Editing JPMorgan Chase & Co.
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== Competition == | == Competition == | ||
JPMorgan Chase and its subsidiaries and affiliates operate in highly competitive environments. Competitors include other banks, brokerage firms, investment banking companies, merchant banks, hedge funds, commodity trading companies, private equity firms, insurance companies, mutual fund companies, investment managers, credit card companies, mortgage banking companies, trust companies, securities processing companies, automobile financing companies, leasing companies, e-commerce and other internet-based companies, financial technology companies, and other companies engaged in providing similar as well as new products and services. The Firm’s businesses generally compete on the basis of the quality and variety of the Firm’s products and services, transaction execution, innovation, reputation and price. Competition also varies based on the types of clients, customers, industries and geographies served. With respect to some of its geographies and products, JPMorgan Chase competes globally; with respect to others, the Firm competes on a national or regional basis. New competitors in the financial services industry continue to emerge, including firms that offer products and services solely through the internet and non-financial companies that offer products and services that disintermediate traditional banking products and services offered by financial services firms such as JPMorgan Chase.<ref name=":0" | JPMorgan Chase and its subsidiaries and affiliates operate in highly competitive environments. Competitors include other banks, brokerage firms, investment banking companies, merchant banks, hedge funds, commodity trading companies, private equity firms, insurance companies, mutual fund companies, investment managers, credit card companies, mortgage banking companies, trust companies, securities processing companies, automobile financing companies, leasing companies, e-commerce and other internet-based companies, financial technology companies, and other companies engaged in providing similar as well as new products and services. The Firm’s businesses generally compete on the basis of the quality and variety of the Firm’s products and services, transaction execution, innovation, reputation and price. Competition also varies based on the types of clients, customers, industries and geographies served. With respect to some of its geographies and products, JPMorgan Chase competes globally; with respect to others, the Firm competes on a national or regional basis. New competitors in the financial services industry continue to emerge, including firms that offer products and services solely through the internet and non-financial companies that offer products and services that disintermediate traditional banking products and services offered by financial services firms such as JPMorgan Chase.<ref name=":0" /> | ||
Some competitors include: | Some competitors include: | ||
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=== Leadership === | === Leadership === | ||
==== Chief Executive Officer ==== | |||
[[File:CEO JPM.png|left|thumb|214x214px]] | [[File:CEO JPM.png|left|thumb|214x214px]] | ||
<big>Jamie Dimon is the Chairman and CEO of JP Morgan - He became CEO in December 2005, and became Chairman in December 2006. He became COO and president of the joint company between Bank One and JP Morgan in July 2004. In March 2008, Dimon became a class A board member of the Federal Reserve Bank of New York. Dimon holds a BA in Psychology and Economics from Tufts University, and a MBA from Harvard Business School.</big><ref name=":3">https://www.jpmorganchase.com/about/our-leadership</ref> | <big>Jamie Dimon is the Chairman and CEO of JP Morgan - He became CEO in December 2005, and became Chairman in December 2006. He became COO and president of the joint company between Bank One and JP Morgan in July 2004. In March 2008, Dimon became a class A board member of the Federal Reserve Bank of New York. Dimon holds a BA in Psychology and Economics from Tufts University, and a MBA from Harvard Business School.</big><ref name=":3">https://www.jpmorganchase.com/about/our-leadership</ref> | ||
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Jeremy Barnum is the Chief Financial Officer of JP Morgan and joined the firm in 1994, having held several leadership roles including head of Global Research for JP Morgan's Corporate and Investment Bank, and CFO and Chief of Staff for the bank from 2013 to 2021. Barnum holds a degree in Chemistry from Harvard College.<ref name=":3" /> | Jeremy Barnum is the Chief Financial Officer of JP Morgan and joined the firm in 1994, having held several leadership roles including head of Global Research for JP Morgan's Corporate and Investment Bank, and CFO and Chief of Staff for the bank from 2013 to 2021. Barnum holds a degree in Chemistry from Harvard College.<ref name=":3" /> | ||
==== Chief Operating Officer ==== | ==== Chief Operating Officer ==== | ||
