⚠ The Penalty Scales With the MoatModerate threat

JPMorgan Chase (JPM) — threat to the moat

Growth that would obviously be accretive at a smaller bank can be value-neutral here once the extra capital is charged against it.

The surcharge turns growth into a decision rather than an ambition.

Who faces whatA US GSIBSurcharge, stress test, resolution plan, TLACA bank below the thresholdsMaterially lower requirements, same businessA private credit fundNo capital requirement at allThe 10-K's warningNon-banks lobbying for exemptionsJPMorgan earned 20% ROTCE at an 11.5% requirement. At 13% the same business earns less.
Growth that is obviously accretive at a smaller bank can be value-neutral here.

Because the requirement rises with size, complexity and cross-border activity, expansion that would be obviously accretive at a smaller firm can be value-neutral here once the additional capital is charged against it. That is a genuine constraint on the strategy, and it is why the largest US banks have grown mostly organically and through crisis-time acquisitions rather than ordinary ones.

It also creates an odd competitive gap. Firms just below the systemic thresholds face lower requirements on the same business, and non-banks face none at all — the arbitrage JPMorgan's own filings warn about when they describe competitors advocating for exemptions from regulatory requirements1.

What partly offsets it is that the same rules keep the field small. Very few institutions can absorb the requirement at all, and the ones that can are the ones already inside.

The measure is return on tangible common equity against the required capital ratio. JPMorgan earned 20% in 2025 at an 11.5% requirement2. The same business at a 13% requirement earns meaningfully less, and nothing about the business would have changed.

References
  1. ReportedThe 10-K warns that advocacy by non-banking competitors for exemptions from regulatory requirements could significantly disadvantage traditional financial institutions.
    JPMorgan Chase & Co., Form 10-K FY2025 — risk factors and competition (SEC, CIK 19617). 'Competitors include other banks, brokerage firms, investment banking companies, merchant banks, hedge funds, commodity trading companies, private equity firms, insurance companies, mutual fund companies, investment managers, credit card companies, mortgage banking companies, trust companies, securities processing companies, automobile financing companies, leasing companies, e-commerce and other internet-based companies, digital asset and other financial technology companies.' 'New competitors in the financial services industry continue to emerge, including firms that offer products and services solely through the internet and non-financial companies that offer products and services that disintermediate traditional banking products and services offered by financial services firms such as JPMorganChase.' The risk factors further warn that advocacy by non-banking competitors for exemptions from regulatory requirements could significantly disadvantage traditional financial institutions; that if the firm does not keep pace with rapidly changing technological advances, including the adoption of generative AI, it risks losing clients and market share, with competition intensified as the feasibility, capability and scalability of new technologies improves; that adverse macroeconomic or market conditions could prompt outflows from funds or accounts or cause clients to invest in products that generate lower revenue; and that the interconnectivity across credit markets increases the risk that the significant expansion of private credit could worsen losses among non-bank lenders and their borrowers, particularly if stress or defaults spread to broader funding and credit markets. — FY2025 · publ. 2026-02-13 · source ↗
  2. Reported2025 net income $57,048M, diluted EPS $20.02, return on equity 17% and return on tangible common equity 20%.
    JPMorgan Chase & Co., Form 10-K FY2025 — consolidated financial statements and management's discussion (SEC, CIK 19617). Total net revenue $182,447M (2024 $177,556M, 2023 $158,104M); total noninterest expense $95,640M (2023 $87,172M); pre-provision profit $86,807M; provision for credit losses $14,212M; net income $57,048M; diluted EPS $20.02; ROE 17%, ROTCE 20% (2024 22%, 2023 21%); overhead ratio 52% (2024 52%, 2023 55%); loans-to-deposits 58% (56%, 55%); deposits 63% of total liabilities. Total assets $4,424,900M, loans $1,493,429M, deposits $2,559,320M, tangible common equity $290,018M, book value per share $126.99, tangible book value per share $107.56, dividends declared per share $5.80 (2024 $4.80, 2023 $4.10). Segment total net revenue: CCB $76,029M / $71,507M / $70,148M; CIB $78,454M / $70,114M / $64,353M; AWM $24,073M / $21,578M / $19,827M. Banking & Payments by client coverage: Global Corporate Banking and Global Investment Banking $25,285M, Commercial Banking $11,851M. Deposit average balances and rates: US non-interest-bearing $572,014M (2024 $611,734M, 2023 $635,791M); US interest-bearing demand $321,145M at 3.26%; US savings $875,519M at 1.41%; total deposits 1.80% (2024 2.08%, 2023 1.70%). An estimated bargain purchase gain of $2.8bn was recorded for the year ended 31 December 2023 on the First Republic acquisition, with a further $588M First Republic-related gain in the first quarter of 2025; 2024 revenue included a $7.9bn net gain on Visa shares. — FY2025 · publ. 2026-02-13 · source ↗
Sources
Generated September 23, 2026