JPMorgan Chase at Barclays Conference: Insights on CIB Strategy

On Tuesday, 09 September 2025, JPMorgan Chase & Co. (NYSE:JPM) presented at the Barclays 23rd Annual Global Financial Services Conference. The call, led by Doug Petno, Co-CEO of the Commercial and Investment Bank (CIB), provided a strategic overview of the CIB’s performance and future outlook. Petno highlighted the bank’s resilience in market uncertainties, while addressing both positive momentum in various sectors and challenges posed by the evolving regulatory landscape.

Key Takeaways

• CIB accounts for 43% of JPMorgan’s revenues and 46% of net income in the first half of the year.
• Markets revenue is expected to rise in the high teens percentage for the quarter.
• Investment banking revenues are projected to grow by low double digits.
• Emphasis on long-term strategy and adaptability to regulatory changes.
• Integration of commercial and investment banking to enhance client services.

Financial Results

Markets:

• Markets revenue is set to increase by high teens percentage, driven by strong performance in both FIC (Fixed Income, Currencies, and Commodities) and equities.
• FIC strength is notable in securitized products, rates, and credit, while equities benefit from elevated client activity.

Global Banking:

• Loans in CIB rose 6% in the second quarter.
• Banking payments loans increased by 4% in the same period.

Investment Banking:

• Q3 revenues are expected to grow in the low double digits, supported by a resurgence in M&A activity and a robust IPO market.

Security Services:

• Achieved record revenue in 2024, with the second quarter of 2025 also setting a new record.
• Maintains industry-leading margins at 32%.

Operational Updates

Markets:

• Expanded balance sheet to provide credit solutions and enhance client opportunities.

Global Banking:

• Loan growth driven by new customer acquisitions and specific needs like capital spending and inventory financing.

Payments:

• Strategic expansion in the Middle East, Europe, and Asia.
• Investments in digital platforms for middle market and innovation economy clients.

CIB Overall:

• Integration of commercial and investment banking to unlock efficiencies.
• Private blockchain payments capability has moved over $2 trillion.

Future Outlook

Markets:

• Anticipated sustained high revenue due to global volatility and strong primary issuance activity.

Global Banking:

• Potential for new originations in commercial term lending if interest rates decrease.

Investment Banking:

• Continued large M&A activity expected, driven by strategic imperatives.

Payments:

• Exploration of distributed ledger blockchain business opportunities.

CIB Overall:

• Potential to exceed the 16% medium-term ROE outlook, depending on economic conditions.

Q&A Highlights

• Doug Petno emphasized the importance of serving clients and running the business with economic considerations.
• Discussed the evolving regulatory environment and the need for a fresh perspective on capital and liquidity rules.
• Addressed the private credit market and the importance of maintaining credit discipline.

In conclusion, the conference call provided an in-depth look at JPMorgan Chase & Co.’s strategic direction and performance. For further details, readers are encouraged to refer to the full transcript below.

Full transcript - Barclays 23rd Annual Global Financial Services Conference:

Jason, Interviewer: Right, 10:30 A.M. If we could just put up the first ARS question that we’ve been asking in all the rooms. Next up, very pleased to have JPMorgan Chase & Co. with us from the company, Doug Petno, who’s Co-CEO of the Commercial and Investment Bank. Just to put it in perspective, CIB was 43% of JPMorgan’s revenues and 46% of net income in the first half of the year. It’s interesting, if you look, they generated $19.5 billion in revenues in the second quarter. That would be the fifth largest bank in the United States if that was a standalone company, and it would be bigger than both Goldman Sachs and Morgan Stanley’s entire operations. Clearly, it’s a big company within a big company.

Maybe the best place to start, Doug, is just given CIB encompasses global banking, markets, payments, security services, does business with, I think, 90% plus of the Fortune 500 over 60 countries. Just give us an overview of what you’re hearing, seeing from your customer base. I don’t know how you want to segment that, but I’m just curious. You’re clearly in the know.

