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CNBC Exclusive: CNBC Transcript: JPMorgan Chase & Co. Consumer & Community Banking CEO Gordon Smith Speaks with CNBC’s Wilfred Frost

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Gordon Smith, JPMorgan Chase & Co. Consumer and Community Banking CEO, and CNBC's Wilfred Frost. Following is a link to the video on

All references must be sourced to CNBC.

Wilfred Frost: Gordon, great to have you with us.

Gordon Smith: Thank you.

Frost: Let's dive straight in to your area of expertise on the consumer because the last set of results—blowout loan growth, despite relatively muted economic environment. Are you taking more risks than normal?

Smith: No, we're really not taking more risk. We're operating completely within our prescribed credit range. But the economy—I'm just much more optimistic about the economy than some of the rhetoric you hear. Home values are progressively improving across the country, which is really a positive for the consumer. As we look across the various income segments, you're seeing employment is improving, it's actually a much more positive picture than you would typically get if you just listened to the TV all day.

Frost: To CNBC everyday.

Smith: Of course .

Frost: If we look across the whole of the year, has that been true throughout? Because there's been some big macro concerns from China to oil prices earlier and then Brexit more recently—has the consumer flickered in line with those or does it plow on regardless?

Smith: No, I would say actually if we go back into the first half of last year we've seen a very steady, gradual improvement in the consumer. And yes, all of these macro economic events, people are aware of them, but if you've got strong job growth and you've got home values improving, that tends to be the biggest driver of consumer sentiment here.

Frost: And if we talk about low interest rates, we know that low interest rates are not ideal for the bank's bottom line. But have you just outlined in fact that it's not that bad because the volume of what you're selling shoots up even if the pricing doesn't?

Smith: Yeah, well listen, the way we try to think about this is we can't impact rates and almost everyone who tries to predict where rates are going has been wrong over the last number of years. I would say everyone. And so what we've tried to do is to just really focus on our strategy of being the best bank for customers to do business with, focus on the customer experience, and you can see that in all of our metrics. When we look at retention levels of customers, they're the best we've ever seen since we began measuring them a decade and a half ago.

Frost: And how many branches have you got today across the country? How many will there be in 10-years' time?

Smith: Well, you know, today we're about 5400, plus or minus, very hard to say where we'll be in 10 years. But it's something that we monitor really closely and I always tell people we have 5400 branches because it's what our customers want. We have fabulous people, you're going to meet some of them here over the course of the afternoon, amazing people who are there serving our customers. And you know, 98% of checking accounts are opened in bank branches today, so they're going to be with us a long time.

Frost: Now, a bigger picture question about the way your part of business fits in because Mr. Dimon is always very clear about the benefits of being a big bank. And I can see the links, particularly on the corporate side and the benefit of being able to offer corporate clients absolutely everything. But if necessary, the consumer part of the business, that would operate fine on its own, would it not? The Chase part particularly.

Smith: We've restructured these businesses around the environments that we operate in. And if we look at where we've been over the last 8, 9 or 10 years, the configuration that we have served us extremely well during the worst economic downturn in perhaps three generations. And here we are in a much better economy and the model that we have is working extremely well. The relationships that we have with the asset management business and the commercial bank, all of which you see – is that Jamie's Harley Davidson I hear starting up behind me? If we look at the relationships that we have with those two businesses and how their customers transact through the branches, it's a very powerful set of synergies.

Frost: Gordon, thank you very much for joining us this afternoon.

Smith: You're welcome, thank you.

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