margin deposits [158].
  3. Interest rates are slightly higher than previously guided, affecting both the short and long ends of the curve [159].
    1. JPMorgan Chase has sensitivity to both, and its actual sensitivity is currently higher than what its Earnings at Risk (EAR) model suggests, due to consumer betas outperforming the model, especially in the front end [160].
  4. Markets NII guidance was also increased, despite higher rate outlooks [163].
    1. This is due to changes in balance sheet composition, specifically expecting lower amounts of non-interest-bearing assets in the second half of the year [170].
    2. At current rate levels, changes in these balance sheet units can significantly impact NII and outweigh the rate effect [171].
    3. An increase in equity allocation to the CIB this quarter, driven by growth in client support and RWA, also shifted some NII from the NIIX category to markets NII [173].
      1. This specific shift, estimated at $150 million, is a rare exception where NII changes are not expected to be fully offset in the bottom line [177].

4.2. Regulatory Proposals and Capital Requirements [244]

  1. JPMorgan Chase advocates for four key changes to regulatory proposals [246]:
    1. Regulators should use accurate numbers rather than manipulating them to achieve higher capital requirements [247].
    2. Eliminate the double counting in operating risk capital [251].
    3. Eliminate the double counting in market risk capital; the current $80 billion in market risk capital is excessive given historical losses (e.g., largest quarterly loss of $1.4 billion, CCAR market loss of $14-15 billion) [252].
    4. Adjust the Global Systemically Important Bank (G-SIB) surcharge as intended since 2015 [255].
    5. Change the approach to short-term wholesale funding to ensure fairness across institutions [256].
  2. The current changes to short-term wholesale funding disproportionately burden banks with both markets and banking businesses, like JPMorgan Chase and Bank of America, compared to former investment bank competitors [260].
    1. This policy outcome is seen as potentially damaging to banks' ability to serve Main Street [265].
    2. The firm believes regulators should be clear about their policy objectives rather than allowing unintended consequences from technical changes, such as removing RWA from the denominator of the short-term wholesale funding contribution to the G-SIB score [266].

5. Market Conditions, Deposit Behavior, and Expense Management [275]

JPMorgan Chase discussed the current market exuberance, potential tipping points for deposit behavior, and the strategic approach to expense management, including the impact of AI.

5.1. Market Exuberance and Deposit Behavior [277]

  1. The current market environment is characterized as "very healthy, active, exuberant" with high prices and volumes, from which the firm benefits [335].
    1. The duration of this favorable environment is uncertain [279].
  2. While JPMorgan Chase is well-positioned for higher rates, there is a potential tipping point where deposit behavior could change significantly [281].
    1. The firm acknowledges the concept of negative convexity in the rate-paid dynamic for consumer deposits, which has not yet materialized as expected earlier in the rate cycle [283].
    2. In stress testing, the firm considers scenarios where a "true stress test with an actual change in regime" could lead to an acceleration in rates paid [287].
    3. It is crucial not to be naive about higher rates, as a 7% rate environment would not be beneficial if it required a "massive revisit deposit franchise" to protect it [288].
    4. The competitive dynamics and the full value proposition of the deposit franchise are also key considerations [293].

5.2. Expense Management and Operating Leverage [299]

  1. While operating leverage on an adjusted basis might appear negative percentage-wise, it was positive in dollar terms [300].
    1. When revenues increase by 10%, the marginal return on that revenue is significantly higher than the overall margin (e.g., 25%) because not all overhead increases [305].
  2. The firm revised its expense guidance up by $2.5 billion for the year [310].
    1. $1.5 billion of this increase is already booked and directly linked to the exceptionally strong performance of the capital markets complex, which outperformed expectations by $6.5 billion in the first half of the year [321].
    2. An additional $1 billion is implicitly added for the second half of the year, with some nuances related to timing and other factors [324].
  3. The firm's performance is exceptional, primarily through the lens of returns, which is the most important metric [327].
  4. The increase in expenses also reflects growth in other business areas like wealth management and credit cards [329].

5.3. Management Changes and Troy's Role in Consumer Banking [338]

  1. The decision to appoint Troy to run the consumer business, despite his background in markets and investment banking, is based on his exhibited qualities such as analytics, brain power, emotional intelligence (EQ), heart, soul, and being a culture carrier [344].
    1. He has demonstrated expertise in extensive operations, back office, and technology functions within investment banking [346].
  2. It is important for leaders to have experience across the company to ensure respect for all parts of the franchise [349].
  3. Troy's background is noted as an options trader, not a foreign exchange spot trader [356].

6. AI's Impact, Equities Performance, and Economic Outlook [361]

JPMorgan Chase discussed the transformative potential of AI for efficiency and client service, the exceptional factors driving equities performance, and its perspective on the U.S. economy, including CapEx and consumer resilience.

