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    JPMorgan Chase & Co (JPM)

    Business Description

    JPMorgan Chase & Co. is a leading financial services firm based in the United States with a global presence, offering a wide range of products and services across various segments . The company is organized into four major business segments, each catering to different client needs, including consumer banking, investment banking, commercial banking, and asset management . Through its diversified business model, JPMorgan Chase serves a broad spectrum of clients worldwide, leveraging its strong market positions to drive revenue growth and maintain a competitive edge in the financial services industry .

    1. Consumer & Community Banking (CCB) - Provides products and services to consumers and small businesses through bank branches, ATMs, digital platforms, and telephone banking, including Banking & Wealth Management, Home Lending, and Card Services & Auto .

      • Banking & Wealth Management - Offers banking services and wealth management solutions to individual and small business clients .
      • Home Lending - Provides mortgage and home equity lending services .
      • Card Services & Auto - Offers credit card services and auto financing .

    2. Corporate & Investment Bank (CIB) - Offers investment banking, lending, payments, market-making, financing, custody, and securities products and services to corporate and institutional clients globally .

    3. Asset & Wealth Management (AWM) - Provides investment management solutions across equities, fixed income, alternatives, and money market funds to institutional and retail investors, along with retirement products, brokerage, custody, trusts, and estate services to high-net-worth clients .

    4. Commercial Banking (CB) - Delivers comprehensive financial solutions, including lending, payments, and investment banking services, primarily to middle-market clients, small and mid-sized companies, and commercial real estate clients .

    Q3 2024 Summary

    Initial Price$202.84July 1, 2024
    Final Price$207.04October 1, 2024
    Price Change$4.20
    % Change+2.07%

    What went well

    • Active Expansion in Private Credit: JPMorgan is allocating significant capital to make direct loans in the private credit market, with an initial allocation of $10 billion, which could increase to $20 or $30 billion. This positions the bank to compete effectively and offer clients comprehensive lending solutions.
    • Strong Capital Position Amidst Regulatory Changes: The bank has very healthy capital ratios and is well-prepared for potential increases in capital requirements under Basel III. JPMorgan expects that even if capital requirements increase, it will be fine and continue to generate very good returns.
    • Expectations of Deposit Growth and Liquidity Strength: JPMorgan believes it is at the trough of deposit balances and expects deposits to stabilize and potentially grow, especially if quantitative tightening (QT) is wound down. This indicates a strong liquidity position to support future growth.

    What went wrong

    • Increased competition from private credit and non-bank entities is disrupting traditional bank lending and market-making activities, potentially impacting JPMorgan's revenue streams .
    • Management expects that upcoming results will be somewhat challenged as normalization continues, indicating potential pressure on the company's financial performance .
    • Jamie Dimon expressed cautiousness about acquiring credit assets and leveraging excess capital, suggesting concerns about credit risk and limited growth opportunities in the current economic environment .

    Q&A Summary

    1. NII Guidance for 2025
      Q: What is the outlook for Net Interest Income (NII) in 2025?
      A: Jeremy Barnum indicated that NII ex Markets is expected to decline in 2025, possibly more than current consensus estimates. He noted that the sequential decline is driven by changes in the yield curve and that the trough in NII may occur in the middle of next year. Factors influencing this include deposit balances stabilizing, less yield-seeking behavior from consumers, and expectations around the end of quantitative tightening (QT).

    2. Capital Deployment Strategy
      Q: How will JPMorgan deploy its excess capital?
      A: Jamie Dimon emphasized that the company has at least $30 billion of excess capital. He stated they are not inclined to deploy it hastily and prefer to wait for the right opportunities, given concerns about potential turbulence and inflated asset prices. The focus remains on serving clients and making long-term strategic investments rather than aggressive share buybacks or asset acquisitions at this time.

    3. Expense Outlook and Investments
      Q: What are the expectations for expenses next year, and where will investments be focused?
      A: Jeremy Barnum acknowledged that expenses are expected to increase, primarily due to inflation and annualization of growth strategies. He mentioned a possible 3% increase on a base of $90 billion, adding several billion dollars to expenses. Jamie Dimon added that investments are being made in areas like private banking, ETFs, international expansion, and the innovation economy, all aimed at gaining market share and delivering good returns.