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: Sure, Jason. First, thank you. Great to see you. Great to see everybody. It’s nice to be here. As you say, we have an amazing wholesale client franchise. We’re banking 50,000 middle market companies. We’re calling on 70,000 middle market prospects. We cover companies from startups all the way to the largest multinationals in the world, governments around the world. We’re counterparty to 90% of the institutional investors in the market. We have a significant commercial real estate practice with 50,000 multifamily lending clients. It’s a tremendous lens on the wholesale market, the wholesale economy. There is no typical client, just given everything I just said. I would say just the overall tone, sort of the general tone is, clients like all of us are trying to see through the fog of market uncertainty. There’s been a lot to have to navigate this year.

I don’t need to tell all of you. Trade uncertainty, legislative uncertainty, regulatory uncertainty, what’s going to happen to the economy? It felt like the economy’s decelerating. Geopolitics, all of it has created a true fog of uncertainty. I think the real positive thing is that most of our clients are kind of seeing through that and either innovating, navigating, evolving, adapting, especially to the volatility created by uncertainty around global trade. Most were sort of getting their arms around that going back to President Trump’s first term. It hasn’t been as disruptive as you might have expected. If you sort of break it into its pieces, some of the fog is actually lifting. We do now have some tax certainty.

Not only do we have a tax bill, there’s some actually interesting things that our clients are very focused on, some favorable depreciation features there that are causing clients to really think about accelerating capital investment. You don’t have complete certainty on trade, but you kind of have a band of outcomes. It’s not going to look like Liberation Day. It does certainly feel like rates are more likely to come down than do anything else at the moment. As the fog sort of lifts, I think you’re seeing client sentiment is pretty strong. Board and management confidence is good. All of that, I think, is manifesting itself. You can sort of see it in our credit performance and credit costs. You can see it in the market activities across capital markets and M&A.

You would not have robust markets that we’re having if people were sort of running for cover. So far, so good. It just, I think, points to how resilient our client franchise, the market is, and that this has been, even though it’s been an uncertain environment, our clients are kind of seeing through it all.

Jason, Interviewer: Got it. Maybe we could just next step, if we may, just run through the businesses individually. I have to start with markets. I fully appreciate we take a longer-term view here. Just any kind of thoughts on the quarter-to-date trends in trading, both equities and kind of what you’re hearing and seeing?

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: Yeah, you know, our markets team is doing extremely well. We’re very proud of the performance. They’re on track to have a terrific year. The momentum from the first half of the year is extended into the third quarter. We’re seeing broad-based strength across FIC and equities. FIC in particular is strength in securitized product rates and credit. Equities, really the strength across the entire client franchise. We’re seeing elevated client activity. The trading performance in those teams has been quite good. We have a few weeks left in the quarter, but we would sort of estimate that markets revenue for the quarter would be up in the high teens % rate. Obviously, a few weeks to go, anything could happen to be a showstopper. Don’t expect that. As we sit here today, we’re expecting a strong quarter in markets.

Jason, Interviewer: I guess based on that, that would put 2025 at a record level for markets revenues. I know it’s a really hard question, but I have to do it. We have to kind of model what 2026 trading revenues will look like. How do you think about the sustainability of that trading revenue pool? It’s obviously a big number for JPMorgan Chase & Co. You’re kind of a leader in a lot of these segments.

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: Yeah, you know, it’s an interesting question. My partner, Troy, did a great job at our Investor Day, I think, addressing this same issue. I think what you’re referring to has been a big step change in the fee pools, revenue pools in markets coming out of the pandemic. We always sort of thought that there would be a reversion back to pre-pandemic levels, and we really haven’t seen it happen yet. There’s a combination of forces at work, I think, that could sustain these higher revenue pools. Just overall higher global volatility has created a tailwind for our global markets business. It’s created elevated client activity. You’re seeing overall global higher interest rates and credit spreads, which created higher financing revenues. I think another notable item is the wallet around corporate activity. Think interest rate hedging, commodity hedging, currency hedging, that’s in financing.

