JPMorgan Chase & Co (JPM) (Q3 2026) Earnings Call Highlights: Strong Profitability Amid ...

Negative Points

• Expenses increased 12% year-over-year to $27.3 billion, driven by higher volume- and revenue-related expenses and wage inflation, impacting overall profitability.

• Credit costs rose to $2.7 billion, including net charge-offs of $2.2 billion and a net reserve build of $539 million, indicating potential credit quality concerns.

• Fixed income markets revenue declined 4% year-over-year due to lower revenues in commodities, rates, and credit, partially offset by higher client flows in currencies and emerging markets.

• The company reported $658 million in net investment securities losses, which negatively impacted revenue and net income.

• JPMorgan Chase & Co ( NYSE:JPM ) faces uncertainty in investment banking activity, with recent market conditions slowing activity, and potential regulatory changes (e.g., Basel III Endgame) could affect capital management and buyback plans.

Q & A Highlights

Q: Can you unpack the new outlook for 2027 NII, including assumptions around balance sheet growth, deposit pricing, and the impact of higher rates? A: CFO Jeremy Barnum explained that annualizing the Q4 NII ex Markets guide of $25.5 billion yields roughly $102 billion, so the $107 billion central case implies about $5 billion of growth. About a quarter of that is related to the yield curve (asset sensitivity and the hikes in the forward curve), with the rest driven by continued balance sheet growth and mix trends modest consumer and wholesale deposit growth and card loans at the comp level. CEO Jamie Dimon added there is more uncertainty than normal given global conditions.

Q: Why was the buyback only $1 billion versus the normal cadence of around $7 billion, and how should we think about capital priorities given Basel III Endgame and G-SIB finalization? A: CEO Jamie Dimon said the firm has roughly $30 billion of excess capital and that the capital hierarchy is unchanged: fund the dividend, then prioritize organic growth as the highest and best use of capital, with buybacks last especially when stock prices are up. He said the firm now believes it can redeploy that capital at very good returns over time, citing the security resiliency initiative where $1.5 trillion is expected to be deployed over 10 years. CFO Jeremy Barnum noted CET1 has fallen from about 15.7% to 13.9% amid heavy organic deployment and buybacks.

Q: How do you assess the disruption risk from agentic AI and the challenge of deploying it inside a bank given rogue agents? A: CFO Jeremy Barnum said the competitive threat is really the intersection of two long-standing themes yield-seeking flows and fintech competition on customer experience so it is "nothing new," though the firm is not complacent and likes its hand given decades of investment in branches, value proposition, and customer trust. CEO Jamie Dimon said JPMorgan uses agents internally and will use them for customers, but will not allow just any outside agent into the company because of the risk to clients and the firm, and is building tools to protect customers from rogue agents and clarify liability transfer.

Q: Can you quantify the AI benefits and address the risk that AI agents will take deposits out of JPMorgan? A: CFO Jeremy Barnum said the AI expense figure cited in media (around $2 billion) was not exactly right and is significantly lower, and that AI costs are now diffused across the institution and hard to ring-fence. He is reluctant to quantify benefits because it distracts the organization, and noted benefits are not yet observable in quarterly earnings, though early use cases in software engineering are exciting. On agents, he said the True North is protecting the client, the firm is against credential sharing and screen scraping, and trust is a key asset but that trust is not an excuse for complacency on customer experience.

Q: On expenses, what are your preliminary thoughts on 2027 investments and drivers versus the Street forecast? A: CFO Jeremy Barnum said expenses are still in the budget cycle with discretionary decisions pending, but the current consensus for 2027 expenses of around $114 billion is not too far from the firm's preliminary read unlike last year when the consensus was off. He noted uncertainty around the macro environment, the dynamic investment picture, and the effects of AI.

Q: What is the health and durability of the consumer if rates stay high for another year? A: CFO Jeremy Barnum said the consumer is currently very healthy, primarily due to a healthy labor market, and has been resilient despite multiple headwinds. However, if the central bank needs to cool the economy with an aggressive, extended rate cycle, that would almost by definition involve higher unemployment and weaker consumer credit results. He called the conditional relationship between higher rates and consumer credit a nuanced question.

Q: What are you seeing in consumer deposit growth, rate-seeking behavior, and deposit competition? A: CFO Jeremy Barnum said there is no significant change to core expectations, with consumer deposit growth reasserting as yield-seeking flows faded. A higher rate environment could drive migration from checking and savings into CDs and premium deposits, raising the weighted average rate paid and slightly weakening deposit growth, though this is speculative. He highlighted exceptionally strong franchise performance, including about 650,000 net new checking accounts in the quarter.

Q: What is the deposit beta outlook given rates may rise further, and how does this cycle differ from 2022-2023? A: CFO Jeremy Barnum said this rate cycle is arguably even more unprecedented than the last, so historical data for models is not rich and out-of-the-box thinking is important. He described the deposit franchise as a barbell between very high beta deposits (most wholesale, CDs, premium deposits) and a stack of very low beta consumer deposits, with the key question being migration behavior across products rather than pricing of any given product. Local expectations are for roughly the same behavior as recently, but all scenarios are being considered.

Q: How are you managing hedge fund leverage and leveraged finance risk, which the IMF flagged as systemic? A: CEO Jamie Dimon said the firm worries about a lot of things, not what the IMF thinks, but acknowledged the IMF "aren't wrong" given the leverage in some of these structures. CFO Jeremy Barnum said hedge fund leverage is a known risk that has been relevant for decades, with funds increasingly institutionalized and professional in risk management and margin relationships, placing it in the "known unknown" category. Dimon noted recent unwinds on the equity and fixed income arbitrage side were handled easily by the Street.

Q: Can the market finance the hyperscaler AI compute build-out without breaching concentration limits? A: CFO Jeremy Barnum said single-issuer concentration will be managed and that assessing direct and indirect exposure, capital structure position, and collateral value requires sophisticated credit analysis. He noted increasing use of diversified capital markets financing for the build-out with a lot of capital waiting to be deployed, and flagged potential crowding-out effects. He stressed that the AI theme is broadly diffused across working capital revolvers and equity markets, so enterprise-wide stress testing is essential; current exposures are modest relative to overall wholesale exposure, but no one would be immune to a major sentiment shift in AI.

Q: What are you seeing with core middle market commercial banking clients as rates move higher? A: CFO Jeremy Barnum said the

For the complete transcript of the earnings call, please refer to the full earnings call transcript .