JPMorgan Chase Earnings Call: Strong Results, Rising Risks

JPMorgan Chase & Co. ((JPM)) has held its Q4 earnings call. Read on for the main highlights of the call.

JPMorgan Chase Delivers Robust Results but Flags Regulatory and Investment Headwinds

JPMorgan Chase’s latest earnings call struck a confident but cautious tone. Management highlighted another year of record profitability, strong balance sheet metrics, and powerful client demand across markets and wealth management. At the same time, executives warned that 2026 will bring higher expenses from strategic investments, a temporary capital drag from the Apple Card transaction, and meaningful regulatory and policy risks that could weigh on card economics and capital planning. The message was clear: the franchise is performing exceptionally well today, but the environment is getting more complex and potentially less favorable.

Strong Quarterly and Full-Year Profitability

JPMorgan reported fourth-quarter net income of $13.0 billion, translating into earnings per share of $4.63 and a robust return on tangible common equity (ROTCE) of 18%. Excluding significant items, full-year net income reached $57.5 billion, with EPS of $20.18 and an impressive 20% ROTCE, underscoring the bank’s ability to generate high returns even in a tougher macro and regulatory backdrop. Management repeatedly framed these results as evidence of the strength and diversification of the franchise, giving the bank room to keep investing and absorbing near-term hits from regulation and one-off items.

Revenue Growth Across the Franchise

Fourth-quarter revenue rose 7% year over year to $46.8 billion, driven by broad-based momentum rather than a single line item. Higher markets revenue, stronger asset management fees, and increased auto lease income all contributed to the top-line growth. The performance underlines that JPMorgan is not only benefiting from its scale in traditional lending but also from fee-based and market-sensitive businesses, which provide important revenue diversification as the interest-rate outlook becomes more uncertain.

Corporate & Investment Bank and AWM Lead Segment Strength

The Corporate & Investment Bank (CIB) and Asset & Wealth Management (AWM) units were standout performers. CIB revenue climbed 10% year over year to $19.4 billion, with equities revenue surging 40% and fixed income, securitized products, and emerging markets rates up 7%, reflecting strong client activity and market share gains. AWM revenue grew 13% to $6.5 billion, delivering a hefty 38% pretax margin, highlighting the high profitability of JPMorgan’s wealth and asset-management platform and the benefits of scale, brand, and distribution.

Record Asset Flows into Asset & Wealth Management

AWM saw powerful client demand, posting $52 billion of long-term net inflows in the quarter, positive across channels, regions, and asset classes. Liquidity products attracted another $105 billion of net inflows in the quarter, and for the full year the firm set a record with $553 billion of client asset net inflows. These numbers highlight the franchise’s ability to attract and retain investor assets in a range of environments, reinforcing JPMorgan’s position as a go-to manager for both retail and institutional clients.

Resilient Consumer and Card Franchise with Strong Customer Acquisition

Management emphasized ongoing resilience among consumers and small businesses, with combined debit and credit card sales volumes up 7% year over year. The bank added 1.7 million net new checking accounts and 10.4 million new card accounts over the year, while also reaching record numbers of wealth-management households across digital and advised channels. This growth underscores the health of JPMorgan’s consumer franchise and its ability to deepen relationships, even as management acknowledges an emerging uptick in card delinquencies that is being closely monitored.

Clear Guidance on Net Interest Income and Expense Trajectory

On the call, JPMorgan provided unusually transparent guidance for 2026. The bank expects total net interest income (NII) of roughly $103 billion, including about $95 billion ex-markets and approximately $8 billion from markets NII. At the same time, adjusted operating expenses are projected to rise to about $105 billion in 2026. Management framed these higher costs as largely deliberate, reflecting growth-related spending, technology build-out, and strategic initiatives rather than simple cost inflation, but investors will still note that expenses are poised to outpace NII growth on current assumptions.

Prudent Provisions and Transparency Around Apple Card Transaction

The bank addressed the Apple Card forward purchase commitment head-on, recording a previously announced $2.2 billion reserve build (NCCV) tied to the transaction. Management provided detailed disclosures around the related risk-weighted asset (RWA) impact and allowance levels to reassure investors that the associated credit risk has been conservatively provisioned. While the reserve build is a notable headwind to near-term earnings, the bank’s framing suggests it views the Apple Card relationship as strategically important, with the upfront credit cost absorbed against a still-strong earnings base.

Capital Position Remains Healthy Despite RWA Pressure

JPMorgan ended the quarter with a standardized CET1 capital ratio of 14.5%, which the bank described as a position of continuing capital strength. The ratio declined 30 basis points quarter over quarter, primarily due to capital distributions to shareholders and higher RWA. Even with these headwinds, the bank remains well above regulatory minimums, giving it flexibility to continue its dividend and buyback programs while absorbing the temporary RWA spike from the Apple Card transaction and other regulatory capital changes.

Expense Growth Driven by Strategic Investments

Operating expenses for the quarter rose 5% year over year to $24.0 billion. Looking ahead, management signaled that adjusted expenses could reach about $105 billion in 2026, roughly $9 billion higher than current levels—an increase of about 9%. The rise is attributed to volume and revenue-related costs, higher compensation including ongoing hiring, stepped-up technology investment, real estate and office catch-up spending, and targeted growth initiatives such as artificial intelligence. While this will pressure near-term efficiency ratios, the bank positioned these outlays as necessary to defend and extend its competitive edge.

