JPMorgan Chase & Co. executives said they have seen barely any pressure on retail deposit pricing but that there has been movement among high-wealth deposits into investment assets.
But with little pressure on core deposits, there was little concern about a flat yield curve hurting profits over the long term.
Speaking Oct. 12 during the bank's third-quarter earnings call, CFO Marianne Lake said client behavior has largely tracked the bank's modeling and expectations, adding that there is nothing unique about the current rate cycle despite the extraordinarily long period of low rates. In the bank's asset and wealth management division, Lake said there has been incremental movement but that customers are largely moving deposits into investment assets also managed by JPMorgan. The bank expects movement in retail deposits into money market funds to follow the movement by high-wealth clients. Also, Lake said there will be outflows of wholesale deposits as the Federal Reserve shrinks its balance sheet.
"I would tell you that we are seeing that rotation start ... Those things are going to play out over the course of the next — depending on the rate cuts — over the course of the next two to four years. So we've begun to see it. It should be expected," Lake said.
At the same time, Lake said there has not been much pressure on the core deposits held by retail customers.
"There has been very little to no movement on repricing of deposit accounts," Lake said. "There's been some incremental movements in certain savings and [certificates of deposit], but nothing systematic in the consumer space."
In terms of retaining deposits, management played up the bank's technology offerings, saying that convenience and ease of use will help the bank retain retail deposits without needing to offer aggressive pricing. Management also mentioned deposit retention on a question about the bank's branch network, saying that retail branches continue to play a critical role in deposit growth.