JPMorgan Chase & Co. (NYSE:JPM) Barclays Global Financial Services Conference 2024 September 10, 2024 9:45 AM ET
Company Participants
Daniel Pinto – President and Chief Operating Officer
Unidentified Analyst
Moving right along, very pleased to have JPMorgan Chase with us once again from the company we have Daniel Pinto, President and Chief Operating Officer. Daniel, thank you.
Daniel Pinto
Thank you. Nice to be here.
Question-and-Answer Session
Q – Unidentified Analyst
Obviously, we’re going to spend a lot of time talking about JPMorgan Chase this morning, but I’d love to get your macro view of the world inflation rates, geopolitical elections, obviously a lot going on. Maybe we could start with the consumer, you guys, I think 80 million customers, 11% deposit market share, 17% credit card market share. So I think you’re more well-informed than almost anyone in kind of the real-time view of the health of the consumer, your kind of unemployment rates have picked up a bit. Maybe kind of what are you seeing?
Daniel Pinto
Well, what we see is that the US economy, even though we see some slowdown, is doing still okay, and the consumer is the main driver of that growth. So what we see is consumption is still there, and we have seen some change in behavior, like discretionary consumption now stabilized, but it came down a bit, and non-discretionary is still growing at a slower pace but is growing. The consumer has delivered over a period of time, so the bulk of the mortgages have been refinanced at lower rates. Employment rates have gone up a bit, but it’s still within reasonable levels and wages. [We’re still] (ph) growing around 3.6% or so.
So the consumers are in a relatively good shape. We see, for example, though the excess savings coming from the pandemic, those are more or less spent, particularly in the lower segments. The cash buffer in the lower income segment, there is still elevated to historical average because wages are growing faster than inflation. So the picture of the consumer still now what it was a year ago, but it’s still in a solid place.
Unidentified Analyst
And maybe shift gears. Obviously, how’s the strong relationship with wholesale clients, maybe kind of a [throw-out around] (ph) business sentiment at the moment?
Daniel Pinto
Business sentiment is okay. I think that there is quite a lot of dialogue in M&A, though concerns about geopolitics, concerns about the election in this country, what is going to happen with race, or not. So the supply chain situation is pretty much normalized. The tension between the US and China is always an area of concern. So in general, there is dialogue. There is activity going on. But CEOs have in their mind all these concerns, so therefore they are more or less careful.
Unidentified Analyst
Got it. We could put up the first ARS question that we’ve been asking all the companies, all the investors for each company. But so I guess you were here two years ago, it sounds like something had changed since then, others remain the same, but one thing is kind of the corporate and investment banking kind of structure of the company, combined commercial banking and corporate banking or corporate investment banking kind of this new CIB, the Commercial and Investment Bank. Maybe just talk to the rationale and maybe provide some examples of kind of the benefits or maybe even some challenges that have occurred.
Daniel Pinto
So these were two very, very successful units, one of the biggest commercial bank in the United States, growing international and the biggest Corporate Investment Bank in the world. So — and we’ve been discussing with Jamie over a long period of time, several years, what is the right time to do this. And I think that the reason why others did, but we didn’t do it before several years ago, is because we wanted to be sure that the correct focus on the different client segment was there that we were not going to be distracted with the large clients and not pay attention to the middle market, which is a huge opportunity in this country and broad international.
So we allow this business to grow to a very, very good place. So at some point, you realize that having two externally reported unit give you one challenge. And the challenge is where is a client better served. And then if you ended up every client that becomes bigger, gets transferred to the corporate investment bank. So this unit would never grow. So I think that by putting it all together, allows a proper coverage of the clients, whatever is the best place for them to be served, give us a more effective way to cover more the high end of the middle market outside the United States, a bit more, with more resources that we would have done just in the commercial bank.
And over time, you are going to have some efficiencies and things like that. So it makes all the sense in the world. I think that Jen and Troy have done a very good job putting it together. And I think that it put us in a better place to compete across client segments from the middle market all the way to the global large international companies.
Unidentified Analyst
You mentioned Jen and Troy doing a good job putting it together, that kind of used to be your baby. So now with them in charge of the CIB, how are you spending most of your time?
Daniel Pinto
Well, before I did two things. I was running the Corporate & Investment Bank, and it was the same job as I have now. And the reality was that the strength of the leaders in each of the lines of business, in markets, in payments, in securities services, in banking really didn’t require me to be too much in the day to day. So these guys, women, they were running their operations very, very effectively. So essentially, I oversee a bit of that. But essentially, in the last several years, I’ll be focused with Jamie and overall management of the company and working with my partners in wealth management and private bank or in the retail bank or now in the corporate and investment bank, in areas where I believe there are opportunities for this company to grow.
