JPMorgan Chase & Co.

JPMorgan Chase & Co.

JPMorgan Chase headquarters at 383 Madison Avenue in New York City
Type	Public
Traded as	NYSE: JPM DJIA component S&P 100 component S&P 500 component
ISIN	US46625H1005
Industry	Financial services
Predecessors	Bank of the Manhattan Company (founded 1799) Chemical Bank (founded 1824) J.P. Morgan & Co. (founded 1871) Chase National Bank (founded 1877)
Founded	December 1, 2000 (2000-12-01)
Founders	Aaron Burr (Bank of the Manhattan Company) Balthazar P. Melick (Chemical Bank) John Pierpont Morgan (J.P. Morgan & Co.) John Thompson (Chase National Bank)
Headquarters	383 Madison Avenue New York City, U.S.
Area served	Worldwide
Key people	Jamie Dimon (Chairman & CEO) Daniel E. Pinto (President & COO)
Products	Asset management banking commodities credit cards equities trading insurance investment management mortgage loans mutual funds private equity risk management wealth management
Revenue	US$128.7 billion (2022)
Net income	US$37.68 billion (2022)
AUM	US$3.0 trillion (March 31, 2023)
Total assets	US$3.67 trillion (2022)
Total equity	US$292.3 billion (2022)
Number of employees	293,723 (2022)
Divisions	Asset and Wealth Management Consumer and Community Banking Commercial Banking Corporate and Investment Banking
Subsidiaries	Chase Bank J.P. Morgan & Co. One Equity Partners
Capital ratio	Tier 1 14.9% (2022)
Website	https://jpmorganchase.com
Footnotes / references

JPMorgan Chase & Co., a globally recognized financial services company, categorizes its operations into four key segments: Consumer & Community Banking (CCB), Corporate & Investment Bank (CIB), Commercial Banking (CB), and Asset & Wealth Management (AWM).

The CCB segment encompasses a broad spectrum of services from deposit, investment, lending, and payment solutions for individual consumers to a similar suite of services for small businesses. It also focuses on mortgage origination and servicing, residential mortgages, home equity loans, as well as credit card, auto loan, and leasing services.

In the CIB segment, the firm provides a range of investment banking services, such as advisory on corporate strategy and structure, equity and debt capital-raising, loan origination, and syndication. This segment also offers risk management solutions, prime brokerage, and research, along with securities services for asset managers, insurance companies, and public and private investment funds.

The CB segment addresses the financial needs of small to midsize businesses, local governments, and non-profits by offering financial solutions including lending, payments, investment banking, and asset management. Moreover, it extends commercial real estate banking services to investors, developers, and property owners across various sectors.

Finally, the AWM segment delivers multi-asset investment management solutions to institutional clients and retail investors. It offers a comprehensive range of products and services, including retirement plans, brokerage, custody, trusts, estates, loans, mortgages, deposits, and investment management products.

In addition to these key segments, JPMorgan Chase & Co. extends its services through ATM, online, mobile, and telephone banking facilities. With its inception dating back to 1799, the company is headquartered in the financial hub of New York, New York.

Operations

How did the idea of the company come about?

The idea of JPMorgan Chase stems from the cooperation of more than 1200 predecessor institutions over hundreds of years. In 1799, the earliest predecessor institution, The Manhattan Company, was charted by the New York State legislature to provide clean water to the city's growing residence. One of the founders, Aaron Burr, added a clause to the charter, to allow the directors of The Manhattan Company to start a bank with excess capital, that is unused by the water company. The service continued until 1842, when New York established its own municipal water system, leading to the closure of The Manhattan Company's waterworks operations.

Meanwhile, the directors of The Manhattan Company, 6 months following the acceptance of the charter, formed The Bank of Manhattan Company. In 1955, The Bank of Manhattan Company merged with Chase National Bank, to form Chase Manhattan Bank, which combined Chase National’s strength in international, corporate, and correspondent banking with The Bank of The Manhattan Company's network of branches and retail banking expertise. In 1871, J. Pierpont Morgan united with Anthony Drexel to form Drexel, Morgan & Co., a private merchant banking house in New York City, renamed JPMorgan & Co later. In 2000, Chase Manhattan Bank merged with JPMorgan & Co. to form JPMorgan Chase & Co. and is now a multinational investment bank and financial services company.

