JPMorgan Chase

Does anyone have a strong view on how JPMorgan's credit card charge-off rates trend from here? They've been ticking up in the consumer banking segment and I'm trying to figure out if this is normalization back to pre-COVID levels or something more concerning given where the lower-income consumer is right now.

It's interesting watching JPMorgan push deeper into payments and fintech infrastructure with products like Chase Pay by Bank and the merchant services business they run through Paymentech. They're not ceding ground to Stripe or Square without a fight, though their approach is more B2B and enterprise-focused than consumer-facing.

JPMorgan completed its full acquisition of First Republic Bank assets and has been steadily converting those branches and client relationships onto the Chase platform. The deal added roughly $92 billion in loans and $30 billion in deposits at the time of acquisition. It was arguably the most opportunistic bank deal of the last decade.

JPMorgan's asset and wealth management segment now has over $3.5 trillion in AUM and is consistently expanding margins. This business alone would be a top-tier standalone company, and the market barely prices it separately because it gets bundled into the whole bank. Long-term this segment is a serious compounder.

Net interest income is almost certainly past peak and management has been guiding it lower for months now. As the Fed cuts rates, the NII tailwind that powered record profits in 2023-2024 just evaporates, and I don't think fee income growth fully offsets that. The stock is priced like NII never goes down.

JPMorgan reported record full-year net income of over $49 billion in 2023, the highest annual profit ever recorded by a U.S. bank. Return on tangible common equity came in at approximately 21%, well above their own long-term targets and peer averages. The results were driven by the combination of elevated NII, strong trading, and the First Republic contribution.

The Basel III endgame capital requirements, even after the revised proposal, are going to constrain JPMorgan's ability to return capital to shareholders more than the street is modeling. Dimon has been vocal about it but investors seem to be discounting the regulatory risk. Higher capital requirements mean lower ROTCEs structurally.

The Chase Sapphire and Freedom card franchise is genuinely one of the strongest consumer finance moats in the business. The travel rewards ecosystem they've built with the Sapphire Reserve, including the airport lounge network and hotel partnerships, creates real switching costs that Citi and Bank of America just haven't replicated.

With Jamie Dimon apparently planning to step down within the next few years, how much of a discount should investors be applying to the succession risk? Daniel Pinto and Mary Erdoes are the obvious internal candidates but neither has Dimon's profile with regulators and the board. Is this a material risk or am I overthinking it?

JPMorgan's investment banking fees came back strong last quarter with equity underwriting up over 50% year-over-year. If M&A volumes keep recovering and the IPO window stays open, the IB segment alone could be a meaningful earnings catalyst heading into 2025. This is exactly the kind of diversified revenue mix that makes Dimon's model look smarter every cycle.