Ruechelle Marish M.

Cauguiran POLSTR W 6:00-9:00pm

JPMorgan Chase & Co.

Company Overview
JPMorgan Chase & Co. (JPMorgan Chase) is a financial holding company, providing investment
banking, consumer and commercial banking services. The company provides financial services to
consumers, small businesses, large corporation, institutional and government clients across the
world under its J.P. Morgan, Chase and WaMu brands. It also offers financial transaction
processing, asset management, and private equity services. The bank and non-bank activities of
the company operate nationally, through overseas branches and subsidiaries, representative
offices and subsidiary foreign banks. JPMorgan Chase is headquartered in New York, the US.

Key Information
Web Address: www.jpmorganchase.com
Financial year-end: December
Number of Employees: 245,192 (Oct 2014)
Source : GlobalData

SWOT ANALYSIS
STRENGTHS

WEAKNESSES

Market Presence
Adequate Capital
Robust Business Performance

Decline in Financial Performance

OPPURTUNITIES

THREATS

Positive Outlook for Global Wealth Market

Strategic Initiatives

Competition
Low Interest Rate Environment

JPMorgan Chase is one of the leading providers of financial services in the world. The company
has well diversified operations and strong support from a wide network infrastructure of ATMs and
banking branches. The companys strong capital adequacy and strong market position are its
major strengths. The companys exposure to the current economic imbalances and intense
competition may impact the companys performance. However, the companys strategic initiatives,

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and possible economic growth in emerging markets could present new growth opportunities to the
company.

Strengths
Strength - Adequate Capital
JPMorgan Chase has a good capital base ensuring capital adequacy to support its organic and
inorganic growth with both secured and unsecured natures of its lending. The good capital
management initiatives and moderate risk weighted asset (RWA) growth have enabled the bank to
strengthen its capital position. Total deposits increased to US$1.3 trillion in FY2013, indicating an
increase of 8% from FY2012. Total stockholders equity in FY2013 was US$211.2 billion. It
reported high quality liquid assets of US$522 billion. The company reported tier1 capital ratio of
11.9%, total capital ratio of 14.4%, tier 1 leverage ratio of 7.1 and tier 1 common capital ratio of
10.7% in FY2013. Such a sound capital management initiative strengthens the companys
business profile, which in turn would enable it to carry out new growth and expansion plans.
Strength - Robust Business Performance
The company reported strong performance during the FY2013 with strong lending and deposit
growth. Its Consumer & Business Banking within Consumer & Community Banking was ranked first
in deposit growth for the second year in a row and 1st in customer satisfaction among the largest
banks for the second year in a row as measured by The American Customer Satisfaction Index. In
Card, Merchant Services & Auto, credit card sales volume increased by 10% in FY2013. The
Corporate & Investment Bank maintained its first ranking in Global Investment Banking Fees and
reported record assets under custody of US$20.5 trillion at December 31, 2013. Commercial
Banking loans increased nearly US$137.1 billion, an increase of 7% compared with the prior year.
Asset Management segment of the company posted nineteen consecutive quarters of positive net
long-term client flows into assets under management. In the FY2013, the Asset Management
segment reported loan balances of US$95.4 billion.
Strength - Market Presence
JPMorgan Chase is one of the leading diversified financial services providers groups in the world
with total assets of US$2.4 trillion. The company offers its services to nearly 50% of US
households, nearly 80% of Fortune 500 companies, and 60% of the worlds largest pensions,
sovereigns and central banks. The company has on the ground operations in 60 countries and
serves clients in over 100 countries around the world. Its Consumer & Business Banking business
operates through an established network of over 5,630 branches and more than 19,211 ATMs. The
company is one of the largest credit card issuers with over US$127.8 billion in credit card loans.
Through its Merchant Services business, Chase Paymentech Solutions, Card is a global leader in
payment processing and merchant acquiring. The company is also one of the global leaders in
investment and wealth management with total assets under supervision of US$2.4 trillion. The
company has wide geographical operations leading to greater benefits, improved profit margins,
economies of scale, and recognition on a worldwide basis. Geographically, the company has

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divides its business operations in four business segments, namely Europe/Middle East and Africa,
Asia and Pacific, Latin America and the Caribbean, and North America. For the FY2013, the
company reported 75.2% of revenue from North America; 16.1% from Europe/Middle East and
Africa; 6.4% from Asia and Pacific; and 2.3% from Latin America and the Caribbean. Geographical
diversity enables the group to mitigate risks associated with overdependence on a specific market.
It bestows the group with a wide customer base, strong brand presence and growth opportunities
across emerging markets.