What is the mission of the company?

JPMorgan Chase aims to be the most respected financial services firm in the world, serving corporations and individuals in more than 100 countries. In particular, the company is committed to accelerating the economy through business and community investments and policy advocacy through the following:

1. Business Growth & Entrepreneurship - Give business solutions, coaching, and mentoring to aid small businesses create jobs, grow and scale. By investing $150 million over five years, they aim to expand opportunities for underserved entrepreneurs.
2. Career & Skills - Helping to improve and train the workforce of today, including 280,000+ employees globally, for future generations and jobs. By investing $350 million over the next five years they aim to develop, test and scale innovative efforts that prepare individuals with the skills they need to be successful in a rapidly evolving economy.
3. Financial Health & Wealth Creation - JPMorgan Chase has already provided $125 million over five years to improve the financial health of those most in need. They plan to further expand financial coaching programs and supporting their non-profit partners, to help more people achieve financial stability and meet their long-term financial goals.
4. Community Development - Aiming to foster strong communities through support of vital institutions and create access to affordable housing and homeownership. By investing $400 million over 5 years, their aim is to focus on promoting housing stability and to improve housing affordability for Black, Latinx and other households of colour.
5. Environmental Sustainability: Aiming to drive climate action, clean energy and sustainable resource management, and help clients' finance and accelerate their transition to a low-carbon economy. They want to promote sustainable development through the following:
   1. Sustainable Solutions and Financing: Supporting clients and financing opportunities that advance the transition to a low-carbon economy and a more sustainable future.
   2. Operational Sustainability: Minimising the environmental impact of their operations, including from their corporate buildings, retail bank branches and data centres.
   3. Stakeholder and Policy Engagement: Engaging with stakeholders to identify and advance best practices and new opportunities.

What are the main offerings of the company?

JPMorgan Chase & Co. provides a wide range of offerings to individuals, businesses, and institutional clients. Some of the main services and products offered by JPMorgan Chase & Co. are:

1. Consumer and Commercial Banking

Under the Chase brand, JPMorgan serve millions of people with a broad range of financial services, including personal banking, credit cards, mortgages, auto financing, investment advice, small business loans and payment processing.

2. Retail Banking

JP Morgan offers various retail banking services, including checking and savings accounts, credit cards, mortgages, personal loans, and auto loans.

3. Investment Banking

JP Morgan provides investment banking services to corporations, governments, and institutional clients. This includes advising on mergers and acquisitions, capital raising through debt and equity offerings, underwriting securities, and providing financial restructuring services.

4. Asset Management

JP Morgan offers asset management services to institutional and individual investors. They provide investment solutions, portfolio management, and advisory services across various asset classes, including equities, fixed income, alternative investments, and multi-asset strategies.

5. Private Banking

JP Morgan provides comprehensive wealth management services to high-net-worth individuals and families. This includes investment management, estate planning, trust and fiduciary services, lending solutions, and customized financial advice.

6. Markets and Trading

JP Morgan has a strong presence in global markets and offers trading and sales services across various asset classes, including equities, fixed income, currencies, commodities, and derivatives. They serve institutional clients, corporations, and hedge funds.

7. Treasury Services

JP Morgan provides treasury and cash management solutions to corporate and financial institution clients. Their services include liquidity management, payment processing, cash flow forecasting, and risk management solutions.

8. Research and Insights

JP Morgan produces research reports, market analysis, and economic insights across different sectors and regions. This research helps clients make informed investment decisions and stay updated on market trends.

Market

Total Addressable Market

Total Addressable Market: Here, the total addressable market (TAM) is defined as the global financial services market, and based on a number of assumptions, it is estimated that the size of the market, in terms of revenue, is $28.1 trillion.

