For the most part, the environment has been bad for major U.S. banks. With onerous regulations and slow economic growth, investors have been heavy sellers. So, there was little optimism ahead of JPMorgan Chase’s (NYSE:JPM) earnings report.
But interestingly enough, it was far from bad. JPMorgan was able to post a nice 7% increase in revenue and its profit came to $5.43 billion.
On the news, the stock rose nearly 2%. However, it’s still down 3.6% for the year.
Does JPMorgan represent a good value for investors? Let’s take a look at the pros and cons:
Pros
Leadership. JPMorgan CEO Jamie Dimon is perhaps the world’s most savvy banker. Because of his focus on creating a “fortress balance sheet,” he was able to deal effectively with the financial crisis of 2008. In fact, he capitalized on the situation with smart acquisitions, such as Bear Stearns and Washington Mutual.
Moreover, JPMorgan should have little problem dealing the higher capital requirements. Keep in mind that the firm was the first to payback its federal bailout loans.
Investment banking. This segment has been growing nicely, both with debt and equity offerings. Interestingly enough, there could be a nice pop from public offerings. JPMorgan has been effective in snagging some juicy assignments.
Credit quality. This continues to improve, in terms of lower amounts of nonperforming assets and fewer charge-offs. This is the case for both consumers as well as business customers. In other words, this trend should lead to better profitability in the coming quarters.
Cons
Loan growth. This is still tepid. In the latest quarter, there was a 1% decline. While things should improve, it will likely continue to be at a sluggish rate.
However, there could be a big problem if the U.S. economy slows down. With the budget impasse on Capitol Hill and the problems in Europe, the risks are certainly increasing.
Mortgages. While this business isn’t as bad as other banks – like Bank of America (NYSE:BAC) – the exposure is still a big drag. JPMorgan continues to take charges for losses and litigation fees. There is also uncertainty about the overall exposure to possible mortgage putbacks.
Regulations. The U.S. government has certainly taken harsh actions on the banks, as seen with the Dodd–Frank legislation. There are new restrictions on areas like overdraft and interchange fees. As a result, it will be tougher for banks to increase revenue.
Verdict
While there are some major headwinds, the fact is that JPMorgan is in a solid position. Its capital is strong and the firm has a set of diverse businesses.
Even though banking is still in a funk, this will eventually change, and JPMorgan is likely to be a top pick for investors. In fact, the shares are fairly cheap, coming to about 9 times earnings. What’s more, it looks like there may be increases in the dividend rate.
Thus, the pros outweigh the cons on the stock.
Tom Taulli’s latest book is “All About Short Selling” and he has an upcoming book called “All About Commodities.” You can find him at Twitter account @ttaulli. He does not own a position in any of the stocks named here.
Tom Taulli is the author of various books. They include Artificial Intelligence Basics and the Robotic Process Automation Handbook. His upcoming book is called Generative AI: How ChatGPT and other AI Tools Will Revolutionize Business.
FAQs
And its website experience can compete with that of online-only banks. Chase ranked well in the 2023 J.D. Power U.S. Retail Banking Satisfaction Study. Chase has a good basic checking account but its savings rates are low, and some fees are high and hard to avoid.
What are the pros and cons of Chase bank? ›
And its website experience can compete with that of online-only banks. Chase ranked well in the 2023 J.D. Power U.S. Retail Banking Satisfaction Study. Chase has a good basic checking account but its savings rates are low, and some fees are high and hard to avoid.
How to answer why J.P. Morgan? ›
Professional Tone:-
Working at such a well-established and successful organization would provide me with valuable experience and opportunities for growth. 2. Culture: From my research, I have learned that jpmorganchasecc.com values diversity, collaboration, and innovation.
What positive things did J.P. Morgan do? ›
What made J.P. Morgan famous? J.P. Morgan was known for reorganizing businesses to make them more profitable and stable and gaining control of them. He reorganized several major railroads and became a powerful railroad magnate.