    4. Private Credit Lending Strategy
      Q: How is JPMorgan approaching private credit lending and competition from alternative managers?
      A: Jamie Dimon explained that JPMorgan aims to offer clients an agnostic view, providing both direct lending and syndicated lending options. The bank has allocated $10 billion to direct loans, which could increase. They prefer not to tie themselves exclusively to one partner, allowing for greater flexibility and competitiveness in serving clients.

    5. Regulatory Capital and Basel III Impact
      Q: What is the anticipated impact of new Basel III regulations on capital requirements?
      A: Jamie Dimon noted that while regulatory capital requirements may come down from original proposals, they are awaiting final details. He believes the bank's excess capital remains significant, even considering potential regulatory changes. Jeremy Barnum emphasized the importance of getting the requirements right and considering the holistic impact on the economy.

    6. Loan Growth and Investment Banking Pipeline
      Q: Are there signs of loan growth and increased investment banking activity due to lower rates?
      A: Jeremy Barnum mentioned that there are not significant signs of increased loan growth yet. While there was some outperformance in Investment Banking fees driven by debt capital markets and closing of some M&A transactions, it's not clear if this is a trend. Expectations are that lower rates would stimulate activity, but this hasn't materialized meaningfully so far.

    7. Market Liquidity Risks and Fed Policy
      Q: What are the views on market liquidity risks and the potential end of QT?
      A: Jeremy Barnum suggested that the recent spike in the repo market indicates the market may be approaching the lowest comfortable level of reserves, potentially leading the Fed to end QT soon. Jamie Dimon expressed concerns about relying on the Fed to step in during market fluctuations and advocated for recalibrating regulatory requirements to allow banks to provide liquidity without excessive constraints.

    8. Consumer Spending Trends
      Q: Are there any changes in consumer spending behavior?
      A: Jeremy Barnum reported that consumer spending has normalized, with a rotation out of discretionary spending like travel and entertainment back to nondiscretionary spending. This normalization is consistent with a solid consumer footing and a strong labor market, aligning with a central case of a soft landing economically.

    9. Potential Government Service by Jamie Dimon
      Q: Would Jamie Dimon consider government service?
      A: Jamie Dimon stated that while he is committed to helping the government succeed, he loves what he does at JPMorgan and intends to continue in his role. He mentioned that the chance of him leaving for government service is "almost nil".

    Key Metrics

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    Revenue by Segment - in Millions of USDFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    Consumer & Community Banking16,45617,23318,36218,09770,14817,65317,70117,791
    - Banking & Wealth Management----43,19910,324--
    - Home Lending----4,1401,186--
    - Card Services & Auto----22,8096,143--
    Corporate & Investment Bank13,60012,51911,73010,95848,80713,63317,91717,015
    - Investment Banking-213---320--
    - Payments-2,248---2,014--
    - Lending-1,480---1,609--
    - Fixed Income Markets-4,5674,514--5,2974,8224,530
    - Equity Markets-2,4512,067--2,6852,9712,622
    - Securities Services-1,2211,212--1,1831,2611,326
    - Credit Adjustments & Other-36(61)---15-87-109
    Commercial Banking3,5113,9884,0314,01615,5463,951--
    - Other-47---8--
    Asset & Wealth Management4,7844,9435,0055,09519,8275,1095,2525,439
    Corporate9853,7181,5581,7778,0382,20210,1223,070
    Total Revenue38,34941,30740,68637,762158,10441,93450,20042,654
    Revenue by Geography - in Millions of USDFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    North America3,2203,3466,175110,49123,2316,87610,93510,701
    Europe/Middle East/Africa8478533,17416,120,9743,9814,2693,260
    Asia-Pacific4774971,8267,80510,6052,0682,1622,439
    Latin America/Caribbean2402475552,2523,294708551615
    Total International1,5641,5975,55526,15734,8736,7576,9826,314
    Total Revenue38,34912,51939,87467,362158,10441,93417,91717,015
    KPIs - KPI / QuarterFY 2013Q1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024
    Active Digital Customers (thousands)64,99865,55966,76566,765-68,49669,01170,063
    Active Mobile Customers (thousands)50,93351,96353,22153,828-54,67455,56456,985
    Debit and Credit Card Sales Volume ($ billion)387.3424.0426.3--420.7453.7453.4
    Client Investment Assets ($ billion)690.8892.9882.3951.1-1,010.31,013.71,067.9
    Number of Client Advisors8,3148,3678,8678,971-5,5719,1819,528
    Third-party Mortgage Loans Serviced ($ billion)575.9604.5639632-627644658
    Principal Securitized ($ million)1,0732,2162,721--4,9224,4715,032
    Proceeds from Loan Sales ($ million)1,0302,1232,585--4,8314,3105,035
    Operating Lease Income ($ million)755716695--672689706
    Estimated Bargain Purchase Gain ($ billion)2.62.72.82.8-2.82.92.9
    Initial Gain on Visa Share Exchange ($ billion)0.914-----7.97.9
    Net Charge-offs ($ billion)1.11.41.5--1.9562.22.1
    Net Addition to Allowance for Credit Losses ($ billion)1.11.52.5--0.0340.7491.0
    Assets Under Management ($ trillion)3.03.23.23.4-3.63.73.9
    Client Assets ($ trillion)4.3474.64.6445.0-5.25.3875.721
    Criticized Exposure ($ billion)34.435.037.741.4-45.846.847.1
    Nonaccrual Loans ($ million)4,2957,2737,5206,917-3,6473,4134,044
    Net Charge-off/(Recovery) Rate0.43%0.47%0.47%0.52%-0.62%0.71%0.65%
    Transfers of Securities to VIEs ($ million)3,4066,2614,521--8,40612,77212,353
    Commercial Paper Held by Conduits ($ billion)10.412.48.717.781-20.42.72.6
    Unfunded Commitments for Conduits ($ billion)9.811.39.910.8-11.212.112.6