Serviceable Available Market

Serviceable Available Market: Here, the serviceable available market (SAM) is defined as the global commercial banking market, and based on a number of assumptions, it is estimated that the size of the market, in terms of revenue, is $2.8 trillion.

Serviceable Obtainable Market

Serviceable Obtainable Market: Here, the serviceable obtainable market (SOM) is defined as the US commercial banking market, and based on a number of assumptions, it is estimated that the size of the market, in terms of revenue, is $1.1 trillion.

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.

Some competitors include:

• Bank of America
• Citigroup
• Goldman Sachs
• Wells Fargo
• Morgan Stanley
• HSBC
• Barclays

Team

Leadership

Chief Executive Officer

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.

Chief Financial Officer

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.

Chief Operating Officer

Daniel Pinto is the President and Chief Operating Officer of JP Morgan - He is also the CEO of its Corporate & Investment Bank. Pinto began as an analyst and foreign exchange trader at Manufacturers Hanover in 1983 and became head of sales for Chemical Bank in 1992. Pinto became global head of Emerging Markets in 2006, and then made co-head of Global Fixed Income for JP Morgan in 2009, before becoming the sole head in 2012. He became Co-President and COO in 2018, before becoming the sole President and COO in 2022. Pinto holds a degree in Public Accounting and Business Administration from Universidad Nacional de Lomas de Zamora.

Board of Directors

James Dimon

For information about James Dimon, see "Chief Executive Officer" section above.

Linda B. Bammann

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.

Stephen B. Burke

Stephen B. Burke is a Senior Advisor of Comcast Corporation. He was Chairman of NBCUniversal, LLC and NBCUniversal Media, LLC, one of the U.S.’s leading providers of entertainment, information and communication products and services, from 2011 until his retirement in 2020.  He was Chief Executive Officer and President of NBCUniversal LLC and NBCUniversal Media, LLC from 2011 to 2019, Chief Operating Officer of Comcast Corporation from 2004 until 2011, and President of Comcast Cable Communications, Inc. from 1998 until 2010. Mr. Burke has been a director of Berkshire Hathaway Inc. since 2009. Mr. Burke graduated from Colgate University and received an M.B.A. from Harvard Business School.

Todd A. Combs

Todd A. Combs is an investment officer at Berkshire Hathaway Inc., a holding company whose subsidiaries engage in a number of diverse business activities including finance, insurance and reinsurance, utilities and energy, freight rail transportation, manufacturing, retailing and services. He is also President and Chief Executive Officer of GEICO. Mr. Combs has served as a director of Berkshire Hathaway subsidiaries Precision Castparts Corp. since 2016, Charter Brokerage LLC since 2014 and Duracell Inc. since 2016. Mr. Combs graduated from Florida State University and received an M.B.A. from Columbia Business School.

Alicia Boler Davis

Alicia Boler Davis has been the CEO of Alto Pharmacy, LLC since 2022. Prior to joining Alto, she served in leadership roles at Amazon.com, Inc., including Senior Vice President of Global Customer Fulfillment from 2021 to 2022 and member of the Senior Team (S-Team) from 2020 to 2022. Prior to her roles at Amazon, she spent nearly 25 years at General Motors where she became Executive Vice President of Global Manufacturing and Labor Relations in 2016. Ms. Davis graduated from Northwestern University, received a Master of Science and an Honorary Doctor of Engineering degree from Rensselaer Polytechnic Institute, and received an M.B.A. from Indiana University.

Timothy P. Flynn

Timothy P. Flynn was Chairman of KPMG International, a global professional services organization providing audit, tax and advisory services, from 2007 until his retirement in 2011. From 2005 until 2010, he served as Chairman and from 2005 to 2008 as Chief Executive Officer of KPMG LLP in the U.S., the largest individual member firm of KPMG International. Mr. Flynn has been a director of United Health Group since 2017 and of Wal-Mart Stores, Inc. since 2012. He was a director of the Alcoa Corporation from 2016 to 2021 and of the Chubb Corporation from 2013 to 2016. Mr. Flynn graduated from The University of St. Thomas, St. Paul, Minnesota, and is a member of the school’s Board of Trustees.