And so essentially, I’m still doing pretty much the same. So I’m working with Jamie in running the day-to-day and focus in all these areas, including technology, including artificial intelligence. Every part of the company to make sure that the company that is performing very, very well continue in the same path.
Unidentified Analyst
You mentioned opportunities to grow. So maybe the graving kind of maybe run through each of the major business lines. And kind of where you see those opportunities. We could start with CCB. One of the things that struck me at Investor Day was you talked about 15% deposit market share target, US, retail deposits are around 11%, or so now 20% credit card market share, up from 17%. Maybe just talk to how you plan to achieve those objectives? How long it takes to get there?
Daniel Pinto
So the opportunity in retail here in the US, even though the business is an amazing business, it is, it’s really, really big. So deposit is one opportunity. We said — we’ve been growing in normal periods around 30 basis points a year in market share in deposits. But when you look at all the markets in the United States, and when you look at the markets where we have been there for a long period of time, that we have a very consolidated presence. We have market shares about 20%, 25%, 26%, things like that. And there is a big segment of markets where we’ve been for a long time, but not as long, and they are in the 10%, 15%.
And then we’ve been expanding in the last several years in new markets where we’ve been for a very short period of time. And in those, in some places, we have 1% market share or 1.5% market share. So just continue investing in expanding the branch, optimizing and expanding the branch network in the new markets, continue creating a great client experience. We may talk later about how are we thinking about covering affluent clients. Things like that will naturally take us to that 15%, and it may be even higher when you consider how we are doing in markets over the long-term, how we are doing in markets that we are very consolidated.
Credit cards, we’ve been doing very, very well. So the revolving balances are roughly 25% above where they were pre-pandemic. But one thing hasn’t recovered totally yet, which is — when you think about revolved, number of clients that they are revolving is still lower, substantially lower than it was below — before the pandemic. So just — and that will normalize over time. So just that will give you some growth. We have great assets. We’re putting a lot of marketing dollars to continue growing that business to different channels, the investments that we are making in travel services, in connected commerce.
And so we think that there are opportunities. There are opportunities in the starter segment of the population. There are opportunities to grow in business, cars and big opportunities in the very, very premium segment. So we think that the credit card business, that is a fantastic business that we have, I think that we’ve been growing. And I think that, that momentum towards 20% over the next few years is very achievable.
Unidentified Analyst
Got it. I guess there is two initiatives across the firm where you’re targeting maybe a slightly different customer base, first, maybe the First Republic integration kind of taking a different kind of new approaches with the branches there. And second, obviously, UK retail banking, we’re taking no branches and I guess there’s an article yesterday, you hired someone to maybe take that to Germany. Maybe just provide us an update, kind of each of those –.
Daniel Pinto
So the problem there on retail is the other opportunity that we’re really very focused on is wealth management in the sub-$10 million segment. We are really, really small. We have 1.5% market share there, probably — even probably lower. We are making a lot of progress. And essentially, the strategy is to use the branch network and put advisors in the branches to capture the trillions of dollars of money that is being managed by someone else, of clients that they have their primary account with us, and that is really doing very well. So I think that those are the segments where we believe the retail business could continue.
First Republic, like, obviously, they have made a mistake. Ended up where they ended up, but the company itself, it was amazing. The quality of the balance sheet, it was great. They got it at the wrong price, but the quality was real. So the — what we were expecting to get out of the $235 billion in assets that we acquired performing totally according to plan, slightly better, number one. They did an amazing job servicing affluent clients. And we are learning a bit how we can, in a big company like us that ended up a bit siloed between credit cards, banking, business banking, mortgage, auto financing, how we can — particularly for the millions of affluent clients to provide a better experience, to have a single point of coverage that allows those customers to really navigate the company better.
And we are experimenting in Boston and in New York, you have these sort of coverage centers with bankers, they will be brand JPMorgan. I think that Mark O’Donovan mentioned that at Investor Day, and see how we can deepen the relationship with those affluent customers that we have in addition to the bankers that we acquired from First Republic that they are doing a very good job. So I think that we need to do and we are going to do a better job in covering affluent clients, and we think that deepening that relationship will be a big plus for the retail business and so far so good, the First Republic.
