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JP Morgan: The Future is Now

 3 min read / 

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 Share Price

 

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.

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Companies

H&M to Shut Stores as Quarterly Results Plunge

 2 min read / 

H&M Results

Fashion retailer H&M announced today that it will be shutting down more stores after it experienced its biggest drop in quarterly sales in at least a decade.

Although group sales rose by 4% over the year, fourth quarter sales shrank by 4% year-on-year, to 50.4bn kronor ($6bn), as fewer customers visited its stores. This was far below the retailer’s expectations. Shares in H&M have now hit their lowest level in eight years.

H&M plans to adapt to changes in the market by closing more stores and selling the brand through Chinese online platform Tmall. It aims to integrate its physical and digital stores more, and will give more details on their strategy changes at a meeting with investors on February 14.

The company said:

“The quarter was weak for the H&M brand’s physical stores, which were negatively affected by a continued challenging market situation with reduced footfall to stores due to the ongoing shift in the industry[…] In addition, there have been imbalances in parts of the H&M brand’s assortment composition.”

The company’s rival, Inditex, the owner of high street brand Zara, as well as Massimo Dutti, Bershka and Pull&Bear, has continually outperformed H&M, as it expands more into e-commerce. However, this week, the Spanish giant also reported a slowdown in sales in its third quarter but said sales improved again in November given the colder weather.

Keep reading |  2 min read

Companies

Snap Opens Online Studio

Snapchat Online Studio

The studio will enable brands to build adverts that individuals users can include in their own snaps.

Snapchat is adding another trick to its repertoire by allowing users to add branded animations to the existing arsenal of augmented reality lenses. This is not a wholly new innovation as advertisers can already sponsor lenses, although there is a hefty minimum spend of $300,000 and a current need to work closely with Snap’s design team. However, the new studio will enable advertisers to create their own adverts, which will then need to be accepted by Snap before they are given the green light. The move is part of Snap’s wider efforts to diversify their revenue streams.

Keep reading |  1 min read

Asia

Japan Is Behind Bitcoin’s Rise

Japan Bitcoin

Deutsche Bank released a research note saying that Japanese investors account for bitcoin’s meteoric rise.

Deutsche Bank analysts have said they believe that individual Japanese foreign-exchange (FX) traders are instead moving towards leveraged cryptocurrency trading in the search for astronomical returns. Already, Japan makes up 50% of the world’s leveraged FX trading and Nikkei recently said that 40% of cryptocurrency trading was denominated in yen throughout October and November. Evidently, the Japanese are growing tired of years of ultra-low interest rates and are turning to the blockchain to boost their savings.

Keep reading |  1 min read

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