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JPMorgan's 5 divisions are expected to make $114.7 billion for full-year 2019
(1) Consumer & Community Banking $55 billion (48%),
(2) Corporate & Investment Banking $36 billion (32%),
(3) Asset & Wealth Management $15 billion (13%),
(4) Commercial Banking $9.4 billion (8%)
(5) Corporate / Private Equity -$0.7 billion (-1%)
Total Revenue
JPMorgan's Business Model
What Need Does It Serve?
JPMorgan provides consumer banking, commercial banking, credit & debit cards, investment banking, treasury services, wealth management and sales & trading services to its clients.
Its end users include:
Retail ConsumersSmall BusinessesHigh net worth individualsCommercial Real Estate FirmsMultinational CorporationsBanksGovernments Institutional Investors What Are The Alternatives?
JPMorgan's business model faces stiff challenges and competition from offerings by its global competitors such as:
Bank of AmericaMorgan StanleyGoldman SachsWells FargoCitigroupBlackRockState Street
Has 5 Operating Segments-
Consumer & Community Banking: The Retail Banking division of JPMorgan serves small businesses and consumers by providing traditional banking services to them through their various branch locations, ATM’s, online banking etc.
Corporate & Investment Banking: This segment includes Investment Banking (financial advisory and underwriting), Sales & Trading, and Treasury & Security Services (cash management, custody, trade, wholesale cards and liquidity products).
Commercial Banking: It provides corporate lending, treasury related, Investment Banking and asset management services.
Asset & Wealth Management: It includes global investment management, banking, brokerage and retirement services to corporations and high net-worth individuals.
Corporate: It comprises private equity, treasury, corporate staff units and expenses that are centrally managed.
Although JPMorgan revenues have grown at an average annual rate of 7% – from $95.7 billion in 2016 to $109 billion in 2018, we expect the growth rate to reduce to 4.7% over 2019-2020.
Total Revenues
YOY change in Total Revenues
(B) Corporate & Investment Banking revenues are expected to drop by 1% in 2019
Although the segment revenues have grown by 3% over the last three years --from $35.2 billion in 2016 to $36.4 billion in 2018, we expect it to slightly drop in 2019 due to negative market conditions and lower consumer activity.
Thereafter, it is expected to grow at an average annual rate of 1% and cross $37 billion by 2021.
corporate and Investment banking [=K+L+M]
Advisory & Underwriting Services [K]
Sales and Trading [L]
Treasury & Securities Services [M]
Advisory & underwriting services have grown 16% from $6.4 billion in 2016 to $7.5 billion in 2018. However, we expect it to remain unchanged in 2019 due to decline in Global M&A activity and Equity Underwriting deals.JPMorgan is a market leader in FICC (Fixed Income, Currency & Commodity) trading which constitutes majority of its Sales & Trading revenues. As a result of this dependence, the recent slump in bond yields is expected to reduce its trading revenues by 1% in 2019.Further, we expect Treasury & Security revenues to record a slight drop in 2019.Notably, each of the three units is expected to grow over 2020-2021.
(C) Asset & Wealth Management have grown 17% over the last three years -- from $12 billion in 2016 to $14.1 billion in 2018.
We expect the revenues to increase 7% in 2019, before reporting a decline of 2% in the subsequent year. Thereafter, it is expected to show a slight growth in 2021.
Overall, the segment revenues are expected to cross $14.9 billion by 2021.
Asset & Wealth Management [P+Q]
Net Interest Income [P]
Fee Income [Q]
(D) Commercial Banking would grow by 15% from $9.1 billion in 2018 to $9.8 billion by 2021.
Although the segment is on a growth trajectory, we expect the growth rate to slow down over the next three.
Commercial Banking [N+O]
Net Interest Income [N]
Non Interest Income [O]
[E] Corporate/Private Equity segment doesn't have a significant impact on JPMorgan's revenues.
We expect the segment revenues to increase from $-2.6 billion in 2018 to $0.1 billion by 2021.
Corporate / Private Equity
YOY change in Corporate / Private Equity