Jp Morgan Analysis

JPMorgan Chase & Company has been a leading global financial irm and one of the largest banking institutions in the United States (US) for many years. The company operates through seven segments which includes investment bank, retail 6inancial services, card services, asset management, treasury and securities services, commercial banking, and corporate. These services are done through the bank and non-bank subsidiaries of JPMorgan Chase which includes JPMorgan Chase bank, a national banking association in the US, and JP Morgan Securities, the investment banking division.

In 2010, the company recorded around $2.1 trillion in assets and $176 billion in stockholders' equity. The company also reported revenue of $103 billion in 2010, an increase of 2.3% as compared to 2009. Net income increased by 48.1% from $11,728 million in 2009 to $17,370 million in 2010.

The majority of the revenue comes from the retail 6inancial services which account for 30% of the revenue. The retail 6inancial services division currently provides 30 million consumers and small businesses with products and services such as checking and savings account, mortgages, home equity and business loans, insurance, auto loans and investment advices. Customers can easily get assistance with their 6inancial needs as JPMorgan Chase has one of the largest networks nationwide with 5,300 bank branches and 16,000 ATMs across 23 states.

The investment banking division also generated solid returns in 2010 with $26 billion in revenue and $6.6 billion of net income. This constituted 25% of the revenue of JPMorgan Chase. The investment bank serves approximately 16,000 investors clients and 5,000 issuer clients worldwide providing services that include corporate strategy, market making in cash securities, capital raising in equity and debt market, and risk management. Besides helping our clients, we also have been actively engaging our capitals in proprietary trading and investing activities.

Compared to the past, JPMorgan Chase had focused more on the investment bank and the retail 6inancial services. The revenue generated comprised of 36% from the investment bank and 21% from the retail 6inancial services in 2003. A small portion of the revenue came from treasury and securities service, and investment management. However, as the company aims to become a true full-6ledged universal bank, the business segment was realigned to re6lect the new business structure after the merger with Bank One in 2004. The retail 6inancial services continued to grow strongly as the bank expanded its network by adding more branches nationwide while acquiring other banks . The card service division also became a segment on its on in 2004 due to the acquisition of several portfolio which increased the number of card accounts tremendously.



More emphasis was also put in the commercial banking sector and also to provide 6inancial advices to high net worth individual. The Investment Management & Private Banking segment was renamed to Asset & Wealth Management. JPMorgan Partners, which was formerly a stand alone business segment which provide equity and mezzanine capital 6inancing to private equity was moved into Corporate.

At that point of time, the investment banking division of JPMorgan Chase was showing impressive results due to the strong equity underwriting, increased capital markets revenues, and excellent return revenues in Global Treasury. However, the US investment banking industry began to face competition by foreign banks as they increase their standing in the US market. Even though JPMorgan remains as the number 1 investment bank in the US, the foreign investment bank cannibalized a sizable part of market share of investment banking services. The whole banking industry, especially the investment banking division, was further affected by the global 6inancial crisis in 2008.

The global 6inancial crisis that started in the US has detrimentally impacted not just the economy of the US, but many other countries in the world. It has caused massive unemployment and bankruptcy that eventually led to a soaring rate of defaulted debt and loans. This rising amount of bad debt ultimately threatened the solvency of the banks and coupled with other reasons, it 6inally led to the breakdown of the global 6inancial system and the downfall of the banking industry.

This crisis pinpointed many aspects of the 6inancial system that requires changes so that to prevent such crisis from reoccurring. Since the 6inancial crisis, regulators of the industry has been constantly implementing regulations and changes to the 6inancial industry that are essential to save the economy and also to prevent the crisis from getting worst. JPMorgan Chase has been very supportive of such changes and we ourselves have implemented certain practices and strategy to steer the 6irm forward.



Strategy

As the business environment in 2011 continued to improve with signs of stability and growth returning to both the global 6inancial market and the US economy, the company has bene6ited due to the lower delinquency rate and a decrease in the estimated losses in the consumer business. It is also forecasted that the global bank industry will continue to grow by 34.4% to a value of $136,946.8 billion in 2015. However, this growth is decelerating as compared to previous years where the compound annual growth rate was forecasted at 6.1%. It is therefore important for JPMorgan Chase to continue come up with vital strategy to gain a competitive advantage in this saturated industry.

Since the 6irm's major revenue has always come from the retail 6inancial services segment and the investment bank, JPMorgan Chase will need to continue to put more emphasis in this two segment but not neglecting other segments such as asset management and commercial banking.

Increase organic growth in Retail Financial Services

JPMorgan Chase has possess one of the most

attractive retail 6inancial services franchise in

America. In 2010, the retail 6inancial services

segment has generated revenue of $31.8

billon with net income of $2.5 billion. The

banking and lending division has performed

well and achieved solid organic growth

throughout the year due to the strong

relationship we have established with our customers. We will continue to focus on this organic growth by improving our brand recognition across the country.

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