JPMorgan Chase’s Consumer Deposits ‘Slightly Down’ Over Banking Crisis and Rates

The banking industry is facing several challenges concerning consumer deposits, according to Jennifer Piepszak, co-CEO of JPMorgan Chase’s consumer and community banking unit.

Piepszak has predicted that consumer deposits will be “slightly down from here” due to factors such as the Federal Reserve’s quantitative tightening program and the Treasury Department replenishing the Treasury General Account, Seeking Alpha reported on Wednesday (June 13).

Despite these headwinds, JPMorgan Chase managed to add 2 million checking accounts on a net basis across consumer and business banking last year and is on track to do at least that much this year.

Piepszak expressed confidence in the bank’s ability to “win the war for customers.”

The competition for deposits has become increasingly fierce, with digital-only banks offering rates that traditional banks cannot match. For example, online banks like Capital One, Ally Financial and Goldman Sachs’ Marcus have reported quarterly increases in deposits.

On the other hand, regional banks are facing two problems: the recent banking crisis that scared customers into shifting their money to larger lenders, and rising interest rates leading consumers to move money to things like money market funds for greater returns.

The Federal Deposit Insurance Corp. (FDIC) reported that banks saw their deposits fall by $472 billion in the first quarter of 2023, the worst decline in the nearly 40 years that the agency has compiled that data.

Reporting its Q1 2023 results in April, JPMC said deposits had decreased, with total deposits held by the bank at the end of the quarter at $2.4 trillion, down about 8% from a year ago.

On the conference call with analysts to discuss results, Chief Financial Officer Jeremy Barnum said that — with a nod to the banking collapses – “as you would expect, we saw significant new account opening activity and meaningful deposit and money market fund inflows most significantly in the commercial bank business banking. Regarding the deposit inflows at the firm wide level, average deposits were down 3% quarter on quarter while end of period deposits were up 2% quarter on quarter, implying an intra quarter reversal of the recent outflow trend.”