NEW YORK — JPMorgan Chase, the largest U.S. bank by assets, said about 70 percent of customers with less than $100,000 in deposits and investments will be unprofitable following regulations that cap lenders’ fees.
“I’m trying to give you a proxy for what the banking industry has to look forward to if you don’t take into account business bank clients and getting more of the affluent wealth wallet,” Todd Maclin, chief executive officer of consumer and business banking at the New York-based company, said Tuesday at an investor presentation.
The biggest U.S. banks are grappling with lost revenue from regulations that cap debit interchange fees and overdraft charges, making customers with low deposits more expensive for lenders to manage. JPMorgan, run by chief executive Jamie Dimon, sees its greatest opportunity with affluent customers that have more relationships with the company, Maclin said.
“Lost revenue has to be replaced with higher share of wallet and customer penetration,” Maclin said. “You have to get your costs and where you spend your time, to the fullest extent possible, more in line with where the opportunity is.”
JPMorgan said there is a “significant opportunity to deepen affluent relationships” and a “limited opportunity to deepen relationships” with customers who have less than $100,000 in deposits and investments, according to the presentation.
“If you shrink the customer base too much, it will kill the bottom line” said Bert Ely, an independent bank consultant based in Alexandria, Va. “You have to avoid the downward spiral where you try to drive away customers and trim customers, and you lose your better customers because they aren’t happy with what you’ve done.”
