The JPMorgan Chase first-quarter earnings call with analysts yesterday (April 14) was noticeably more subdued than the typical tone expressed by the otherwise outspoken CEO Jamie Dimon, one of the few banking leaders who’s been quick to criticize regulators.
In fact, last quarter, Dimon went as far as to say "banks are under assault," when defending his stance on why JPMC wouldn't break up unless the regulators required them to do so. Even in his letter to shareholders last week Dimon kept his tone critical toward regulators when he said that they could affect the company's stock in a negative way.
Saying things like, "uncertainty remains around regulatory requirements," and said that "many questions still remain, and they are hard to explain or are difficult to answer," we were primed for a lively investor call. But Dimon’s tone this week was somewhat muted, who took a backseat to CFO Marianne Lake during most of Tuesday's (April 14) call.
But that didn’t mean that the regulators didn’t come up.
Addressing an analyst's question about the Comprehensive Capital Analysis and Review process as it relates to surcharges and the transparency of the Fed's process, Lake continued Dimon's sentiment about working with regulators.
"With respect to the dialogue with the Fed, it’s definitely much, much further progressed than it was two years and three years ago and every year it gets better in terms of the bilateral conversations and it’s constructive," she said. "I don’t think, however, you could today or will likely ever be able to characterize it as transparent and clear, maybe potentially by designs in terms of understanding or being able to reconcile exactly what their models do and what their results are driven by."
In a memo to JPMC employees, as reported on by The Wall Street Journal, Dimon says the company is "getting safer and stronger," as the "mix of business continues to work well." And in another memo from Gordon Smith, JPMC's head of Consumer and Community Banking, he said the unit has concluded 81 percent of the work on "open regulatory matters," and said the company hopes to have those open regulatory issues behind it by the start of 2016.
In Dimon's letter last week he also spoke about the potential of another economic crash and cited how banks are better equipped to prepare for such a crisis when, and if, it hits again. While Dimon didn't say much during the call, he did elaborate on that matter. His letter indicated that regulators, not just the banks, have a major role in preventing the next financial crisis.
“The banking system is much stronger to start with and every bank in the system is much stronger. So just trying to think through what are the effects of some of these things. And we look at that kind of a warning shot across the bow," Dimon said in yesterday's earnings call. "What I would argue more is what happens in a stress environment. I think people are paying attention to what’s going on in the markets and there has to be changes down the road; there might be changes relative to that."
Specifically looking toward earnings, JPMC's nearly $6 billion in profit for the quarter may have been what left Dimon quieter during the call where he is typically vocal in justifying why numbers didn't go the way the corporation expected. This quarter, however (unlike last, which saw a 6.6 percent drop in quarterly profit), Dimon didn't have to say much.
Last quarter, Dimon spent most of the time talking about cleaning up mistakes of JPMC — adding in his own Dimon-esque flair saying that "I’d like to stop stepping in dog****, which we do every now and then." This quarter, however, Dimon didn't have to worry about cleaning much up — at least not during the earnings call that was focused primary on the growth of the company. The talks of the breakup that flooded last quarter didn't make it into this latest batch of earnings discussions.
Overall, on the payments side, Chase saw a consumer and business banking average deposit increase of 9 percent, year over year and saw its active mobile customer base increase 22 percent. JPMC reported its active mobile customers hit roughly 19.96 million in Q1 of 2015, which was roughly a 900,000 customer increase from Q4 of 2014. From Q1 in 2014 the increase in active mobile banking customer increased roughly 3.56 million.
Credit card sales volume increased 8 percent, year over year, to $112.8 billion for Q1. On its commercial banking side, the percentage of clients grew 68 percent on the year. Income from the consumer and business banking hit $828 million, a $77 million increase from the year prior. Its revenue from that side hit $4.4 billion, which was relatively flat from the year prior.
JPMC posted a profit of $5.9 billion in the quarter, which was a 12 percent increase from the year prior, which was driven by higher revenue. First quarter revenue hit $24.8 billion, which was up $967 million from the year prior. In its Q1 report, JPMC took a new design approach in how it presented its earnings figures, which was streamlined into a more concise eight-page report to focus on the key messages, Lake said. For those looking for more details on the payments-specific numbers, such as mobile payment users, credit card sales volume and merchant processing volume that were in the abridged versions before, that stuff is now left for the full earnings supplement packet.
Because Dimon already provided extensive updates about JPMC's past year last week, that may have been what kept him from providing much more during yesterday's call. One thing he did indicate in the letter was that Chase plans on approaching its payments side of the business in a "very aggressive manner," which means evaluating real-time systems, enhanced encryption techniques, and reduction of costs and “pain points” for customers.
"The combination of Chase Paymentech, our merchant acquirer, ChaseNet, our proprietary Visa-supported network, and ChasePay, our proprietary wallet, allows us to offer merchants – large and small – better deals in terms of economics, simpler contracts, better data and more effective marketing to their clients,” Dimon wrote in the letter. "We are going to be very aggressive in growing this business, and we will be disappointed if we don’t announce some exciting and potentially market-changing ventures.”
Looks like analysts may have to wait until next quarter to see what those "market-changing" ventures may be.