Download JP Morgan Corporate iQ.xlsx

J.P.Morgan Chase &
Co.Coporate iQ
J.P. Morgan
Trading Symbol
Sector
Industry
FYE
Currency
ABOUT: JPMorgan Chase (NYSE: JPM) has assets of USD2.4 trillion and operates in more than 60 countries. JPM focus is on investment
banking, financial services for consumers, small business and commercial banking, financial transaction processing, asset management
and private equity. The stock is a component of the Dow Jones Industrial Average. JPMorgan holds a strong position in the global
investment banking space. For each of the last three years, it earned the most global advisory, debt origination and equity & equity‐
related underwriting fees, according to Thomson Reuters. JPMorgan competes with Bank of America and Wells Fargo mostly in the retail
banking business.
JPM US
Financial Services
Banking
31-Dec
USD
Performance Highlights (Annual)
FY 2014
Total Assets (US millions)
2,573,126.00
FY 2013
2,415,689.00
FY 2012
2,359,141.00
FY 2011
2,265,792.00
27,831.00
39,771.00
53,723.00
59,602.00
S&P
Fitch
Cash & Cash Equivalents (US millions)
Return on Assets
0.87
0.75
0.92
0.87
Return on Common Equity
9.75
8.40
10.72
10.21
Operating Margin
23.10
31.62
26.82
29.80
27.51
Revenue Growth Y-o-Y
(3.93)
(1.76)
(2.39)
(4.02)
6.50
5.81
5.50
5.34
301.45
314.87
340.86
368.54
Net Income Margin
Basic EPS
Total Debt/Total Equity
8.28
8.27
7.76
33.66
23.79
29.06
1.58
1.44
1.20
1.00
Q1 2015
Q4 2014
Revenue Growth % (y-o-y)
3.32
(4.35)
Operating Income % (y-o-y)
9.55
(16.49)
Return on Assets
0.89
Return on Capital
2.39
Operating Margin
Q3 2014
(4.10)
(10.40)
0.87
0.89
0.65
2.41
2.41
1.69
34.17
27.82
31.72
34.07
Net Income Margin
24.57
21.90
22.98
24.47
Total Debt Growth (y-o-y)
(3.54)
5.21
(1.61)
(4.38)
7.38
9.89
11.91
8.64
828.96
678.96
653.83
583.74
Total Equity Growth (y-o-y)
Total Debt to Total Equity
Book Value per Share
Payout Ratio
Sustainable Growth Rate
Last Price
$
62.93
A (Neg)
52-Week High
$
64.48
A + (Stable)
52-Week Low
$
Year to Date
52.97
0.58%
Q2 2014
2.20
-
Share Data
A3 (Stable)
19.52
8.24
DPS
Performance Highlights (Quarterly)
21.94
30.25
Common Equity/Total Assets
Payout Ratio
18.55
Credit Data
Moody's
6.87
7.17
8.64
5.81
27.33
33.25
29.25
27.60
7.16
6.51
7.15
5.26
Economy Overview
The growth prospects for the U.S. economy remain fairly favorable, with several of the headwinds that had restrained economic activity subsiding and positive momentum carrying over from the second half of
last year. Still, given a slightly softer-than-expected start to 2015, Standard & Poor's has lowered its forecast for full-year GDP growth. The U.S economy has grown 2.3% (annualized), but the pace of output
growth has picked up closer to 4% since the quarter 2014. This strength is expected to continue into 2015. For 2015 GDP is forecasted to grow 3% in 2015. This growth rate has been reduced from 3.3% due
to weaker than expected Q1 2015 data. Harsh winter weather across the northeast and north central regions, together with the West Coast port shutdown, weighed heavily on both businesses' and consumers’'
spending. The sharp appreciation of the US dollar has also started to reduce the price competiveness of U.S manufacturers. The economy continues its move towards full employment with little sign of
increasing inflation rates in sight. Inflation has been running below the Fed’s target of a 2% annualized rate for the core personal consumption expenditure (PCE) deflator, excluding food and fuel. In the past 12
months through February, the core PCE deflator has increased just 1.37%, while the overall deflator rose 0.3% for the month of February, pulled down sharply by lower oil and gasoline prices.