6.1. Artificial Intelligence (AI) and Efficiency [361]

  1. JPMorgan Chase is committed to using AI to better serve clients and expects it to drive huge efficiencies in certain parts of the company [370].
    1. The firm has invested significantly in AI, with many Net Present Value (NPV) positive projects [374].
    2. There are almost 1,000 AI use cases currently, with about 50 considered "really important" across areas like risk, fraud, marketing, hedging, prospecting, note-taking, idea generation, and document reading [377].
  2. The firm is preparing to retrain its people and has already seen job reductions of 30-40% in discrete areas, with most affected employees offered jobs elsewhere [383].
  3. While AI will be transformative and faster than previous technological advancements, its benefits will ultimately accrue to the customer due to competition [239].
    1. Smaller competitors will also have access to AI tools through fintech companies [386].
  4. Token expense related to AI is currently trivial but is forecast to accelerate meaningfully in the second half of the year and subsequent years [665].
    1. The firm is developing a sophisticated approach to using the right AI models for the right purpose, such as using less expensive models for summarizing reports [674].
    2. The goal is to achieve more capacity, efficiency, better revenue outcomes, or enhanced competitiveness through AI [679].

6.2. Exceptional Equities Performance [400]

  1. The "particular set of things" that made this quarter's equities performance exceptional included [404]:
    1. Major Initial Public Offerings (IPOs) [405].
    2. Significant index rebalancing [405].
    3. Complicated dynamics in the Korean equity market [406].
    4. High activity in Asia [407].
    5. A generally dynamic and interesting overall environment across various dimensions [408].
    6. Extremely active clients [409].
  2. While these factors could repeat, it is statistically improbable for that specific combination of effects to recur [410].
  3. Much of this activity is publicly visible through daily volumes on exchanges like the New York Stock Exchange and the CME, as well as hedge fund and marginal loan volumes [412].

6.3. U.S. Economy: Main Street and Consumer Resilience [422]

  1. CapEx and Commercial Lending:
    1. JPMorgan Chase observes decent CapEx and associated loan growth across the franchise, some of which does not appear to be AI-related [428].
    2. However, the proliferation of AI across the economy makes it difficult to definitively separate AI-related CapEx from other types, as AI demand can indirectly drive demand for services like plumbing and electrical work [430].
    3. Total CapEx is about $4 trillion annually, with AI-related CapEx projected to grow from $400 billion last year to $700 billion this year, potentially exceeding $1 trillion next year [435].
    4. The impact of the Chips Act on CapEx is rolling off and being replaced by more direct AI investments [439].
  2. Consumer Side:
    1. Consumer spending is robust across all income segments, with a tailwind from tax refunds [444].
    2. Delinquencies are lower than expected, showing better performance across all FICO scores [446].
    3. Recent economic data from the Fed on heterogeneity does not strongly support a "K-shaped narrative" (where different segments of the economy recover unevenly) [448].
    4. While there is concern about a cohort of consumers experiencing negative real wage growth in a higher inflationary environment, this is a watch area [451].
    5. The economy has shown surprising resilience and consumer strength during a long expansion, leading to concerns about fragility [454].
    6. Consumer credit performance is fundamentally tied to the labor market, which has been surprisingly resilient [458].

7. Capital Allocation, M&A, and European Consumer Banking [463]

JPMorgan Chase discussed its approach to capital allocation, including stock buybacks and organic growth opportunities, its M&A strategy, and its aspirations for European consumer banking.

7.1. Capital Allocation and M&A Strategy [463]

  1. JPMorgan Chase prefers to buy back less stock when prices are high and more when prices are low [473].
    1. The firm had significant excess capital, estimated at $40 billion two years ago, and now believes it will deploy this capital over time [475].
    2. The world has become larger and more complex, with needs in global infrastructure, remilitarization, trade restructuring, and government deficits competing for capital [477].
  2. The firm's goal is to deploy capital at a 17% return through organic growth [500].
    1. Organic growth is challenging, requiring investment in technology, people, systems, branches, bankers, hiring, and training [493].
    2. Opportunities for organic growth exist in every business, including doubling market share in certain European areas, expanding the U.S. branch network, and developing credit card and app businesses [496].
  3. JPMorgan Chase is always looking at inorganic opportunities but does not want M&A to be a sign of organic weakness [502].
    1. The firm faces strong competition from traditional banks and fintechs like Stripe, PayPal, Cash, Block, Chime, SoFi, and Revolut [506].
    2. M&A could involve adjacencies, data-related businesses, or other areas, with the firm remaining open-minded [517].
    3. The firm has undertaken several deals this year, most of which were successful [512].