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Linda B. Bammann was Deputy Head of Risk Management at JPMorgan Chase from 2004 until her retirement in 2005. Previously she was Executive Vice President and Chief Risk Management Officer at Bank One Corporation (“Bank One”) from 2001 to 2004 and, before then, Senior Managing Director of Banc One Capital Markets, Inc. Ms. Bammann graduated from Stanford University and received an M.A. degree in public policy from the University of Michigan.<ref name=":3" /> | Linda B. Bammann was Deputy Head of Risk Management at JPMorgan Chase from 2004 until her retirement in 2005. Previously she was Executive Vice President and Chief Risk Management Officer at Bank One Corporation (“Bank One”) from 2001 to 2004 and, before then, Senior Managing Director of Banc One Capital Markets, Inc. Ms. Bammann graduated from Stanford University and received an M.A. degree in public policy from the University of Michigan.<ref name=":3" /> | ||
==== Stephen B. Burke ==== | ==== Stephen B. Burke ==== | ||
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Alex Gorsky retired from the Chairman and Chief Executive Officer roles at Johnson & Johnson in 2021 and then served as Executive Chairman during 2022. Mr. Gorsky currently sits on the boards of Apple, IBM, New York-Presbyterian Hospital and the Travis Manion Foundation, and serves on the Business Council and the Wharton School of the University of Pennsylvania Board of Advisors. He is also a former member of the Business Roundtable. Mr. Gorsky graduated from the United States Military Academy and received an M.B.A. from the Wharton School of the University of Pennsylvania.<ref name=":3" /> | Alex Gorsky retired from the Chairman and Chief Executive Officer roles at Johnson & Johnson in 2021 and then served as Executive Chairman during 2022. Mr. Gorsky currently sits on the boards of Apple, IBM, New York-Presbyterian Hospital and the Travis Manion Foundation, and serves on the Business Council and the Wharton School of the University of Pennsylvania Board of Advisors. He is also a former member of the Business Roundtable. Mr. Gorsky graduated from the United States Military Academy and received an M.B.A. from the Wharton School of the University of Pennsylvania.<ref name=":3" /> | ||
==== Mellody Hobson ==== | ==== Mellody Hobson ==== | ||
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== | == Risk == | ||
The principal risk factors that could adversely affect JPMorgan Chase’s business, results of operations, financial condition, capital position, liquidity, competitive position or reputation include: | |||
* '''Regulatory''' risks, including the impact that applicable laws, rules and regulations in the highly-regulated and supervised financial services industry, as well as changes to or in the application, interpretation or enforcement of those laws, rules and regulations, can have on JPMorgan Chase’s business and operations; the ways in which differences in financial services regulation in different jurisdictions or with respect to certain competitors can negatively impact JPMorgan Chase’s business; the penalties and collateral consequences, and higher compliance and operational costs, that JPMorgan Chase may incur when resolving a regulatory investigation; the ways in which less predictable legal and regulatory frameworks in certain countries can negatively impact JPMorgan Chase’s operations and financial results; and the losses that security holders will absorb if JPMorgan Chase were to enter into a resolution.<ref name=":0">https://jpmorganchaseco.gcs-web.com/node/525601/html#i71fd3be39cff46d4bfa090c3713c3fa2_34</ref> | |||
* '''Political''' risks, including the potential negative effects on JPMorgan Chase’s businesses due to economic uncertainty or instability caused by political developments.<ref name=":0" /> | |||
* '''Market''' risks, including the effects that economic and market events and conditions, governmental policies, changes in interest rates and credit spreads, and market fluctuations can have on JPMorgan Chase’s consumer and wholesale businesses and its investment and market-making positions and on JPMorgan Chase’s earnings and its liquidity and capital levels.<ref name=":0" /> Due to the high inflation rate, central banks of 28 counties has increased interest rates and planned to rise interest rate by the end of 2023 continuously. However, this will accompany more economic weakness, an increase in unemployment, market volatility, a decline in levels of risky assets, and a fall in inflation. This is a downside risk in the near term. [https://www.jpmorgan.com/insights/research/market-outlook#:~:text=GDP%20growth%20in%202023&text=Developed%20Market%20growth%20is%20forecast,forecast%20at%202.9%25%20in%202023.] However, in long term, central banks will likely be forced to pivot and signal cutting interest rates sometime next year, which should result in a sustained recovery of asset prices and subsequently the economy by the end of 2023. | |||
* '''Credit''' risks, including potential negative effects from adverse changes in the financial condition of clients, customers, counterparties, custodians and central counterparties; and the potential for losses due to declines in the value of collateral in stressed market conditions or from concentrations of credit and market risk.<ref name=":0" /> | |||