Weaknesses
Weakness - Decline in Financial Performance
The company reported a decline in its financial performance during the FY2013 as compared to
FY2012. It reported an interest income of US$52,996 million as against US$56,063 million and net
interest income was US$43,319 million in FY2013 as against US$44,910 in FY2012. As a result
the net income declined to US$17,923 million in FY2013 compared to US$21,284 million in
FY2012. The various profitability ratios of the company declined in FY2013 as against FY2012. Net
profit margin, return on equity, return on assets, return on fixed assets declined to 33.8%, 48.89%,
8.48%, 0.74% and 1.79% in FY2013 as against 37.9%, 51.5%, 10.43%, 0.9% and 1.9% in FY2012
respectively.

Opportunities
Opportunity - Positive Outlook for Global Wealth Market
While the developed countries are struggling with the consequences of the economic downturn, the
emerging economies are reporting a huge inflow of funds. According to the industry estimates,
assuming moderate and stable economic growth, total household wealth is expected to rise by
approximately 50% in the next five years from $223 trillion in 2012 to $330 trillion in 2017. The
number of high net-worth individuals across the world is expected to increase by approximately 18
million to 46 million in 2017. China is expected to surpass Japan as the second wealthiest country
in the world. However, The US is forecast to remain the wealthiest country with total wealth of $89
trillion by 2017. The company generated significant income from its Asset management services.
For the FY2013, the bank reported total net income from asset management segment at
US$11,320 million, indicating an increase of 13.8%. Such positive outlook for the global wealth
management industry could provide ample growth opportunities for the company.
Opportunity - Strategic Initiatives
The company undertook several strategic initiatives which will enable its increase its future
economic revenue. In August 2014, the company entered into a definitive agreement with

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Lexington Partners and AlpInvest to divest its stake in about 50 pct of portfolio companies held by
One Equity Partners, the companys principal private equity unit. In July 2014, the company
entered into a definitive agreement to sell its stake in the companys Global Special Opportunities
Group to Sankaty Advisors, LLC. In June 2014, the company entered into an agreement with
Carlson to divest its 45% equity interest to Carlson Wagonlit Travel (CWT). During the same month,
the company acquired 8.58% of shareholding interest in Legend Mining Ltd. In April 2014, the
company entered into strategic investment partnership with Resolution Life Holdings Inc. and will
provide it with strategic support around the implementation of its multi-manager portfolio
investment strategy and will help manage its US$12 billion fixed income investment portfolio. In
March 2014, the company and Mercuria Energy Group reaches definitive agreement to acquire its
physical commodities business.

Threats
Threat - Competition
JPMorgan Chase and its subsidiaries operate in a highly competitive environment. The company
competes on the basis of the quality and variety of products and services, transaction execution,
innovation, reputation and price. The company faces competition from other banks, brokerage
firms, investment banking companies, merchant banks, hedge funds, private equity firms,
insurance companies, mutual fund companies, credit card companies, mortgage banking
companies, trust companies, securities processing companies, automobile financing companies,
leasing companies, ecommerce and other Internet-based companies, and a variety of other
financial services and advisory companies. A few of the competitors of the company are The
Goldman Sachs Group, Inc., Barclays PLC, and others. Intense competition may pressurize the
company on prices of products and services or may cause it to lose market share. Intense
competition may have negative impact on the companys operations as any failure to compete
effectively in areas such as pricing, services and quality could negatively impact the revenue and
overall performance of the company.
Threat - Low Interest Rate Environment
Expansion of monetary policies across various economies influenced interest rates. Owing to such
policies, banks/companies offering banking and financial services witnessed lower interest
margins. As a result of such compressed margins, several banks have reported a decline in their
net interest income and a decline in their non-interest income. Non-interest income on asset
management declined over the year as banks/companies had to waive management fees on
money market funds due to low yields and invest excess liquidity in short-term, low-yield assets.
Since interest rates are driven by monetary policies, economic and political conditions, and factors
beyond bankers control, such low interest rate environment could reduce interest yields.