7.2. European Consumer Banking Aspirations [554]

  1. JPMorgan Chase did not initially compete in European consumer banking with traditional brick-and-mortar models due to local bank brands, capabilities, and the overhead of different languages and regulatory regimes [555].
  2. The advent of digital banking changed this, leading to the launch of Chase UK four to five years ago [560].
    1. Chase UK has grown to approximately 2.5-3 million customers [562].
    2. The firm has also opened in Berlin and performed better than expected in Germany [563].
  3. The strategy involves leveraging a digital platform to distribute across more clients and countries, aiming for profitability after initial costs [566].
  4. The firm has added investment products in the UK and plans to expand these, along with credit cards, elsewhere [568].
  5. The long-term vision is to become a pan-European successful digital bank, building on JPMorgan Chase's strengths as a private bank with an upscale business, cross-border clients, and strong training, underwriting, and research capabilities [569].
  6. This is a developing initiative, and the firm is patient with its progress [576].

7.3. Credit Underwriting Standards [588]

  1. While "crazy" is a strong word, JPMorgan Chase has observed some examples of aggressive underwriting from competitors [592].
    1. The data center underwriting space is cited as a bellwether, where the firm has passed on deals due to concerns about power supply, tenants, and other risks [594].
    2. Competitive pressures and eagerness to be involved, sometimes through relationship lending with startup entities, contribute to this environment [600].
  2. The firm does not see a "huge deterioration" but rather a "very mild" weakening in credit underwriting standards across several areas [608].
    1. This includes competitors making aggressive assumptions on revenue growth, adding back expenses, using more Payment-in-Kind (PIC), weaker covenants, and taking on more rollover risk (interest rate exposure versus underlying exposure) [609].
  3. JPMorgan Chase aims to hold the line and be guided by its own risk appetite and a skeptical view of the environment, though it may flex for particularly important clients [605].
  4. The firm emphasizes that in a future credit cycle, there will likely be outliers in performance, similar to the Great Financial Crisis [612].

8. Regulatory Stability and Future Outlook [615]

JPMorgan Chase discussed the potential for regulatory stability, the importance of clear policy objectives, and the ongoing evolution of its capital allocation and AI strategies.

8.1. Desire for Regulatory Stability [615]

  1. JPMorgan Chase believes regulatory stability is desirable and a nonpartisan idea [622].
    1. The firm hopes that the "amplitude of those oscillations" (reactions to crises and subsequent reactions) is decreasing, leading to a point where regulations are "about right" [624].
    2. Ideally, banks would focus on their own standards and risk appetite as their "true north," with regulations serving as backstops [626].
  2. The firm is not convinced that current regulatory instability is a major drag on bank stock valuations [629].
  3. Recent Supreme Court decisions allowing presidents to remove officials more easily could lead to more "flip-flopping" in regulations [630].
    1. The firm suggests that when legislation is written, it should be clearer about its intent to prevent such instability [632].
  4. There is a need to step back and honestly assess what regulatory measures have worked and what haven't over the past 20 years [636].
    1. Examples of areas that "did not work" include resolution and recovery [643].
    2. The discount window should be viewed differently [644].
  5. The goal should be to create a safer banking system where failures do not cause widespread panic [645].
    1. Regulators should focus on safety and soundness, which would have prevented issues like Silicon Valley Bank and First Republic failures, as their interest rate risk was disclosed [636].

8.2. Capital Allocation and Client Demand [684]

  1. Capital allocation is not like a hedge fund where capital is simply given to people to use; instead, it is a response to client demand [687].
    1. There are also passive effects on capital, such as increased market risk capital when volatility is higher, and RWA increases with global equity market appreciation in businesses like prime brokerage [690].
  2. JPMorgan Chase has ample capital to serve its CIB clients when it makes sense from a risk appetite and returns perspective [694].
  3. While the system is currently flush with capital, it is less flush with liquidity at the margin [698].
    1. This highlights the need for adjustments to liquidity regulation to reduce bank demand for reserves, especially with the stated goal of reducing the Fed's balance sheet [700].
  4. The firm's risk standards have not changed [703].
    1. If clients choose other providers due to these standards, that is acceptable [704].

8.3. AI Expense and Strategic Discipline [661]

  1. While the majority of the expense increase is in revenue-related lines, there are also some ups and downs in other categories like marketing and technology [661].
  2. Token expense for AI, though currently trivial, is expected to accelerate significantly in the future [665].
    1. JPMorgan Chase is doing "high-quality thinking" on this and has built infrastructure to use the right models for the right purposes [673].
    2. For example, less expensive models can be used for tasks like summarizing analyst reports [675].
  3. The firm's discipline in managing AI expenses aims to achieve increased capacity, efficiency, better revenue outcomes, or enhanced competitiveness [679].