Chillin' out till it needs to be funded
Predilections and updates and more random comparisons to set the bar:
Of course there is much more on Analyst Day /but with the shares under performing there is a lot of time to bring you the rest. Both HSBC scored a $19 bln full year Profit and JP Morgan scored $100 bln in revenues where it grew more than 50% of its revenues to international climes while HSBC cored $83 bln in revenues 80% from international business and a salutory $600 mln profit from its remaining profit in the USA.
Even in Basel 3 RWA the bank compares with the wannabe HSBC in $1.22 Tln RWA vs $1.25 Tln for HSBC (Basel 2.5) and in Deposits with Chase at $1.12 Tln vs HSBC’s $1.25 Tln
JP Morgan’s Asia and Commercial Banking businesses are also the best performing businesses as for the industry in 2011 and this 2012 but contributed $6 bln each to topline and others have done more. However JP Morgan is right now in just 16 Asian countries and its Chase operation is the third largest in the USA
The bank is adding back $10 bln from loan Loss reserves in 2012 as LLRs increase to 238% over NCOs and NPLs go below 0.2% and of course there is no break up planned for the banks this year( see Mike Mayo’s opinion on Dealbook or Barron’s) Even without the releases from Loan Loss reserves the bank expects to get to a targeted $24 bln in profit.
The Investment Bank scored $26.3 Bln in revenue for the year and $6.8 bln in Profits ( same as HSBC again) on a Capital of $40 bln and Loan Syndication revenue took advisory up 22% in 2011 and also wrought share havoc on the Comml Banking portfolio with Industry shares of Healthcare and Oil rising to the top. Of course behind that is the JP Morgan thrust to globally leverage its synergies across the 7-8 different business CEOs esp with RFS sitting Business banking and Wealth / Funds marketing and sales people with Card Services representation as well. Even Commercial Banking is growing in the Mid market leveraging Chase Retail’s leadership in 23 states. Direct origination of Mortgages from branches increased 40% as it reached #2 in Originations, while Wealth management / CPCs also leverage customers with existing mortgages, available for a cross sell.
Also before we get on with other business for the day, an interesting fact to be in use in 2012 seems to be that the “Shadow Banking” NBFC sources of Financial Assets are likely to grow to twice the size of banking assets which themselves plateau to 150% of US GDP including mutual funds, Insurance and home Finance companies.
JP Morgan’s Wealth and Private Bank model including its now popular Chase Private Centers (CPCs) are spun around the same too, with Funds being the senter and growing in revenues to $9.5 bln in 2011 and $1.3 T in Assets Under management.
As we said this is just a primer , our own notes to review what needs to work in 2012 and what will need to atrophy with the run off assets in strategy.
A 19.3% share of Cards business by volumes and steadily improving revenue margins which are still lowest next to Discover standout in stark contrast as the two pillars of the $122 bln cards outstanding business of JP Morgan in Card Services. However chase.com has just beat the online portal of Bank of America according to Compete.com and Its mobil payments are bigger than the 4 biggest mobile payments operators incl Paypal and Amazon.
Sales Actives used to measure number of active card accounts have increased mor e than 501 basis points and 38% in volume of card activity per Sales active has also grown. Sales from each new card account has increased 100% from 2009 while number of active cards accounts has increased by 25% in the same period.
Apart from the charge off rate which is an industry leading 4.3%, the bank falls behing then in expenses of 4.8% ,ekeing out $225 mln in savings in Operational and marketing expenses in the two years but vindicated byt he performance of the increased 4000 odd sales force in the Bank’s 5500 branches