JPMorgan Chase & Co. Presents at Bank of America Future of Financials Virtual Conference 2020, Nov-09-2020 09:40 AM - NYSE:JPM

NYSE:JPM

Marianne Lake, an executive at JPMorgan Chase & Co., presented at the Bank of America Future of Financials Virtual Conference in 2020 and discussed several topics related to the state of the economy and the financial industry during the COVID-19 pandemic. Here is a detailed summary of her remarks:

1. Consumer Stability: Marianne Lake noted that the consumer in the United States was relatively stable at the time, better than initially feared during the height of the pandemic. This stability was attributed to government stimulus and broad payment relief programs. She also mentioned that household balance sheets and liquidity were strong before the crisis, which helped cushion the impact.

2. Economic Recovery: The economy was doing okay, with no clear signs of softening. Spend trends were grinding higher, indicating a solid recovery from the lows experienced in the second quarter of 2020. Durable spend was highlighted as a bright spot, with a 14% year-on-year increase in consumer spending.

3. Payment Relief Programs: In consumer lending, the majority of individuals who requested payment relief earlier in the pandemic had exited these programs and were current on their payments. There was no indication of a second wave of deferrals at the time. For home lending, due to the CARES Act, 40% of those who sought help were still in payment relief because of the 12-month opportunity provided.

4. Stimulus Impact: The effectiveness of the stimulus was likened to a bridge, with the question being whether it was strong enough and long enough to help people get to the other side of their hardships. Lake believed that a second stimulus package was necessary and likely, but it was unclear how long the bridge would need to be.

5. Distribution Strategy: JPMorgan Chase & Co. remained committed to an omnichannel strategy, combining physical branches with digital channels. The company continued to open new branches, particularly in underserved communities, while also seeing an acceleration in digital transactions.

6. Deposit Growth: Deposit growth at JPMorgan Chase & Co. increased significantly year-over-year, driven by lower spending, higher savings rates, and stimulus-related deposits. However, the company also emphasized its success in building primary banking relationships, which contributed to the growth.

7. Portfolio Quality: The consumer lending portfolios were repositioned over the last five to ten years to be of higher quality, with better FICO scores and incomes, and a more spend-centric approach. This was expected to lead to lower peak loss rates compared to the previous financial crisis.

8. Card Products and Innovation: Investments in new card products, value propositions, and digital capabilities were made to maintain market share and drive growth. This included refreshing existing cards and launching new ones to meet changing customer needs, such as increased rewards for grocery, home improvement, and streaming services.

9. Home Lending Strategy: The strategy for the Home Lending business focused on winning with existing Chase customers and leveraging data and distribution capabilities. Efforts were made to improve efficiency and scalability in loan origination and production, with a focus on digital transformation.

10. Purchase Market: The purchase market in 2020 was estimated to be around $1.3 trillion, with homeownership rates up 4% year-over-year. Lower interest rates, combined with a solid economy, were driving a healthy purchase market, especially among younger customers.

11. Risk Management: JPMorgan took quick action in response to the deteriorating economic environment and has since become more surgical in its risk management strategies. The company has introduced new datasets and models to better segment customers and loosen some of its criteria in home lending.

12. Competition and Partnerships: JPMorgan learned from and competed with fintechs and neobanks by identifying and resolving customer pain points. The company also partnered with these firms, leveraging its scale, distribution, and data assets.

13. Regulatory Environment: Regardless of the political climate, JPMorgan planned to continue running its business for the long term. The company would comply with regulatory expectations and maintain a focus on customer protection.

14. Future Outlook: Despite short-term uncertainties, Marianne Lake was optimistic about the potential and future of consumer lending businesses. She expected growth in 2021, particularly in the mortgage and auto spaces, and saw opportunities for innovation and value addition for customers.