Net interest margin contracted by 13 basis points from the previous quarter as higher volumes of interest-bearing deposits and lower interest rates pressured net interest income. Growth in the markets business balance sheet further weighed on overall margin performance.

Under new regulatory proposals, risk-weighted assets dropped 7%, primarily driven by credit-risk reductions in investment-grade commercial loans and residential mortgages. Market risk exposures remained steady, while operational risk increased slightly but less than initially projected.

CFO Michael Santomassimo noted that NIM compression from low-risk, low-ROA assets like treasury repurchase agreements may depress return on assets but should not dilute return on tangible common equity. He expects increased business activity and client onboarding to bolster ROTCE toward medium-term targets.

CEO Charles Scharf highlighted strong structural protections in non-bank financial institution lending, emphasizing careful client selection and robust lending structures. The bank remains confident in its NBFI exposure and sees potential commercial growth if customers maintain borrowing plans.