On international retail, is going probably better than we were expecting. We are reaching by now around $28 billion in deposits. We have 2.3 million customers, 1.5 million — 1.6 million of those are highly engaged. We are adding more products. We are launching joint accounts. We are launching credit card, we are progressing with the integration of Nutmeg, the Wealth Management acquisition that we did — that at the moment is around $9 billion, $10 billion in asset under management and growing fast to make a better and nicer experience through the app.
The strategy, it is the same. We are now going to have branches or anything like that. It is all digital. And at some point, we will expand into the rest of Europe. But at no point, we are going to — we talked in the last couple of Investor Days about the cash burn of the business, and we are way inside that, even though we are investing because the business is performing and growing faster. The brand recognition is really very high now, and the client satisfaction is really good. So we need to do a lot of work to keep optimizing the operational side of it, just to make it more and more effective and less high touch and more low touch and having a better client experience. So — but really, this one is going well. And we will continue assessing as time goes by.
Unidentified Analyst
Got it. And maybe turning to CIB. Obviously, leading positions in many of the segments you compete in. Can you continue to grow share? And then maybe kind of what sub-pockets of business do you feel like you’re not really leading up the potential and you can expect improvement?
Daniel Pinto
Well, in markets, start with markets, at the moment we have 12.3% market share overall between fixed income and equities. We have lost in the last three years or four years, a bit of market share in fixed income. When the wallet grow up again, some of the marginal players they were — they took some of the wallet. But within in equities, we’ve been growing market share and we continue to grow market share according to Coalition, at the moment, we are Number #1, with equal one in equities.
So that franchise is doing very, very well. And it’s — but it is a tough business for us and for everyone else. So we are going to continue investing in this franchise because I am a strong believer that the wallet in that segment will continue to consolidate because the wallet now — the overall wallet has been stable for the last two or three years, a bit up or a bit down. And even at those levels, of wallet that is higher than it was in the past, is still for banks that they are – players that they are not at scale, it is a low return proposition.
So as the wallet stabilizes, probably it will be more consolidation towards the top five to 10 players. So that is about continuing investing, managing the capital and the liquidity effectively, deepening into the relationship with the big clients. So — and that is going very, very well. In banking at the moment, 9.1% market share according to the Logic. And they are also the — I don’t know what is the potential because at the end, you have conflicts, companies have to pay for a deployment of balance sheet to many banks, but I don’t know what it is, but probably it’s more than 9.1%. So — and there are sectors and segments and geographies where we were not doing a good job, as we could have done.
So we are investing in hiring some bankers, optimizing our strategy, taking advantage of now the combination of the commercial bank and the corporate and investment bank into the new unit. So I think that there is some growth there. Payments, we have done amazingly well. So we almost doubled market share in the last five years, six years. We are heading towards 10% global market share in payments. And I think that — that is another business that it was very obvious to me that many years ago that such a fragmented business with such a risk like cyber attacks and things like that, was a need for investment and client experience was something that marginal players will really struggle.
So it was a wallet that it was always was going to consolidate. That’s why we invested so much. We got, without the market share, as I mentioned. And I think that — that will continue to grow. The growth is not just because interest rates went up. It’s a lot of fee growth because we are winning pretty much everything that we are interested in winning. So we are in a very good position there. And then in Securities Services, we are doing a good job. It’s a very tight ship. We are a top three player. We continue to grow. We’ve been investing in technology to create a better client experience, so good returns. So it is a good business. So overall, the corporate and investment bank has opportunities to grow, even though at the moment, is probably the biggest that exists in the world still, had more to go.
Unidentified Analyst
Helpful. And I guess I kind of look at Asset & Wealth Management, well run, solid, profitable business.
Daniel Pinto
Yes, with many opportunities. I think that on the Asset Management side, there we have a fantastic franchise growing amazingly well. We have a great franchise in real estate. That is doing fine, but I think that is mainly core and you can expand into that. We have a great franchise in infrastructure. That is mainly core infrastructure, the less risk, lower return. I think that infrastructure is such a big thing, and it’s just growing so much. But I think the expansion of that the same. We need to do. We’ve been analyzing what is our way for the asset management company to get into the private credit space.
So there are opportunities. And the private banking internationally I think that is a very challenged, very fragmented business. We’re not in bankers. We are creating the scale. We have done a lot of work with many to optimize the deployment of lending versus non-lending revenues. And we have a better mix that is increasing the returns of that business. So there are opportunities, a very nice little business that is doing amazingly well. We have a lot of opportunities.