    Executive Team

    NamePositionStart DateShort Bio
    James DimonChairman of the Board and Chief Executive OfficerDecember 2005James Dimon has been the Chairman of the Board since December 2006 and the CEO since December 2005. He has been a Director since 2004 and has extensive experience in the financial services industry .
    Ashley BaconChief Risk OfficerJune 2013Ashley Bacon has been the Chief Risk Officer since June 2013. He is a citizen of the United Kingdom .
    Jeremy BarnumChief Financial OfficerMay 2021Jeremy Barnum has been serving as the Chief Financial Officer since May 2021. Previously, he was the Head of Global Research for the Corporate & Investment Bank starting in February 2021 .
    Lori A. BeerChief Information OfficerSeptember 2017Lori A. Beer has been the Chief Information Officer since September 2017. She was previously the CIO of the Corporate & Investment Bank starting in June 2016 .
    Mary Callahan ErdoesChief Executive Officer of Asset & Wealth ManagementSeptember 2009Mary Callahan Erdoes has served as the CEO of Asset & Wealth Management since September 2009. She was the CEO of Wealth Management from 2005 to 2009 .
    Stacey FriedmanGeneral CounselJanuary 2016Stacey Friedman has been serving as the General Counsel since January 2016. She has held senior-level positions with the firm during the past five fiscal years ending December 31, 2023 .
    Marianne LakeChief Executive Officer of Consumer & Community BankingJanuary 2024Marianne Lake is the CEO of Consumer & Community Banking. She was appointed to this role in January 2024, after serving as Co-CEO of Consumer & Community Banking since May 2021 .
    Robin LeopoldHead of Human ResourcesJanuary 2018Robin Leopold has been the Head of Human Resources since January 2018. She was previously the Head of HR for the Corporate & Investment Bank starting in August 2012 .
    Douglas B. PetnoChief Executive Officer of Commercial BankingJanuary 2012Douglas B. Petno has been the CEO of Commercial Banking since January 2012. He has continuously held senior-level positions with the company during the five fiscal years ending December 31, 2023 .
    Jennifer A. PiepszakCo-Chief Executive Officer of Consumer & Community BankingMay 2021Jennifer A. Piepszak was appointed as Co-CEO of Consumer & Community Banking in May 2021. She previously served as the CFO for the firm from May 2019 to May 2021 .
    Daniel E. PintoPresident and Chief Operating OfficerJanuary 2022Daniel E. Pinto is the President and COO. He has held the position of sole President and COO since January 2022. He has also been the CEO of the Corporate & Investment Bank since March 2014 .
    Peter L. ScherVice ChairmanMarch 2021Peter L. Scher has been serving as Vice Chairman since March 2021. He was previously the Chairman of the Mid-Atlantic Region from February 2015 until December 2022 and Head of Corporate Responsibility from April 2011 until September 2021 .

