It’s all about the consumer and artificial intelligence, even on a day when five big banks were tracking record-setting earnings.
During JPMorganChase’s second-quarter earnings call Tuesday (July 14), executives described spending patterns and credit performance that continued to exceed expectations despite elevated interest rates.
Chief Financial Officer Jeremy Barnum said consumer spending was “robust across income segments,” supported in part by tax refunds, while delinquencies came in “a little lower than we expected.”
The firm’s internal data does not support a broad “K-shaped” view of the consumer, although households experiencing negative real wage growth remain an area the bank continues to monitor, Barnum said.
Looking ahead, the principal driver of consumer credit performance has not changed.
“When it comes to consumer credit performance, it’s just about the labor market,” Barnum said on the earnings call, which helped kick off earnings season on Wall Street. “It’s been surprisingly resilient. So, for now, that’s the narrative.”
The operating results reflected that picture. As detailed in company materials that accompanied earnings results, consumer and community banking revenue rose 8% from a year earlier to $20.3 billion, driven primarily by higher card net interest income associated with larger revolving balances. Average card services loans increased to $243.5 billion from $228.4 billion a year earlier, while card purchase volume reached $373.1 billion, up 10%. The card services net charge-off rate was 3.34%, compared with 3.4% a year earlier.
The digital franchise also continued to expand. Active mobile customers increased 6% year over year to 63.7 million, while combined debit and credit card sales volume rose 10% to $535.8 billion. Average consumer and community banking deposits climbed 3% to $1.1 trillion.
The figures indicate that payment activity, borrowing and customer engagement all continued to grow during the quarter, even as consumers faced higher borrowing costs.
FinTech Competition Extends Beyond Traditional Banks
Questions about AI prompted a broader discussion of how technology is reshaping competition across financial services.
CEO Jamie Dimon said JPMorgan now has nearly 1,000 AI use cases under development, with roughly 50 representing the bank’s largest efforts across fraud detection, risk management, marketing, prospecting, note-taking, document review and other functions.
The technology should create “huge efficiency in certain parts of the company,” Dimon said, adding that some business units have already reduced staffing substantially and reassigned many employees elsewhere in the organization.
Dimon also cautioned against assuming those gains will remain exclusive to the largest banks.
“The ultimate beneficiary of AI will be our customers,” Dimon said, adding that competition will ultimately convert many productivity gains into better products, lower costs and fewer errors rather than permanently higher bank margins.
The competitive landscape extends beyond large banking institutions. Discussing future investment priorities, Dimon cited Stripe, PayPal, Block, Chime, SoFi and Revolut as competitors that require JPMorgan to continue investing in technology, products and customer experience. He said the bank has opportunities for organic growth, but maintaining that position requires continued investment as banks and FinTech firms develop new capabilities.
Dimon also said AI tools will become available throughout the industry as technology providers distribute them more broadly. Smaller institutions will gain access to many of the same capabilities through established technology vendors and FinTech companies, reinforcing his view that AI will become a widely available operating tool rather than a feature reserved for the largest banks.
Shares were up 2.5% in early trading Tuesday.
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