Lake stepped into the spotlight this past week at Goldman Sachs (GS) financial services conference in Manhattan, giving investors a bullish update about the bank’s fourth quarter performance (investment banking fees will be up 45%) and 2025 (a key revenue source will be $2 billion more than expected).
JPMorgan’s CEO of consumer and community banking told investors there were “reasons to be optimistic” about 2025, a sentiment that many others in her industry echoed this past week as they cheered the incoming Trump White House.
Marianne Lake, JPMorgan’s CEO of consumer and community banking, at the JPMorgan headquarters in New York City. REUTERS/Kent J. Edwards ·REUTERS / Reuters
The hope is that lending and dealmaking churn higher while a new Republican administration loosens some rules for banks and applies more leniency in approving the sort of corporate mergers that produce big profits for Wall Street giants.
Lake, who is 55 years old, went into more detail about her outlook in a conversation with Yahoo Finance, covering a number of topics that are front of mind for her industry.
Lake has not been shy in the past about expressing her concern with pending regulation and legislation that she and others argue will harm banks and their customers.
Along with the proposal that could increase bank capital requirements, she cited three specific examples this week of rules or legislation that are of concern.
One reduces debit card fees, one reduces debit card interchange fees, and one makes it simpler for customers to transfer their personal data between banks.
The day after she spoke, the Biden administration released another new rule opposed by banks: a $5 cap on bank overdraft charges imposed by the CFPB. It quickly resulted in a lawsuit from bank lobbying groups.
The Consumer Financial Protection Bureau (CFPB) headquarters in Washington, D.C. REUTERS/Andrew Kelly/File Photo ·Reuters / Reuters
She does expect there is an opportunity with the new administration to reverse some of these proposals.
When it comes to the “onslaught of new regulatory constraints,” Lake told Yahoo Finance, “we’re optimistic about the opportunities for collaboration between the business community and the new administration.”
Some economists are worried that the policies of Trump 2.0 will prove to be inflationary, adding to persistent pricing pressures.
Lake said the bank shares the general consensus view that tariffs and trade policy will have an impact and Trump’s stance toward China will be tougher.
“Our central case is that it will have an impact on inflation,” but “it’s more of a headwind than it is a derailer.”
There may be “second-order consequences” in extra costs for consumers and on employment.
“But we think those will be more modest.”
U.S. President-elect Donald Trump appears on the 2024 Person of the Year cover of TIMW. TIME/Handout via REUTERS ·via REUTERS / Reuters
Lake sounded optimistic about the economic picture, citing the ability of the central bank to avoid a recession while bringing inflation down.
The Federal Reserve is expected this coming Wednesday to lower rates for the third consecutive meeting, as it shifts to an easing of monetary policy while (thus far) avoiding a recession.
“As we sit here today, we believe that the Fed has engineered, at least possibly, a soft landing,” she told Yahoo Finance.
“If we become more and more confident in that, and if some of the inflationary pressures or the risk to growth are somewhat modest, then I think you might see the animal spirits translate.”
But she expects the longer end of rates to “remain somewhat anchored” into 2025, meaning homeowners may not see a ton of relief in the form of lower borrowing costs on mortgages.
The JPMorgan Chase New York headquarters in Manhattan. REUTERS/Andrew Kelly/File Photo ·Reuters / Reuters
“So it’s not looking like mortgage rates are going to materially come down in the next, you know, call it 12 months, at least. That’s not our central expectation.”
Lake also discussed a massive expansion of JPMorgan’s branch network, which has added 150 branches this year.
By the end of October, it had 4,906 brick-and-mortar locations. The bank plans to add another 350 by 2027.
The bank, she said, currently has 11.3% of all US deposits after gaining about 30 basis points per year on average over the last decade.
“It would be arrogant to assume that we can accelerate [that growth], but we will if we can.”