Apple Card’s Impact on Reserves and Capital Requirements

Beyond the reserve build, the Apple Card transaction had a sizable impact on capital metrics. It added around $23 billion of standardized RWA and approximately $110 billion of advanced RWA at closing, creating a visible drag on capital ratios and complicating capital planning. Management noted that it expects the advanced RWA associated with this deal to decline to about $30 billion in the near term, which should ease some of the pressure. Nonetheless, the initial step-up illustrates how large consumer partnerships can meaningfully affect regulatory capital under today’s rules.

Quarterly CET1 Ratio Decline and Capital Distribution

The 30-basis-point quarter-over-quarter drop in the standardized CET1 ratio to 14.5% was a focal point, as it reflected net income being more than offset by shareholder distributions and higher RWA. While the ratio remains solid, management acknowledged that elevated advanced RWA and regulatory changes are constraining how aggressively the bank can return capital. Investors are being asked to balance the near-term drag from regulatory capital dynamics against the bank’s ongoing ability to generate capital internally through strong earnings.

Card Credit Stress Outlook Turning Less Favorable

Even as consumer health remains broadly solid, JPMorgan is bracing for some normalization—and even deterioration—in card credit metrics. Management forecast a 2026 card net charge-off rate of about 3.4%, citing an unfavorable delinquency trend that is gradually building. This anticipated uptick in losses is not yet alarming given the strength in employment and spending, but it suggests that the easy phase of post-pandemic credit performance is over, and that card portfolios may exert more pressure on earnings as the cycle matures.

Investment Banking Fees Face Timing-Related Pressure

Investment banking fees were down 5% year over year, which management said reflected tough comparisons against a strong prior-year quarter and deal timing that pushed some transactions into 2026. While this created a modest drag on CIB results, the broader CIB revenue line still grew 10%, and management implied that the pipeline remains healthy. For investors, the message is that volatility in individual fee lines can be offset by strength in trading, lending, and other CIB activities.

Growing NVFI Exposure and Structural Risks

The bank highlighted that its lending exposure to nonbank financial institutions (NVFIs) has grown materially over the past seven years. Historical loss experience has been benign—management noted only a single charge-off since 2018, linked to fraud—but executives cautioned that structural risks remain. In particular, they flagged that fraud or a deep recession could test these exposures in ways that past performance does not fully capture. This emphasis suggests that JPMorgan is keenly aware of potential pockets of risk outside the traditional banking system.

Regulatory and Policy Uncertainty Threatens Consumer Pricing

A key area of concern was regulatory and policy risk around consumer finance. Management pointed to public discussions of potential credit-card interest-rate caps and changes around stablecoin regulation as possible significant downside scenarios. They warned that such measures could materially change card economics, reduce the availability of credit—especially for higher-risk borrowers—and weigh on profitability across the industry. While nothing is finalized, JPMorgan is clearly preparing investors for a world where consumer credit may be less lucrative and more tightly constrained by policy.

Elevated Advanced RWA as a Temporary Capital Drag

Advanced RWA rose sharply, partly due to the Apple Card transaction, leaving the bank with a temporarily elevated RWA profile that complicates capital planning. Management emphasized that they expect advanced RWA to decline from current levels to something more manageable, including an expected drop of the Apple Card-related advanced RWA from roughly $110 billion to about $30 billion. Until that normalization occurs, however, the bank must run with extra capital buffers, which may limit the pace of buybacks even as earnings power remains strong.

Forward Guidance: Solid Earnings Power with Higher Costs and Credit Normalization

Looking ahead to 2026, JPMorgan guided to total NII of roughly $103 billion, including around $95 billion ex-markets and about $8 billion from markets-related NII, a profile that implies modest growth rather than a big rate-driven windfall. Adjusted operating expense is expected to reach roughly $105 billion, reflecting heavy investment in technology, staffing, and infrastructure. The bank also forecast a card net charge-off rate of around 3.4%, in line with an unfavorable delinquency trend and a return toward more normal credit conditions. At quarter-end, the standardized CET1 ratio stood at 14.5%, and the Apple Card transaction had added about $23 billion of standardized RWA and roughly $110 billion of advanced RWA, with management expecting that advanced figure to drop to about $30 billion. The $2.2 billion NCCV reserve build related to Apple Card has already been taken, signaling that some of the most visible one-off hits are now behind the company.

In summary, JPMorgan’s earnings call portrayed a franchise firing on all cylinders yet entering a period of heavier investment, higher regulatory complexity, and more normalized credit costs. Strong revenue growth, record wealth and liquidity inflows, and a resilient consumer and CIB platform underpin confidence in the bank’s long-term earnings power. However, elevated expenses, temporary RWA pressure from the Apple Card transaction, and potential policy moves on card pricing represent real, not theoretical, headwinds. For investors, the story is one of a high-performing bank choosing to lean into growth and innovation even as it navigates a more challenging regulatory and credit landscape.