Undergraduate Stock Trading Society USTS – THIRD MEETING JPM ANALYSIS
JPMorgan Chase & Co. Intro Financial holding company Services provided:
Investment Banking: advising on corporate strategy and structure, capital raising in equity and debt markets, risk management, marketmaking in cash securities and derivative instruments, and prime brokerage and research Commercial Banking: lending, treasury services, investment banking, and asset management services Treasury and Securities Services: transaction, investment, information services, cash management, trade, wholesale card, and liquidity products and services Asset Management: investment and wealth management, equities, fixed income, real estate, hedge funds, private equity, and liquidity products, including money market instruments and bank deposits Retail banking: checking & savings account, mortgages, credit card, business loans, etc.
JPM
JPM – M&A history
Recent Events Financial Regulation Reform:
Volcker rule: no more prop trading (but ok if it is “client related”) OTC derivatives: large portion can be kept in-house. Some need to go through clearing house “orderly liquidation”: fees. How much ?? Tougher capital requirement Fees – reduced (or at least can’t drive up too much)
Foreclosure probe: possible foreclosing fraud
Related expenses unknown The probe may go through years of information ???
Federal Reserve Actions
JPM Strengths Strength in profit – 23% jump in Q3 Less provisions for bad debt – $1.55B compared to
$3.99B last year Debt underwriting – low interest rate = more companies issuing debt = more fees for JPM Tier 1 capital ratio 11.3% - strong balance sheet
Threats Large portion of income due to reduction in
provision for loan loss Still holds 5.1% loss provision reserve Investment banking unit income unreliable Possible currency war. Anemic growth in the general economy