Financial Performance
JPMorgan reported total revenues of $9.6 billion for its corporate & investment banking division, which includes its advisory, underwriting, trading, treasury and securities services operations. The highlight of
JPMorgan’s results was the strong revenues churned out by its FICC (fixed income, currencies and commodities) trading desk. The trading unit was responsible for just under USD5.7 billion of this figure,
making this the best performance for the trading desks since Q1 2013. Trading revenues were 9% higher than the figure year on year. While investment banks normally report a peak in trading revenues for the
first quarter, JPMorgan benefited from the surge in debt as well as currency trading activity this time around, thanks to the Swiss central bank’s unexpected decision to remove the cap on the Swiss franc.
Notably, the equities trading desk also put up its best performance since Q1 2009 to churn out US1.6 billion in revenues. The reversal in fortunes for the business should help JPMorgan maintain its extremely
diversified business model even as stringent capital requirements put pressure on such models. JPMorgan also saw an improvement in performance for its other operating divisions over the quarter. The bank’s
consumer and business division, which include banking services offered to retail customers (credit cards, mortgages and deposits) as well as small businesses, saw its total deposit base swell past US500
billion for the first time ever this quarter. Total period-end deposits of US515 billion represent a 5% growth compared to the figure for the previous quarter and an 8% improvement year-on-year. Client assets
continued to swell and touched a record US219 billion. These two factors had a positive impact on non-interest revenues for the division in Q1 2015 – mitigating the effect of a sharp reduction in interest income.
Credit Ratings
In November 2014 Fitch affirmed JPMorgan Chase & Co.'s (JPM) long-term Issuer Default Rating (IDR) at 'A+' and short-term IDR at 'F1'. Fitch also affirmed JPM's viability rating (VR) at 'a+', its supporting
rating at '1' and its support rating floor (SRF) at 'A'. The Rating Outlook is Stable. Capitalization has improved materially over the past two years and liquidity remains sound. This strengthening balances with
continued pressure on earnings, particularly in securities businesses, and remaining material but unpredictable exposure to conduct and regulatory risks. JPM's ratings affirmation reflects the strong underlying
earnings capacity of the bank, given its dominant domestic franchise and growing international franchise, and significant progress made toward achieving compliance with heightened capital and liquidity
requirements. The affirmation also reflects the firm's strong funding flexibility, given its deposit raising capabilities and uninterrupted access to the global capital markets through an economic cycle.
Recommendation
Notably, US largest banking group witnessed a year-on-year increase in revenues across its operating divisions. Coupled with lower operating as well as legal costs, this translated into improvements in pre-tax
earnings for each division compared to the year-ago period. Investors were clearly happy with the results, as they sent the bank’s shares 3.3% higher within two days of the results announcement.
Conclusively, investment prospects seem favorable given the group's ability to enjoy a healthy trading yield. JPMorgan's investment banking business normally reports margins in the range of 36%-38%, but an
improvement in margins is forecast to around 40% in the years to come.
DISCLAIMER
This report has been prepared by First Citizens Investment Services Limited, a subsidiary of First Citizens Bank Limited. It is provided for informational purposes only and without any obligation, whether
contractual or otherwise. All information contained herein has been obtained from sources that First Citizens Investment Services believes to be accurate and reliable. All opinions and estimates constitute the
author’s judgment as at the date of the report. First Citizens Investment Services does not warrant the accuracy, timeliness, completeness of the information given or the assessments made. Opinions
expressed may change without notice. This report does not constitute an offer or solicitation to buy or sell any securities discussed herein. The securities discussed in this report may not be suitable to all
investors, therefore Investors wishing to purchase any of the securities mentioned should consult an investment adviser.
DISCLOSURE
We, First Citizens Investment Services Limited hereby state that (1) the views expressed in this Research report reflects our personal view about any or all of the subject securities or issuers referred to in this
Research report, (2) we are a beneficial owner of securities of the issuer (3) no part of our compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this
Research report (3) we have acted as underwriter in the distribution of securities referred to in this Research report in the three years immediately preceding and (4) we do have a direct or indirect financial or
other interest in the subject securities or issuers referred to in this Research report.