While Wall Street buzzes about interest rates, deposit migration, and buyback capacity, there's a subtle but critical trend emerging within JPMorgan Chase's financials that no one seems to be talking about. The recent Q1 2024 earnings call was packed with the usual jargon about Basel III, QT, and macroeconomic uncertainty. Yet beneath this surface, a remarkable story of sustained organic growth in a challenging environment is unfolding.

JPMorgan Chase, often viewed as a financial behemoth with limited room for expansion, is quietly but relentlessly demonstrating a potent capacity for growth. This isn't about blockbuster acquisitions like First Republic – although the successful integration of that deal is certainly a feather in their cap. It's about consistent, strategic, and almost counter-intuitive expansion across multiple lines of business.

Let's take a closer look at some of the numbers. In the past year, despite intense competition and uncertainty, JPMorgan Chase added a staggering 2 million net new checking accounts. Active card accounts saw a robust growth of 8%. Over the last three years, the bank has expanded its deposit market share by an impressive 180 basis points. These figures are not flukes. They represent a pattern of calculated investment and strategic execution.

This organic growth isn't limited to the consumer banking sector. The Commercial Bank, often seen as vulnerable to competition from private credit providers, is showcasing a remarkable dynamism. Half of the bank's projected expense increase in this segment is directly attributed to the onboarding of new clients and loans in 2023. This momentum, fueled by the bank's willingness to seize opportunities during market disruptions and accelerate its innovation economy strategy, seems set to continue.

Even within the CIB, where JPMorgan Chase already enjoys formidable market share, the story of growth persists. The bank is strategically allocating resources, upgrading talent, and capitalizing on the anticipated rebound in the investment banking wallet. Their payments business, a beneficiary of ongoing investment and innovation, is driving significant share gains.

What's truly remarkable about this growth narrative is its counter-cyclical nature. While much of the financial industry grapples with shrinking margins and tightening lending conditions, JPMorgan Chase is forging ahead. Their confidence stems from a deep understanding of their strengths – a powerful brand, a vast global network, and an unwavering commitment to invest in the cycle.

This sustained organic growth, while not as flashy as a multi-billion dollar acquisition or a surge in trading revenues, might be the most significant indicator of JPMorgan Chase's future success. It reflects a well-honed capacity to navigate challenging environments, seize opportunities, and build for the long-term. The elephant in the room, therefore, is not the macro-economic storm that everyone seems to be bracing for. It's the powerful and quiet engine of growth that JPMorgan Chase has cultivated, an engine that could propel the bank to even greater heights in the years to come.

Hypothesis:

JPMorgan Chase's sustained organic growth, particularly in checking accounts, active card accounts, and deposit market share, will prove to be a more powerful driver of future profitability than short-term fluctuations in interest rates and capital markets.

Key Data Points:

2 million net new checking accounts added in 2023

8% growth in active card accounts in 2023

180 basis points increase in deposit market share over the past three years

Net Interest Income (NII) Trajectory

While the article emphasizes organic growth, the transcripts reveal concerns about the normalization of NII as interest rates potentially decline. The table below shows the projected decline in NII ex-Markets throughout 2024, based on the forward curve assuming six rate cuts.

The chart below visually represents this projected decline. Note that the Q1-Q3 2024 data is not yet available and will be updated in future earnings calls.

Conclusion

JPMorgan Chase is navigating a complex economic landscape. While concerns about NII normalization and potential macroeconomic headwinds exist, the bank's strong organic growth across various business segments indicates a robust and adaptable business model. Investor Day on May 20th promises further insights into the bank's strategic direction and how they plan to leverage this organic growth to drive long-term profitability.

"Fun Fact: JPMorgan Chase processes an estimated $6 trillion in payments globally every day, highlighting the immense scale and reach of its payments business."