Our markets products, financing products for our corporate clients, that wallet is sustained and has been quite strong. I think notably the last factor that we hope continues is that primary issuance activity is really strong. Think IPO market. It fell out of bed. It was completely on its back in 2022. It’s steadily come back year after year. This year, we’ve got a lot of primary issuance. It’s really playing and creating strength in our markets franchise. A lot of contributing factors. Hopefully, they sustain a more robust wallet opportunity. There are a range of things that could change that, obviously. I always like to caveat where the future may go. These are powerful secular forces that we think could be around for a while.

Jason, Interviewer: Got it. Before we kind of move off of trading, you know, the markets balance sheet has increased quite significantly over the past year. Maybe just talk to the thought process behind the growth and the appetite to continue to grow the balance sheet from here.

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: Yeah, financing our markets clients is something we’ve done for a long time. I think it gets back to the root of our strategy, which is to build every one of our businesses and CIB around our clients, have a deep understanding of what their needs may be. The capital intensity of our markets clients is increasing. We’re trying to provide credit solutions in an agnostic way and bring value to our clients. In many cases, providing loans to the clients preserves your existing markets revenue pool. In some cases, it opens up and expands your wallet opportunity with our clients. It’s very often the case that these financing products on their own are standalone profitable and interesting for us. I think that you should expect financing revenues as a part of our markets business overall to continue to start to climb this step up over time.

A positive of that is it brings much more stability to the markets revenues. Those revenue pools are much less volatile than just pure markets-driven, flow-driven kind of activity.

Jason, Interviewer: Makes sense. We’ll put up the next ARS question as we kind of shift maybe to kind of global banking. You know, loan growth, loans in, I guess, CIB were up like 6% sequentially in the second quarter. That’s up from 1% in the prior three quarters. Banking payments loans were up 4% in the second quarter. You mentioned on the call, it was mentioned a lot of activity coming late in the quarter. Just maybe talk to how you see the back half of the year playing out. Is the growth last quarter a sign that demand’s picking up?

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: I mean, just to set the stage and remind everybody, for us, growing loans is an outcome of the strategy. It’s not the strategy. I think indicative of that, over half of our middle market clients don’t borrow from us. We do have a full suite of credit and lending products, asset-based securities, securitization, home business securitization, revolvers, trade, direct lending. We have a full suite that we provide to clients. Growing loans is really not the core strategy. We deploy capital to support our clients. Where we’ve seen growth is a combination of factors. We’re adding new customers. We’re adding over 3,000 middle market clients a year. With that comes some loan growth. It’s the organic expansion of our business, brings forward relationship. We’re going to grow loans. We’re seeing some sort of situation-specific loan growth as clients pull down on the revolvers to do two things.

I think there’s more capital spending coming out of sort of the fog lifting that I described at the beginning. You’re starting to, you were saying earlier in the year, see some inventory financing being brought forward just given the trade uncertainty. Maybe one of the biggest contributing factors to loan growth, it comes in a more lumpy format, is just cash M&A. If you look at the growth that you saw in our second quarter loan portfolio, a lot of that was driven by a handful of large cash M&A transactions in our bridge book. I think going forward, there’ll be a number of forces that affect our loan growth. Will there be sustained cash M&A? If rates come down, we might see new originations in commercial term lending and our commercial real estate businesses.

Depending on the strength of the economy, if the economy stays on the rails, we expect clients have a lot of pent-up demand, capital spending, and growth. We hope to finance a lot of that. I don’t think there’s anything unusual going on. It’s a combination of contributing factors. I wouldn’t look at the second quarter as being an indicator of what to expect going forward.

Jason, Interviewer: Makes sense. There’s just on credit quality. I mean, wholesale charge-offs have been sub-20 bps for a bit now. On the second quarter earnings call, Jeremy Barnum mentioned reserve builds came from downgrades, a handful of names. Maybe just talk to your outlook for credit quality across the main portfolios. Any particular areas of concern?

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: Yeah, there’s no real concentrated area that we’re worried about. We feel great about our underwriting. We feel good about the quality of our portfolio overall. We definitely feel like we’re adequately reserved for a full range of economic scenarios. If you break it into CNI and CRE, in CNI, the losses and the downgrades have been just that idiosyncratic. One or two situations where they’re not secular. You have to think of a company that had outsized exposure to the government as a customer, seen everything that the government’s done to cancel contracts and change their consumption profile. Their companies were caught flat-footed in that. I don’t think that’s going to, that’s happened. There could be more of it. It isn’t like we have a tremendous amount of risk to that across the portfolio. You have some tariff-related stress in the system.

