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Revenue growth of 7% and EPS increase of 25% were driven by balanced contributions across every business segment, including record first-quarter revenue in Wealth Management.

Net interest income (NII) outperformed expectations due to disciplined balance sheet management, higher global markets activity, and the ongoing benefit of fixed-rate asset repricing.

Operating leverage of 290 basis points was achieved by growing revenue faster than expenses while maintaining strict discipline on non-strategic spending.

Management attributed the improvement in the efficiency ratio to positive operating leverage, where revenue growth—driven by 9% NII growth and double-digit increases in investment banking and asset management fees—outpaced expenses, which were managed through digitization and the application of artificial intelligence to reduce manual work.

Asset quality remained stable to modestly improved, with net charge-offs and card delinquencies declining compared to the prior year, reflecting a benign credit environment.

The company reduced headcount by approximately 1,070 people through attrition since year-end 2025, shifting resources from operational processes to revenue-producing relationship managers.

Full-year 2026 NII growth guidance was raised to a range of 6% to 8%, assuming no further rate cuts in the current interest rate curve and moderate loan and deposit growth.

Management expects to maintain more than 200 basis points of positive operating leverage for the full year, supported by continued expense discipline and revenue momentum.

The 12-month NII sensitivity indicates a $2 billion reduction for a 100 basis point decline in rates, while a 100 basis point increase would provide a benefit of slightly less than $500 million.

Capital requirements are expected to see some reduction in future periods if Basel III Endgame and G-SIB frameworks are adopted as currently proposed, due to inflation indexing relief.

The effective tax rate for the full year 2026 is projected to be slightly more than 20%, following a seasonally lower 17.5% in the first quarter.

Management highlighted structural insulation in their exposures to alternative asset managers, noting that substantial operating company equity and fund investor capital would need to be impaired before the bank experiences losses.

The commercial real estate office portfolio showed signs of stabilization, marking the first quarter in over three years with no new inflows of nonperforming assets into office exposures.

A modest net reserve release was driven by improvements in card and commercial real estate, partially offset by targeted builds to support corporate and commercial lending growth.

Ongoing geopolitical conflicts in the Middle East are being monitored for potential impacts on energy markets and global trade flows, though impacts to date have been measured.

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Management believes consumer deposits have found a floor after four consecutive quarters of year-over-year growth, driven by primary checking account stickiness.

The bank is prioritizing core operating client accounts over chasing high-cost CDs, which has allowed them to maintain one of the lowest cost funding profiles in the industry.

AI is viewed as a primary beneficiary tool that will drive internal efficiency and shift the workforce toward high-touch relationship management roles.

Management emphasized that 99% of consumer interactions are already digital, and AI will further reduce the high cost associated with the remaining 1% of manual interactions.

The bank intends to gravitate toward a 50 basis point management buffer over regulatory minimums as earnings stability reduces the need for larger cushions.

Excess capital generation will continue to be returned to shareholders through dividends and buybacks while supporting organic risk-weighted asset growth.

Recent C&I loan growth was primarily driven by normal-course revolver utilization for working capital rather than defensive draws or significant shifts from private credit.

Management noted that while they monitor private credit, they are seeing a return of traditional C&I demand as corporate clients find opportunities in the current macro environment.

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