⚠ The Floor Is Where You Can Only Go Up FromModerate threat

JPMorgan Chase (JPM) — threat to the moat

A 2.5 percent stress capital buffer is the regulatory minimum, and minimums have only one direction available to them.

Being assigned the lowest possible stress capital buffer is a compliment and an asymmetry.

Stress capital buffer, and what a point costs2.5% - the floorCurrent SCB~$2.0tnRWA, $tn~$20bnCost of +1pt CET1, $bnRoughly one to two years of buybacks, removed by a supervisory model revision.
At the regulatory minimum there is only one direction available.

JPMorgan's SCB is 2.5%1, the regulatory floor. That is the Federal Reserve concluding the firm's modelled losses under a severely adverse scenario do not require more. It also means every future revision can only take capacity away.

The sensitivity is larger than it sounds. Each additional point of required CET1 on roughly $2 trillion of risk-weighted assets is about $20 billion of equity that has to be found from retained earnings rather than returned — which is one to two years of buybacks.

The mechanism has bite because it is annual and model-driven. Scenario design changes, portfolio composition changes, and a bank can find its permitted payout materially different from one June to the next with no change in its own performance.

What partly protects JPMorgan is that a firm running 14.1% against an 11.5% requirement2 can absorb a tightening without changing anything operational. The buffer exists precisely for this.

The falsifier is any year in which the SCB rises and the net payout ratio has to fall to accommodate it. That is the regulation showing up directly in the share count.

References
  1. ReportedThe stress capital buffer is 2.5%, in effect through 30 September 2027, with the annual capital plan submission due 6 April 2026.
    JPMorgan Chase & Co., Form 10-K FY2025 — capital risk management (SEC, CIK 19617). Basel III common equity Tier 1 capital of $288 billion and a Standardized CET1 ratio of 14.6%; the Standardized CET1 requirement including all regulatory buffers was 11.5%. The stress capital buffer requirement is 2.5% and remains in effect through 30 September 2027, based on the severely adverse scenario of the Federal Reserve's supervisory stress test; the annual CCAR submission was due 6 April 2026. Capital is allocated to the lines of business using standardized risk-weighted assets and the GSIB surcharge under rules currently in effect, reassessed at least annually. The enhanced supplementary leverage ratio rules revise the static leverage buffers to 50% of the bank holding company's US Method 1 GSIB surcharge, capped at 1% for insured depository institution subsidiaries. The July 2023 proposal to amend the US risk-based capital framework (the Basel III endgame) was never finalised; in September 2025 the Federal Reserve's Vice Chair for Supervision indicated regulators may issue an updated proposal in early 2026 replacing it, the timing and content of which remain uncertain. The Apple Card transaction reduced the Standardized CET1 ratio by approximately 25 basis points. — FY2025 · publ. 2026-02-13 · source ↗
  2. ReportedThe Standardized CET1 ratio was 14.1% on $303bn of capital in the June 2026 quarter.
    JPMorgan Chase & Co., second-quarter 2026 earnings release (Form 8-K, exhibit 99.1) — net income $21.2bn ($7.70 per share), or $16.9bn ($6.14) excluding significant items; ROE 24%, ROTCE 29% and ROTCE excluding significant items 23%. Reported revenue $57.3bn and managed revenue $58.0bn; expense $27.3bn with a reported overhead ratio of 48%; credit costs $2.5bn with $2.4bn of net charge-offs and a $149M net reserve build. Average loans up 10% year on year and average deposits up 7%. CET1 Standardized 14.1% and Advanced 14.2%, total loss-absorbing capacity $590bn, Standardized RWA $2.1tn, cash and marketable securities $1.5tn; book value per share $133.01 up 9% and tangible book value per share $113.35 up 10%; Basel III CET1 capital $303bn; supplementary leverage ratio 5.5%; net payout over the last twelve months 73%. Segment returns: CCB ROE 34% with client investment assets up 21%, a Card Services net charge-off rate of 3.34%, card sales volume up 10% and active mobile customers up 6%; CIB ROE 22% with investment banking fees up 30% year on year, a #1 ranking for global investment banking fees at 9.3% wallet share year to date, markets revenue up 35% with fixed income up 6% and equity markets up 86%, and average client deposits up 11%; AWM ROE 48% with AUM of $5.1tn, up 18%. Significant items were a $4.6bn net gain related to Visa shares ($1.27 of EPS) and $1.0bn of gains on certain equity investments ($0.29). Jamie Dimon: 'These results were the product of a particularly favorable environment with an elevated level of market activity, as well as rigorous execution, years of consistent investment and thoughtful capital deployment.' — Q2 2026 · publ. 2026-07-14 · source ↗
Sources
Generated September 23, 2026