I would say until the dust is settled on trade and all of that is washed through, it’s possible you could see more downgrades and possibly some charge-offs, especially for clients at the lower end of the risk spectrum, more thinly capitalized, tighter margins that aren’t as able to adjust their supply chain. Depending on how the tariffs play out, you might see more stress. Nothing that we’re certainly not panicked about. We’re watching it all carefully. Those clients aren’t standing still waiting for that to happen. They’re securing liquidity. They’re changing their business models. They’re evolving and adapting. In CRE, our commercial real estate portfolio is quite solid. The one area that we continue to watch is office. Our office exposure is less than 10% of our portfolio.

Even while office fundamentals are weak, they’re starting to see some signs of improvement. It certainly feels like we’re off the bottom in office and for us in real estate overall. For our office portfolio, we feel like we’re well reserved for whatever might happen across the commercial real estate sector.

Jason, Interviewer: I guess just on the fee side, you touched earlier on just strong kind of equity issuance. We’ve been reading a lot more about kind of corporate M&A picking up. Maybe just talk to your outlook for investment banking, both maybe near-term and then just looking out.

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: We’re actually turning out to have a pretty good year in investment banking. I reflect on our investor day where it was in the days following Liberation Day. We were much more sanguine about the outlook. Literally, a couple of weeks after that, the markets kind of took off. Team’s done a great job. The last several months have been quite busy. It’s been one of the busiest summers, certainly maybe one of the busiest Augusts we’ve had in a long time. Like markets, we still have a few weeks to go in the quarter. If things progress as we expect they will, and just based on our pipelines, we’re sort of pegging our Q3 investment banking revenues at up sort of low double digits. Like markets, anything could happen. We feel like there’s a lot of animal spirits at the moment. Big M&A is back.

It’s maybe one of the biggest last few months we’ve had in a long, long time. There is a strategic imperative to be global, big, diversified, integrate your operations. There’s also a sense that you have a finite window of time to complete large M&A before the regulatory sentiment may shift back. I think that we’re expecting to see large M&A continue until something happens that slows it down. ECM, market’s wide open. Big IPOs are back. We’ve had four big IPOs, over $1 billion. They’re performing well. Pipelines are good. There’s a lot of invested cash-seeking liquidity, both in venture capital and private equity that’s looking to fund the market. We expect the ECM business for us to continue to be robust. The technicals in ECM are really strong. Spreads are at historic tights.

Most of our clients are taking advantage of open credit markets to either fund their cash M&A or term it out in any floating rate exposure they have. Literally across the board in banking, the teams are quite busy. We feel great about the outlook there.

I wouldn’t say just a couple, just to offset the revenue growth in both markets in banking. Sorry to cut you off. You know, with the higher outlook in both of those businesses, you’re going to see higher performance-related expenses, as we call them good expenses. It’s just comp will correlate to the outsized performance in both investment banking and in trading.

Jason, Interviewer: I mean, the company overall has talked about $95.5 billion in expenses overall for the year. I guess any kind of thoughts around that number, or we have to wait for Jeremy on the earnings call?

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: I think we wait for Jeremy Barnum on the earnings for that.

Jason, Interviewer: Just to.

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: We are watching every nickel and dime.

Jason, Interviewer: That was up low double digits year over year on the trading front, on the IB front.

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: Correct.

Jason, Interviewer: Maybe shifting gears to the payment side, JPMorgan Chase & Co. services clients of all different shapes and sizes and industries across the world, with a lot of different solutions. Just maybe talk to you, we could probably spend the whole session on this, but just, you know, kind of recent initiatives where you kind of see the biggest opportunities there.

