JP Morgan Chase ranked largest US bank by assets, is one of the most complex and diverse companies thanks to its universal banking model. Even recently, when the bank has been under regulatory pressure due to advanced capital constraints and other regulatory requests, the international bank has been able to earn a return on equity of 11.28%. JP Morgan is keen on reinventing customers’ experience, slashing $2.8 billion of expenses to diminish overlaps in operations and technology. The US bank wants to grow internationally as the anticipated cost reductions in its investment banking division will most likely come from business simplification.
International growth and success
JP Morgan has plenty of room to grow, especially in Latin America, Asia Pacific as well as Africa. The firm aims to grow its international market share via electronic trading, having recently announced that its e-trading volumes were up by 17% in the US between 2014 and 2015. The company aims to hire more than a few thousand technologists across Asia Pacific over the next couple of years to bring in fresh perspectives and ideas that can have a positive impact on their clients and businesses. The majority of these roles will be based in Singapore and Hong Kong. The company has been successful globally, although, its revenues in the EMEA (Europe, Middle East and Africa) under-performed over the past 5 years. To tackle this issue, JP Morgan recently purchased intelligent client solutions to support its internal activities in order to provide value and insight to their clients. The firm is also keen on fighting against money laundering and terrorist financing by monitoring credit card and treasury services transactions to catch fraudulent activities, to help investors mitigate costs by optimising prime brokerage.
Commitment to success
JP Morgan works hard to create a global synergy by improving transactions and projects that support the company’s businesses. The US bank produced $15 billion in annual revenue synergies by being able to take advantage of the reduced cost and enhanced productivity across its divisions. The firm believes in doing the right thing by recognising mistakes and do not shy away from announcing groundbreaking decisions. As of late, JP Morgan’s CEO and Chairman Jamie Dimon has bought $26.6 million in his company’s stock to save the bank, gaining up to 500,000 shares. In total, the CEO now has 6.7 million shares in JP Morgan Chase holdings worth $358 million. The Chairman’s bold move aims to increase confidence in the financial markets to reassure investors. Effectively, the company’s stocks tumbled by 20% in 2015, a continuing trend for many well-known banks across the globe. Although, the bank does not appear to be in any financial trouble following last year net income of $24.4 billion, up 12% from 2014, outperforming every single investment bank. In addition, the company’s markets revenues are less volatile than its competitors with 4% volatility.
JP Morgan expects global investment banking revenues to decline in 2016 due to widening credit spread and issuance activity. The recent turmoil in commodity markets and global equities has made it even harder for investment firms to earn more money in traditional business lines. In case of a market normalisation, it may be followed by a period of lower market activity as witnessed in the previous sell-offs. As a glimpse of hope, JP Morgan’s analysts expect investment banks’ revenues to grow by 7% in 2017.