Unidentified Analyst
I guess, in the Asset Management segment was like an acquisition to kind of increase its contribution makes sense.
Daniel Pinto
So contributions, I think that we’ve been doing is very surgical small acquisitions that add to the product offering. I am not a big fan of bigger acquisitions because I think that if you put a big with another big, most likely you’re going to lose a lot of the assets that you have because clients need to diversify, they cannot have. So we are looking at everything. We look to a thousands of things and we have exactly, no, not 1,000 — 450 things we look at. We acquire the five little things. So I think that there is — they will continue looking at, but we are in a good place.
The other very successful story there is CBL. We have a lot of debate. We were a bit late to the party. What is the right strategy. Clearly, it was not go and compete in the big Cap ETF with BlackRock, with iShares. What it was is let’s concentrate in manage ETF and probably today is the most successful manage ETF platform that exists. Totally built organically. So I think that there are opportunities there. You need to be smart about it rather than trying to be everything for everyone, but there are opportunities.
Unidentified Analyst
Makes sense. All right. Maybe shifting to the income statement. I got ask you an [obligatory] (ph) 3Q trading question and get trading investment banking guide inside of the way. I know September is probably the strongest month of the quarter, so a little bit more challenging to come up with a number there. But just thoughts on how the quarter is progressing, August, obviously, a bit more volatility than maybe anticipated. Just kind of what are you thinking there?
Daniel Pinto
So the quarter is doing fine so far, in investment banking there is — it will be a solid quarter. We think that we are going to be around 15% plus-minus increase versus the third quarter of the previous year, IBCS. And when you look at what is the composition of that very, very strong performance in debt capital markets that we continue to be. So what we are expecting in debt capital markets volumes in institutional loans and leveraged loans almost double, it will double from last year. So a lot of that is refinancing and that brings with — comes with smaller fees. but it’s a very, very solid activity, very solid performance this quarter in debt and equity capital markets.
And in M&A is — what we are expecting in M&A for the year is around probably flat volumes to last year to slightly up. So M&A this quarter, this means sort of flattish overall. But overall, banking fees will be around 15% plus-minus up, on markets it’s flattish to slightly positive, probably around 2% or so, plus/minus, mainly driven by equities. We have very, very strong performance in equities across the franchise, particularly in derivatives, fixed income, a bit weaker performance driven by — not necessarily, client flows were fine. It was a bit more challenging environment to monetize client flows, particularly in rate. So markets flat to slightly up 2% plus-minus.
Unidentified Analyst
Year-over-year?
Daniel Pinto
Yes, on the third quarter of ’23.
Unidentified Analyst
Got it. And then maybe net interest income. I think the guidance for NII both with and without markets, $91 billion for the year. Maybe how you are feeling about that, loan growth for the industry may be a bit softer than expected, but car growth seems to be continuing.
Daniel Pinto
Yes. I think that — that one — we are tracking towards a number in that ballpark. So I think that the consensus of the analyst is around [9 to 1.5] (ph) or so. That consensus probably was calculated before the recent reduction in interest rates. But ballpark, we are going to be there. Where I would like to pause for a second is for ’25.
Unidentified Analyst
So that’s my next question.
Daniel Pinto
Okay. So I’ll tell you. ’25, we have — the analyst consensus is a drop in NII of $1.5 billion from $91.5 billion to $90 billion. So that is – is not very reasonable because the rate expectation is lower by 250 basis points. So I think that, that number will be lower. We are not going to guide on that now, but the $90 billion is a bit too high. Clearly, as rates go lower, you have less pressure on repricing of deposits. But as you know, we are quite asset sensitive. So lower interest rates. You see the [ERR] (ph) numbers. So therefore, you can have a sense of what will it be that is lower than what the analysts are expecting at the moment.
Unidentified Analyst
Got it. But I guess kind of — maybe kind of longer-term on NII, and Jamie and Jeremy both kind of been upfront in the over-earning on NII kind of thesis. But then earlier, you are talking about massive growth in kind of retail deposit market share, strong growth in credit card market share. Maybe just talk to kind of maybe more longer-term.
Daniel Pinto
No, longer-term it will be very good. I think that particularly next year is going to be a bit more challenged. So all the things that I mentioned, we really feel very comfortable that we’re going to achieve them. So the performance of the company in the long-term, it will be great. The performance of the company next year will be very good, too. But the NII expectations are a bit too high. I just want to reprice that of it.