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: If you’re very interested in the details on this, I’d bring you back to our investor day presentation. The gentleman that runs that business, Max, did a good job of outlining it. We’ve got organic growth potential across our payments franchise in almost every client segment, every market, every geography. The big drivers, if I had to sum it up just in a few minutes, are that we’re expanding our footprint strategically. With that, we can better serve clients in regions. If you expand in the Middle East, you expand in Europe and Asia, you become truly their Asia bank, their Middle East bank, their European bank. It also brings new customers as you extend your footprint into those new geographies. That will be a big growth driver for us long term.

With the investments we’re making in our platform and capabilities on digital, it’s exposing us to very significant fee pools and deposit gathering businesses, both the middle market and innovation economy. Digital, having a best-in-class end-to-end digital experience, is a big investment priority for us in payments. I think moving along the innovation spectrum in the merchant services business that we have, we have an omnichannel embedded finance, embedded payments capability that serves platform businesses. This is very unique, but it could be a big revenue driver for us over time. The last point I would say is more Horizon 2, Horizon 3, our Connexus or distributed ledger blockchain business. We’re right in the middle of wherever that market may go. We’ve been spending a lot of time thinking about product opportunities and solutions. We’re staying close to our clients on that.

Jason, Interviewer: I guess, again, in payments, there’s, right, you’re competing against a lot of different players, banks, non-banks, tech, fintech, and the like. I need to talk a bit about, you know, the landscape and kind of just where you see the competitive threats.

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: I mean, it’s extremely competitive in every product, in every market, and in every client segment. I think all our traditional universal banks, global banks, regional banks, commercial banks, certainly all the fintechs, depending on sort of the payments product continuum. The other thing to just highlight too, unlike the transactional investment banking business, to win payments business, you have to convince a CFO or treasurer to lift up their treasury operation from an incumbent that’s otherwise doing probably a reasonable job and move it to you. You’ve got to display some combination of much more resiliency, reliability, or value. You’re going to increase effectiveness or bring efficiency to their treasury middle office. That is a very, you know, sort of more software sales. The investments we’re making in our operational resiliency, cybersecurity, user experience are all contributing factors to our win rate.

The investments we’re making in our onboarding and service journeys for our clients are all contributing to our win rate. The fact that JPMorgan Chase & Co. is one of the few players that has an integrated merchant services, trade, and treasury services business that can bundle all of those capabilities together is contributing to our win rate. If you just sort of look back at the historic payments fee revenue growth, sort of low to mid-teens, that’s quite impressive. We do, while we do grow with our clients, to grow payments fee revenue in the teens is something we’re extremely proud of. Given the point I said earlier, you’re literally lifting it out of an incumbent and moving it over.

I think the other notable benefit of sort of putting these businesses together, as we did a year and a half ago, is we’re now acquiring customers much earlier in their life cycle. We jump in, we don’t have to displace an incumbent. We’re becoming the primary operating bank for a client at inception, which reduces your cost to acquire that business. It’s a much easier game to play. If you just look at our market share over the last five years, we’ve added 3.5 points of share. We feel like the steps we’re taking to invest in our platform capabilities and user experience are really contributing to our success. There is competition everywhere.

Jason, Interviewer: I guess one area we hear a lot about recently is just, you know, stable coins. Some use cases sound better than others, but, you know, cross-border and non-U.S. transactions kind of come up a bit. I just love to get your thoughts on that and just better understand how JPMorgan Chase & Co.’s approaching it.

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: You know, time will tell whether there’s going to be large, scalable, profitable wholesale solutions that emerge. Over five years ago, we saw the utility, the advantage to financial services of being smart on distributed ledger and blockchain technologies. We formed a center of excellence. We have a very qualified team that’s been in place for a long time, innovating both for blockchain solutions in terms of how we run the bank, but also in terms of product and capabilities. With the enactment of the GENIUS Act, hopefully it’ll bring a range of regulatory certainty and operating frameworks such that maybe some of these products, it’ll give oxygen to some of these blockchain-type, stablecoin-type products. Absent that, I think it was just more experimental. This GENIUS Act is a notable milestone in the build-out of digital-type payment solutions. We’re ready.