* '''Liquidity''' risks, including the risk that JPMorgan Chase’s liquidity could be impaired by market-wide illiquidity or disruption, unforeseen liquidity or capital requirements, the inability to sell assets, default by a significant market participant, unanticipated outflows of cash or collateral, or lack of market or customer confidence in JPMorgan Chase; the dependence of JPMorgan Chase & Co. on the cash flows of its subsidiaries; the adverse effects that any downgrade in any of JPMorgan Chase’s credit ratings may have on its liquidity and cost of funding; and potential negative impacts, including litigation risks, associated with the transition to alternative reference rates.<ref name=":0" /> | |||
* '''Capital''' risks, including the risk that any failure by or inability of JPMorgan Chase to maintain the required level and composition of capital, or unfavourable changes in applicable capital requirements, could limit JPMorgan Chase’s ability to distribute capital to shareholders or to support its business activities.<ref name=":0" /> | |||
* '''Operational''' risks, including risks associated with JPMorgan Chase’s dependence on its operational systems, its ability to maintain appropriately-staffed workforces and the competence, integrity, health and safety of its employees, as well as the systems and employees of third parties, market participants and service providers; the potential negative effects of failing to identify and address operational risks related to the introduction of or changes to products, services and delivery platforms; legal and regulatory risks related to safeguarding personal information; the harm that could be caused by a successful cyber attack affecting JPMorgan Chase or by other extraordinary events; risks associated with JPMorgan Chase’s risk management framework, its models and estimations and associated judgments used in its stress testing and financial statements, and controls over disclosure and financial reporting; and potential adverse effects of failing to comply with heightened regulatory and other standards for the oversight of vendors and other service providers.<ref name=":0" /> | |||
* '''Strategic''' risks, including the damage to JPMorgan Chase’s competitive standing and results that could occur if management fails to develop and execute effective business strategies; risks associated with the significant and increasing competition that JPMorgan Chase faces; and the potential adverse impacts of climate change on JPMorgan Chase’s business operations, clients and customers.<ref name=":0" /> | |||
* '''Conduct''' risks, including the negative impact that can result from the actions or misconduct of employees, including any failure of employees to conduct themselves in accordance with JPMorgan Chase’s expectations, policies and practices.<ref name=":0" /> | |||
* '''Reputation''' risks, including the potential adverse effects on JPMorgan Chase’s relationships with its clients, customers, shareholders, regulators and other stakeholders that could arise from employee misconduct, security breaches, inadequate risk management, compliance or operational failures, litigation and regulatory investigations, failure to satisfy expectations concerning environmental, social and governance concerns, failure to effectively manage conflicts of interest or to satisfy fiduciary obligations, or other factors that could damage JPMorgan Chase’s reputation.<ref name=":0" /> | |||
* '''Country''' risks, including potential impacts on JPMorgan Chase’s businesses from an outbreak or escalation of hostilities between countries or within a country or region; and the potential adverse effects of local economic, political, regulatory and social factors on JPMorgan Chase’s business and revenues in certain countries.<ref name=":0" /> | |||
* '''People''' risks, including the criticality of attracting and retaining qualified and diverse employees; and the potential adverse effects of unfavourable changes in immigration or travel policies on JPMorgan Chase’s workforce.<ref name=":0" /> | |||
* '''Legal''' risks, including those relating to litigation and regulatory and government investigations.<ref name=":0" /> | |||
== Valuation == | == Valuation == | ||
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The fact that shareholders continue to receive dividends year after year is an indication that the company has reached peak maturity. It shows that its operations are stable, and not much turbulence is likely to be experienced in the future. Thus, from an assessment point, it is much easier to calculate the discount rate since the model eliminates risk.<ref name=":4" /> | The fact that shareholders continue to receive dividends year after year is an indication that the company has reached peak maturity. It shows that its operations are stable, and not much turbulence is likely to be experienced in the future. Thus, from an assessment point, it is much easier to calculate the discount rate since the model eliminates risk.<ref name=":4" /> | ||
Other key assumptions made include: | |||
==== 1. Length of High-Growth Phase ==== | ==== 1. Length of High-Growth Phase ==== | ||