What are JPMorgan Chase weaknesses? ›
Weaknesses. Regulatory Challenges: As a global financial institution, JPMorgan is subject to complex and evolving regulatory environments in multiple countries. Compliance with these regulations can be costly and time-consuming, potentially impacting the company's operational efficiency and profitability.
What are the pros of JPMorgan Chase bank? ›
JPMorgan Chase — 3 Pros, 3 Cons
- Pros.
- Leadership. JPMorgan CEO Jamie Dimon is perhaps the world's most savvy banker. ...
- Investment banking. This segment has been growing nicely, both with debt and equity offerings. ...
- Credit quality. ...
- Cons.
- Loan growth. ...
- Mortgages. ...
- Regulations.
In conclusion, traditional banking offers a range of advantages such as personalized customer service, physical branches, and a sense of security and trust. However, it also has its drawbacks, including potential fees, limited accessibility, and lengthy processes.
Why is J.P. Morgan different from other banks? ›
How is J.P. Morgan different from other banks that work with startups? The firm has decades of global experience, a robust professional and venture capital network, and scalable treasury management solutions—which can make us the only bank you'll ever need.
What attracts you to J.P. Morgan? ›
Professional Tone:-
I am drawn to JPMorgan Chase because of its reputation as one of the world's leading financial institutions and its commitment to providing innovative solutions to its clients.
How to crack J.P. Morgan interview? ›
Highlight your skills and abilities: We want to know your accomplishments and what drives you. Share relevant experiences and specific attributes like self-discipline, collaboration and attention to detail to show us why you'd be a great fit.
On the negative side, J.P. Morgan Self-Directed Investing is available only to US residents. The product portfolio is limited to stocks, ETFs, options, bonds and mutual funds. Lastly, research capabilities are weak as charting tools are limited and there are no recommendations or analytical tools.
What does J.P. Morgan do best? ›
J.P. Morgan is a leader in investment banking, commercial banking, financial transaction processing and asset management.
Is J.P. Morgan a good company? ›
J.P. Morgan has an overall rating of 4.1 out of 5, based on over 24,469 reviews left anonymously by employees. 82% of employees would recommend working at J.P. Morgan to a friend and 80% have a positive outlook for the business. This rating has been stable over the past 12 months.
What are the disadvantages of Chase? ›
A few disadvantages of Chase Bank are low interest rates and APYs, monthly service fees, and wire transfer fees on some accounts.
Why JPMorgan Chase is best? ›
J.P. Morgan is one of the world's leading financial services companies. It has clients in more than 100 countries and employs more than 260,000 staff. The business is famed for its core principle of putting its clients' interests first. J.P. Morgan's widely considered to be a great place to work.
What is the most interesting thing about J.P. Morgan? ›
Morgan's power was such that he bailed out the US economy in two separate financial crises – providing 3.5 million ounces of gold when the US Treasury ran out after the Panic of 1903, and saving the New York banking industry during the Panic of 1907.
Is Chase a good or bad bank? ›
Our recent MarketWatch Guides consumer banking survey shows that 64% of Chase customers are extremely satisfied with their banking experience. Chase best suits customers who prefer many branch and ATM options, want a solid digital banking experience and can meet requirements to get monthly account fees waived.
What are the benefits of joining Chase Bank? ›
Tools to help you bank on your terms.
- Free credit score. Track your credit score with Chase Credit Journey® and start building your credit health.
- Chase QuickDeposit℠ Save a trip to the branch and deposit checks in a snap.
- Zelle. ® ...
- Online Bill Pay. ...
- Account Alerts. ...
- Lock card.
Chase Secure Banking has been certified by Bank On for meeting the National Account Standards as a low-cost, low-fee account since 2019.
Which bank is better Chase or bank of A? ›
Bank of America pays slightly higher interest on your account balance. It also has a lower monthly fee and more options to have it waived. While the comparison between the two banks' checking accounts stacks up as a draw, the clear winner among savings accounts is Bank of America Advantage Savings.