We’ve already had open for business a permissioned private blockchain payments capability that’s moved over $2 trillion. Right now, we’re doing a proof of concept on cash on chain, public blockchain. It’s Ethereum blockchain, JPMorgan deposit token. Who knows where this will go exactly, but we’re taking a first principles design approach. We’re staying very close to our clients. They’re seeking speed, simplicity, and 24-hour access. I think that we’ll be right in the middle of wherever this goes. It’s very early stages at the moment.

Jason, Interviewer: Got it. Maybe just kind of adding other businesses, security services. I think it gets sometimes overlooked. I think people are surprised when they realize JPMorgan Chase & Co. is actually the third largest player in this business. Maybe just kind of talk to what you’re seeing.

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: Yeah, don’t overlook the security services business. It is kind of tucked within the CIB, but it’s an incredible franchise on its own. It does completely benefit by being a part of an investment bank and part of a trading operation. Most of our top clients are also investment banking clients and markets clients. The actual utility of having those broad-based relationships is a huge strategic advantage for them. The business is performing extremely well. I’ve had record revenues for each of the last five years. 2024 was a record year for us. The second quarter was a record revenue year for us. We have industry-leading margins. You mentioned we’re in the top three, but we have industry-leading margins at 32%. I think beyond the actual number, that’s 32% while we’re making significant investments in bringing new customers on and in our platform and our capabilities. It’s a fantastic franchise.

It brings a lot of stability. It brings to, it’s a deposit gathering business for us. It’s a predictable revenue stream that’s nice to have sort of tucked within the CIB. It’s certainly accretive to our growth rates.

Jason, Interviewer: You know, maybe this ties into that, but at Investor Day, you mentioned, I think you made the comment, we’re only beginning to see the full potential of the interconnected businesses. Maybe love to hear what you see as the next largest growth opportunities within CIB.

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: Yeah, the point I was making in that comment was, you know, it was more of a, what was the strategic rationale of putting our commercial bank together with the Corporate and Investment Bank? Commercial banking, if you remember, was an independently reported business for JPMorgan Chase & Co. for over a decade or more. We always operated in harmony and strong partnership with the Corporate and Investment Bank. Having now been a year and a half as one business, the power of that is really starting to unlock. The leaders of all these different components of CIB are sitting together every day. We’re seeing the potential to actually even better serve clients. There are many notable examples. One of the biggest examples is how we show one face to large client ecosystems like private equity and venture capital.

The CIB, the broad-based capabilities of the CIB to serve the GP, the actual, either the venture capitalists or the owners of the private equity firm, the portfolio companies or startups, the founders and the private banking, markets business, financing, and the investment banking, and show one face to these large and growing client ecosystems, I think is truly unmatched. That’s one sort of real powerful example. If you think about the 70,000 middle market companies we’re calling on, the 50,000 middle market companies we had called clients, we’re doing more and more investment banking business for them. There is no top-tier investment bank that has a commercial bank attached to it. These are warm institutional relationships. Our cost to acquire the investment banking business there is dramatically less than our traditional investment banking competitors.

You can see the growth rates in that part of the investment banking sector are really outsized. Those are two big sort of notable examples where you put these teams together, and there’s been real tremendous combustion, and there are many, many more. We announced the Strategic Financing Solutions team, which is sort of a joint venture between our debt capital markets team and our markets finance businesses, bringing a much higher level of comprehensive financing solutions to this private equity ecosystem that I described earlier. That was something that came out of the combination of these two businesses. There are many, many examples. The other sort of asterisk on this, it was never motivated by expenses, but it’s turning out that we’re finding ways to like, really, even though we’re all part of one company, as one single business unit, we’re finding ways to do things more efficiently.

There’s actually been a decent efficiency prize in this effort as well.

Jason, Interviewer: Interesting. You mentioned deposits earlier, and you know, CIB, I think, is a trillion to a deposit. Obviously a big contributor, balances up like 12% year over year. Maybe just talk to kind of what’s driving that growth.