Unidentified Analyst
Got it. And so less than $90 billion you want to maybe give us a range or –.
Daniel Pinto
Leave it to Jeremy, he’s the CFO.
Unidentified Analyst
Maybe we’ll go to the next ARS question. So I’m going to push my luck here on 2025. But I guess maybe for 2024 expenses, you got a kind of fairly bit consistent with that $92 billion number. I think I guess, how you’re thinking about that? And then maybe how you’re kind of thinking about expense as you approach next year?
Daniel Pinto
That is — is in the ballpark or is most likely going to happen. There are two components. So expenses this year will be slightly up based on revenue related expenses. But then some of the investments they’ve been — the hiring related to certain areas of investments they’ve been going slower than we were expecting that more or less [two cancel] (ph) each other. That’s why the $92 billion is still a reasonable number to have in mind.
For next year, I think that the numbers that the analysts are expecting is also a bit too optimistic because for a variety of reasons. So one of them is there is still inflation. So there is some inflation adjustment for next year. Some of the delay on investment of this year will hit, some will hit next year, and the annualization of investment that we have done will hit next year, too. It will be some new investments that we are going to make. And so there are a bunch of components that tell us that probably the number of expenses will be a bit higher than what is expected at the moment that we will provide more guidance later in the year. But — so it’s something to keep in mind.
Unidentified Analyst
Okay. So just to recap, trading up 15% year-on-year in 3Q, IB is flat to up 2% year-over-year in 3Q. And then it sounds like no change to the 2024 guidance of $91 billion of expense in NII, $92 billion in expenses. As we begin to think about 2025, consensus of $90 billion for NII, maybe be a little bit too optimistic. And I think consensus for expenses next year, [$93.7 or-so] (ph) billion it will be higher than that.
Daniel Pinto
It would be higher than that.
Unidentified Analyst
And then I guess when you think about — you mentioned investments, anything new in particular, we haven’t discussed or kind of more kind of more business as usual?
Daniel Pinto
Well, there are investment related to all the areas that I mentioned to our growth. And then we have the big agenda still continues to be technology and artificial intelligence. So the process of modernization of the technology stack going to the cloud, going to the new data centers, refactoring applications, having a technology stack that is modern and effective and efficient that allow us to deliver more with the dollars of investment, there’s still that agenda requires a lot of work.
We make a huge amount of progress, but it is still a long way to go. And artificial intelligence, I think that it will be very transformational. At the moment, if you guys remember at Investor Day, I mentioned one number that is a benefit that we see related to deployment and artificial intelligence, I said that it was last year between $1 billion to $1.5 billion. I think that this year, it’s heading more towards $2 billion. And a lot of that is related to prevention of fraud. And there are all kind of benefits, but fraud is in — a big beneficiary.
Going forward, we think that artificial intelligence, large language models will have, and we are doing a lot of work on this, over the medium to long-term, a big impact in improving processes and efficiencies in the operational services that we have. We have — I don’t know, 100,000, 150,000 people doing operational things or in call centers or things like that. Artificial intelligence will have a big impact in many domains, in the way that we manage documents, in the way that we manage voice, e-mails.
And we are doing 2 things. So one is going through the big areas where we have operational services and look at every single process to be optimized using artificial intelligence and large language models. And the second one is deploying what we call LLM suite to hundreds, to almost every employees. At the moment it’s being deployed to 140,000 employees and is to help them to do the job that they do, one is optimized as effective as possible.
I think that the combination of the two over the next three years to five years will really make a difference in the — either we’ll be able to process a lot more for the same money or to spend less. So I think that operational efficiencies in my view, it will be the biggest impact over the short to medium-term rather than any of the other use cases that you could probably heard about it.
Unidentified Analyst
Helpful. And maybe just kind of touch on credit quality for a moment. I think the charge-off guidance for the credit card for the year, 3.4% implies kind of a stable-ish loss rate in the back half of the year, you talked about I think, 3.6% for next year. Any kind of the — maybe some of the recent softness and data changed that?
Daniel Pinto
No. Still, that is what we are expecting. Obviously, as we change [EBITDA mix] (ph) over the medium-term, we expect probably that number to go up a bit because we may do a bit more, we do very little in the less affluent segment. So if we ended up — and using technology, helps you to really underwrite properly, they probably will focus and more on that, that will obviously — we will price accordingly and increase delinquencies more over the — a bit over the medium term. But at the moment, 3.4% for this year, around 3.6% for next year is what we are seeing. We haven’t seen any deterioration.