    Questions to Ask Management

    1. Given the increasing competition from private credit firms and changes in market structure, how is JPMorgan planning to adjust its strategies to maintain its competitive edge in market-making and traditional lending, especially when non-bank entities are not constrained by the same regulations?

    2. With Banking & Wealth Management revenue declining by 11% year-on-year due to deposit margin compression and lower deposits, what specific actions is JPMorgan taking to mitigate these pressures and reverse the trend of decreasing deposits, which are down 8% year-on-year?

    3. Despite having at least $30 billion of excess capital, why is JPMorgan choosing to be patient in deploying this capital, and how does this decision align with your long-term growth and shareholder return objectives in a potentially turbulent market environment?

    4. Considering the uncertainty surrounding the final Basel III capital requirements and your stance that current requirements may already be more than needed, how will this impact your capital planning, lending practices, and overall competitiveness, especially if regulations push more activities outside the banking sector?

    5. Jamie, you've expressed significant interest in government policy and its impact on the economy; under what circumstances, if any, would you consider transitioning from your role at JPMorgan to a government position, and how do you manage this interest alongside your commitment to the company?

    Share Repurchase Program

    Program DetailsProgram 1Program 2
    Approval DateApril 13, 2022 June 28, 2024
    End Date/DurationThrough June 30, 2024 No specific end date
    Total additional amount$30 billion $30 billion
    Remaining authorizationN/A$23.639 billion
    DetailsReplaced by Program 2 Utilized at management's discretion

    Past Guidance

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Net Interest Income (NII) ex Markets: Approximately $89 billion based on a forward curve with 3 rate cuts .
      2. Total NII: Approximately $90 billion, implying a decrease in Markets NII guidance from around $2 billion to around $1 billion .
      3. Adjusted Expense: About $91 billion, reflecting the increase to the FDIC special assessment .
      4. Card Net Charge-Off Rate: Below 3.5% for 2024 .
      5. Effective Tax Rate: Around 23% for the year, absent discrete items .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Net Interest Income (NII) and NII excluding markets: Approximately $91 billion .
      2. Adjusted Expense: About $92 million .
      3. Card Net Charge-Off Rate: Approximately 3.4% .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Net Interest Income (NII) ex Markets: Approximately $89 billion, based on a forward curve with three rate cuts .
      2. Total NII Guidance: Approximately $90 billion, implying a decrease in Markets NII guidance from around $2 billion to around $1 billion .
      3. Adjusted Expense: About $91 billion, reflecting the increase to the FDIC special assessment .
      4. 2024 Card Net Charge-Off Rate: Below 3.5% .
      5. Effective Tax Rate: Around 23% for the year, absent discrete items .

    Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: FY 2024
    • Guidance:
      1. Expenses: $90 billion, including a $1 billion increase in volume and revenue-related growth .
      2. Net Interest Income (NII): NII excluding Markets approximately $88 billion; Total NII approximately $90 billion .
      3. Card Net Charge-Off Rate: Below 3.5% .
      4. Capital: CET1 ratio of 15%; plans for a modest pace of stock buybacks, consistent with a $2 billion net buyback per quarter .
      5. Economic Assumptions: Interest rates to follow the forward curve, including six rate cuts in 2024 .

    Competitors

    Competitors mentioned in the company's latest 10K filing.

    • 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
    • Financial technology companies
    • Non-financial companies offering products and services that disintermediate traditional banking products and services .

    Latest news

    Recent developments and announcements about JPM.

    Corporate Leadership

      Leadership Change

      ·
      10 hours ago

      Daniel Pinto is leaving his role as President and Chief Operating Officer of JPMorgan Chase, effective June 30, 2025, as he plans to retire at the end of 2026. He will continue to serve as Vice Chairman, advising on key projects and client relationships. Jennifer Piepszak has been appointed as the new Chief Operating Officer, effective immediately. She will manage various corporate functions and oversee global corporate centers. Doug Petno will succeed Piepszak as Co-Chief Executive Officer of the Commercial & Investment Bank, and John Simmons will take over Petno's previous role.