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: Yeah, our strategy in payments is to be the primary operating bank to our clients, you know, help them make payroll, manage their payables, collect receivables, manage liquidity. If you do that, if you are truly their primary operating bank, you will get core stable operating deposits. That’s the prize. We invest in our products and solutions to drive that outcome. We invest organically to expand our business to acquire clients as the primary operating bank. That’s been a big deposit driver for us. You’ve seen that in innovation economy. You’ve seen that in the middle market. We’ve seen that across our multinational franchise where the investments we’ve made in our global pooling liquidity solutions have really been incredibly competitive and successful. As I touched on earlier, our security services business is actually a really positive contributor to our deposit portfolio.

A combination of all those forces has really been a, you know, gives us a good foundation for future deposit growth. The one sort of thing that always gets lost in this story is the power of having an asset management business attached to JPMorgan. We have hundreds of billions of dollars of yield-seeking liquidity that leaves our clients and gets swept to money market accounts in our AWM business. None of that’s captured in the P&L of the CIB, but it’s certainly captured in the P&L of JPMorgan Chase. That’s a complete extension of our treasury platform as clients, you know, many of our clients have different liquidity requirements.

Jason, Interviewer: Good point. Inorganic expansion is something that got an outsized play on the second quarter earnings call. I guess when you look across CIB, what areas do you believe acquisitions could be helpful?

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: We’ve just got so much organic growth. It’s not something that, you know, we look at everything. I mean, every one of our business heads has a business development mindset, a team dedicated to sort of playing in traffic to make sure that we’re thinking about the art of the possible, imagining how we’d feel if one of our major competitors woke up and owned something that we might have wanted. There’s no strategic imperative that we need to acquire anything. Hopefully you can get the sense in some of the points I’ve made this morning. We have ways to invest capital, ways to invest to grow our franchise organically. When you can handpick every banker, handpick every client, handpick every loan, handpick every market, it’s a far better way to grow the franchise than to pay a premium for someone else’s business.

Jason, Interviewer: Fair. Private credit’s another area that’s gotten a lot of attention. I guess JPMorgan kind of touches that term in many different ways, but just love to get your thoughts on the state of play. We’ve seen a lot of growth in that segment. Your thoughts there and what role is JPMorgan playing?

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: It’s a tremendous market. It’s grown dramatically in the last several years. It’s now a multiple trillion dollar market. It’s over half the C&I lending market. It’s here to stay and something that we watch very carefully. You all as investors and students of banks should appreciate as well as anybody that banks that had grown loans at over 20% at an extended period of time tend not to do well. There will certainly be winners and losers in this asset class over time. There are some outstanding players, and then there’s some secondary and tertiary players. We’re not so worried about the outstanding players. Many of them, most of them, are clients of ours. The secondary and tertiary players, they’ve not been through a hard recession. I wouldn’t consider the pandemic a hard recession. We’ll see what happens if we see two, three quarters of real tough economic climate.

We touch the segment in several ways where the bank to the GPs. We take them public. We sell these businesses, they’re investment banking clients, they’re markets clients, and we finance their portfolios on a very strategic basis and conservative advance rates. The second part of the business is we have the product offering. With the exception is, in the investment bank and in our markets business, we’re not an asset gatherer. It’s a solution set we’re bringing to solve problems or help our clients. The teams aren’t motivated by, hey, let’s go grow a bunch of direct loans. We were public at our high yield conference early in the year. We announced $50 million of capital availability to be in the direct lending business.

It was meant for nothing other than to signify that we have the balance sheet, we have the scale, we have the capacity, and we’re open for business. It is in no way a target that we, hey, we’ve got to, we expect to, or are working hard to fund $50 million of direct loans. I will also say that we’re running all these credits through our pre-existing credit rails, the same underwriting expertise that’s been in place for generations at JPMorgan Chase & Co., and look at all of our middle market loans, all of our buyout loans, and have delivered extremely strong credit performance for us for decades. We’re running it through the same rails. We’re maintaining the same credit discipline. All it is for us is just a way to be much more holistic and comprehensive and product agnostic in delivering a solution.

We’re in the game, but it isn’t the one and only thing we’re doing.

Jason, Interviewer: Another hot topic has been the evolving regulatory environment. Maybe talk to the right potential changes in stress testing, Basel 3, GSIB, SLR. How does it impact how you run CIB, other businesses that are not as attractive today to become more attractive, and how the evolving landscape impacts you?

