JP Morgan’s Consumer & Community Banking (CCB) segment (constituting 39.6% of total net revenues in 2024) serves consumers and businesses through personal service at bank branches and through automated teller machine (ATMs), online, mobile and telephone banking. CCB is organized into Consumer & Business Banking, Mortgage Banking, and Card & Auto. Commercial & Investment Bank (CIB) segment (38.9%) offers a wide range of IB, market-making, prime brokerage, and wholesale payments services to a global client base of corporations, investors, financial institutions, government and municipal entities. The segment also offers lending, wholesale payments, and investment banking services to corporations, municipalities, financial institutions and non-profit entities. Asset & Wealth Management (AWM) segment (11.9%) provides services to institutions, retail investors and high-net-worth individuals. It offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity including money market instruments and bank deposits. The segment also offers trust and estate, banking and brokerage services. Corporate segment (9.6%) consists of Treasury & Chief Investment Office (CIO) and Other Corporate, which includes corporate staff units and centrally managed expenses.
Though the Federal Reserve has started lowering interest rates and signaled more cuts this year, relatively high rates are expected to support JPMorgan’s NII and net yield on interest-earning assets as funding and deposit costs gradually stabilize. While NII declined in 2020 and 2021 on near-zero interest rates, the metric witnessed a five-year (2019-2024) compound annual growth rate (CAGR) of 10.1%. This was largely driven by the acquisition of First Republic Bank in 2023 and the high-interest rate regime since 2022. However, higher funding costs hurt the company’s net yield on interest-earning assets in 2024. The metric declined to 2.63% last year from 2.70% in 2023. The company projects NII to be almost $94 billion in 2024, up almost 1%, while net yield on interest-earning assets will gradually stabilize. We expect NII (reported) to grow 1% and net yield on interest-earning assets to be 2.67% this year. JPMorgan is expanding its footprint in new regions despite the proliferation of mobile and online banking options. In 2024, the company announced plans to open more than 500 new branches by 2027, of which 150 were built last year. This initiative will solidify its position as the bank with the largest branch network and a presence in all 48 states in the United States. Earlier in 2018, the bank announced plans to enter 25 new markets by opening new branches. In addition to enhancing market share, the strategy continues to help the bank grab cross-selling opportunities by increasing its presence in the card and auto loan sectors. The company also is committed to renovating 1,700 existing locations by 2027-end to serve its customers better. Apart from this, the company launched its digital retail bank Chase in the U.K. in 2021 and plans to expand the reach of its digital bank across the European Union countries. JPMorgan is also focused on bolstering the CIB and AWM businesses in China.
While global deal-making came to a grinding halt at the beginning of 2022, mainly due to the Russia-Ukraine conflict, fears of economic slowdown and high inflation numbers, JPMorgan continued to rank #1 for global IB fees. The trend is reversing of late. In 2024, the company’s total IB fees (in the CIB segment) soared 49% after declining 5% in 2023 and 59% in 2022. Further, last year, the company’s wallet share was 9.1%. It will likely witness growth in IB fees going forward, driven by a healthy IB pipeline and active merger & acquisition (M&A) market, and leverage its top position to gain further from the changed scenario. Our estimate for IB fees (in the CIB segment) reflect a CAGR of 6.5% by 2027. JPMorgan has been growing through on-bolt acquisitions, both domestic and international. In 2023, the company increased its stake in Brazil’s C6 Bank to 46% from 40%, formed a strategic alliance with Cleareye.ai (a financial technology firm focused on trade finance) as well as acquired Aumni and First Republic Bank (an FDIC-assisted deal). In 2022, it acquired Renovite, a 49% stake in Greece-based Viva Wallet and Global Shares. These deals, along with several others, are expected to support the bank’s plan to diversify revenues and expand the fee income product suite and consumer bank digitally.
JPMorgan remains focused on acquiring the industry’s best deposit franchise and strengthening its loan portfolio. Despite a challenging operating environment, deposits and loan balances have remained strong over…
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