Unidentified Analyst
And then on the commercial front in areas you’re keeping a closer eye on?
Daniel Pinto
I think that from auto financing to mortgages, to small business to middle market to large corporates, we haven’t seen any deterioration. Clearly, there is some challenges in the commercial real estate. We probably — we haven’t seen the bottom of it. We have around $15 billion or $16 billion of exposure, and we are very well reserved for that. But as interest rates are coming down. So that will benefit, and it will make easier the ability to refinance and do whatever needs to be done in the industry for that segment.
So other than that — in multifamily lending, you know that we are not exposed, so very little exposure to Type A. We are mainly Type C and Type B, where the demand is very strong. So therefore, we haven’t seen the deterioration at all in-multifamily where the portfolio, that is $120-plus billion.
Unidentified Analyst
Great. next ARS question, please. Three questions, three minutes. So I guess, first, Michael Barth speaking right now. I’m not going to ask you to comment. But if we go by the headlines, it seems like the 20% increase in capital requirement in the industry is going to 10%, is that good enough for the banks to kind of accept it? There’s — originally it’s supposed to be a 0% change in capital requirements.
Daniel Pinto
We don’t know. Obviously, 10% is better than 20%. So that’s good. The issue is we have no idea what have they changed. And one of my area of concerns is, for example, markets. So the increase in the original proposal, the increase of RWA for markets was 60% in a market that is already consuming a lot of capital. It would totally make everyone to rethink what do you do in markets or what you don’t. So if they are changing that, it will be good because it was good for market liquidity and the proper function of market, but we don’t know. And then there are many other areas. So it is not just the overall number. It’s a composition of it, and we have no idea yet what the composition is.
Unidentified Analyst
That’s fair. Maybe put up the next ARS question. Jamie downplayed sizable share repurchase greatly above 2 times tangible book. You have excess capital, this rollback goes through a lot of iterations, but you have excess capital. Just kind of what do you do with that? Because that number is going to continue to grow?
Daniel Pinto
Yes. So yes, we do have excess capital. So what we think is about the following: first, there is uncertainty about Basel III, hopefully that will be clear some way or the other in the next few months, and then we will know what we are going to face. But we are — even though I said that the US economy is doing well and it’s all good. The valuations in the market, they are very high. So this can be close to the all-time highs and 21 times earnings credit spreads at the tightest point or close to the tightest point since the financial crisis.
So is — in an economy that is doing fine, but it’s decelerating with interest rates that they are coming down, but we are not going down to anywhere close to where they were in average in the last 20 years. So it makes us think that probably is to continue the policy of modest buybacks for now is good. So I think that we will continue to be cautious. We will continue to reassess the situation. Our strategy always going to be to deploy the capital to grow the franchise. But at some point, it’s — too much is too much. So — but at the moment, we are going to stay with uncertainty around, we are going to be careful.
Unidentified Analyst
And then may go to the last ARS question. Before we do that, I just want to make it clear for those on the webcast. When I was kind of reading back what Daniel said, I kind of reversed it. So market flattish, market’s flattish year-over-year. Investment banking fees up 15%, plus or minus. That’s the last question.
Daniel Pinto
[indiscernible] when you’re having the ER people in the room.
Unidentified Analyst
Exactly. And this is lastly, I guess Daniel, we’ve talked about a 17% on average over time for JPMorgan. Is that the right number? Could you do better than that? And it was interesting on a prior slide, kind of use of excess capital, I don’t know if people saw it, but non-bank acquisitions was the Number #1 audience response for that. I’m not sure if you want to comment to that.
Daniel Pinto
So I think the 17% is a good number for us. It is through the cycle. It will be years where it is higher, years will be lower. At the moment, deposit margins, particularly retail deposit margins are substantially higher than – they are often the highs, well higher than the historical average, as asset price — as interest rates go down, those deposit margins will sort of correct over time. So it will be years where we are above. We will be years where we are below, but 17% looks to be a reasonable place to be. And when you compare with the industry overall, it’s not like it’s an easy target.
So overall, we feel good about it. We think that we can deliver on that. And like for example, next year, the 17% may be a bit challenge. So we will see that 17% looks fine. Clearly, we are planning at some point to run the company with a normalized amount of capital, so which have that.
Unidentified Analyst
On that note, please join me in thanking Daniel for his time today.
Daniel Pinto
Thank you. Bye.
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