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: I mean, we obviously study every moving part of the regulatory framework, but the honest truth is we sort of see through that. We run the business for the long term. We seek to do the right thing for clients, to make the right economic decisions, and try to set up the franchise to thrive through any potential economic outcome. I mean, just sort of since the financial crisis, we sort of wave of historic bank regulation has washed into the business. We’ve been adjusting and navigating, but the true north for us has been serve our clients, run the business with a proper economic lens on the franchise, because you don’t know what can happen from day to day. I think the point I would make is, and Jamie’s made this point publicly many, many times, there’s been a tremendous wave of regulations washed into the banking sector.

Nobody’s really taken a step back and looked at how these rules and regulations intersect with each other and what good or bad comes out of it. We’re absolutely in favor of a strong regulatory environment that creates the safety and soundness that everybody wants. I think that we’re at a point where these things just overlap with each other and create a lot of unintended consequences. It certainly feels like now’s the time to take a fresh perspective on capital and liquidity rules. We’ll see where it goes. We’re sort of steady as she goes in terms of what our strategy is, and we’re sort of seeing past it. We’re imagining if there is a capital relief, we know exactly what we would do. We’re studying all the range of alternatives, but we’re not counting on it.

You also don’t know what the market pricing response would be, depending on whether some of these rules get enacted or changed. I don’t know if that’s a great answer or not, but you know, we’ve been living in this sort of regulatory environment that’s not dysfunctional, might be harsh, but it’s been tough to sort of make long-term decisions knowing that on any given day something could change. We just sort of get back to what our clients need, what’s the right economic lens, how do we build a franchise that’ll thrive through a range of different economic scenarios or regulatory scenarios?

Jason, Interviewer: No, it makes sense. I guess in that vein, if we kind of look at this new CIB, it’s kind of been around six quarters. ROE has kind of been running 17 to 20%, despite investment banking fees maybe not being where they could be, and allocated capital increasing. You’ve talked to kind of 16%. I guess two questions. Given the increased diversity of the business, just how do you think about the variability of returns? Secondly, is something greater than 16% conceivable, just given your market share opportunities, global scale positioning, and the like?

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: I’ll take the last part first. The 16, so everybody’s sort of on the same page, was a medium-term outlook that we gave at investor day. It was just simply that. It was an outlook. It was not an aspirational target in any way. As we sat on stage at investor day, we didn’t know where the regulatory framework was going to go. The economy was wobbly. At that point in the market, it’s very reasonable to consider that we were over-earning on credit, over-earning on deposits. The investment banking landscape, as we telegraphed at that point, was very uncertain. Sixteen was not an aspirational target. Medium-term outlook, given the facts and circumstances we felt at the time. Another notable point is 16 is pretty good and best in class by any standard in a lot of different subcomponents of the businesses we’re in.

On top of that, the 16% outlook for us includes a tremendous amount of investment in our future: platform capabilities, technology, organic growth, bankers, systems, AI, our whole stablecoins initiative. All of that’s in there, and we’re still delivering strong returns in margins. I don’t want to be defensive around the 16. It’s just meant to be a, you know, a conservative guidepost for all of you. Is it possible that we can outperform it? We’ve shown that we can. I think depending on where the economy goes, what happens with regulations, there’s, you know, a real chance that we could do that. In terms of variability around the margins and the returns of the business, having run the commercial bank for 12 plus years, that was a high ROE, much more stable revenue stream margin business than CIB.

By putting that together with CIB, I think you get, it’s accretive to sort of margin stability and return stability. I think another notable point we touched on earlier is the increasing percentage of financing revenues as a part of our markets business. It’s much more stable returns and margins in that. It’s very hard to dimension and quantify, but I think as the business mix has shifted pro forma for the combination, this new commercial and investment bank, you should expect some degree of increase in stability of margins and earnings and returns. At least we’re hopeful that’s the case.

Jason, Interviewer: Great. I think it’s a good point to leave it on. Doug, thank you so much for your time today.

Doug Petno, Co-CEO of the Commercial and Investment Bank, JPMorgan Chase & Co.: Thank you. Thanks, everybody.

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