Alex Gorsky

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.

Mellody Hobson

Mellody Hobson has been the Co-CEO of Ariel Investments, LLC, an investment management firm, since 2019 and President and Director since 2000.  She has also served as Chair of the Board of Trustees of the Ariel Investment Trust, a registered investment company advised by Ariel Investments, since 2006. Ms. Hobson works with a number of civic, non-profit and professional organizations, acting as a Director of the Chicago Public Education Fund; Chair of After School Matters, which provides Chicago teens with high quality out-of-school time programs; a member of the Executive Committee of the Investment Company Institute’s Board of Governors; Board member of the George Lucas Education Foundation; Vice Chair of World Business Chicago, and many other organizations. She is also a former Chair of the Economic Club of Chicago. Ms. Hobson graduated from the Woodrow Wilson School of International Relations and Public Policy at Princeton University.

Michael A. Neal

Michael A. Neal was Vice Chairman of General Electric Company, a global industrial and financial services company, until his retirement in 2013 and was Chairman and Chief Executive Officer of GE Capital from 2007 until 2013. During his career at General Electric, Mr. Neal held several senior operating positions, including President and Chief Operating Officer of GE Capital and Chief Executive Officer of GE Commercial Finance prior to being appointed Chairman and Chief Executive Officer of GE Capital. Mr. Neal is a trustee of Georgia Institute of Technology’s GT Foundation. Mr. Neal graduated from the Georgia Institute of Technology.

Phebe N. Novakovic

Phebe N. Novakovic has been the Chairman and Chief Executive Officer of General Dynamics since 2013. She was the President and Chief Operating Officer of General Dynamics in 2012, Executive Vice President of Marine Systems from 2010 to 2012, Senior Vice President of Planning and Development from 2005 to 2012, and Vice President from 2002 to 2005. Ms. Novakovic served as a director of Abbott Laboratories from 2010 to 2021. Ms. Novakovic graduated from Smith College and received an M.B.A. from University of Pennsylvania Wharton School.

Virginia M. Rometty

Virginia M. Rometty retired from the President and Chief Executive Officer roles at IBM on April 6, 2020 and as Executive Chairman of the Board on December 31, 2020. She had been the Chairman, President and Chief Executive Officer of IBM since 2012. Mrs. Rometty is a member of the Business Roundtable, Council on Foreign Relations, Peterson Institute for International Economics. She is also a Trustee of Northwestern University and on the Board of Overseers and Managers of the Memorial Sloan-Kettering Cancer Center. She is also a former member of the President’s Export Council. Mrs. Rometty graduated from Northwestern University.

Financials

Historic

Most recent quarter (2Q23)

In the 2nd quarter of 2023 (2Q23), JPMorgan Chase & Co have released a strong earnings report showing a net income of $14.5 billion, with profits soaring 67% compared to the previous year. This was largely due to the bank being a big lender, with their balance sheet boasting loans of $1.2T, up 10% since the previous quarter. The bank has therefore benefitted significantly as a result of the current economic climate with constant interest rate hikes and rising inflation increasing yields on loans. Another reason for the strong quarterly results was due to gains from the acquisition of First Republic, the failed bank that it had acquired in May 2023.

• Managed revenue rose by 34% to $42.4 billion, beating analyst expectations of $38.4 billion.
• Deposits have gone up 3% compared to the previous quarter but are still down overall by 6% compared to the previous year.
• Common dividend paid out of $2.9B ($1.00 per share), with $1.8B of common stock net repurchases.
• Total assets under management for the Asset & Wealth Management division as of 2Q23 are $3.2 trillion, up 16%.
• In contrast, the revenue from investment banking (CIB) operations fell 6% in M&A and 10% in trading from the previous year. However, when looking across the sector for investment banking we see that this was less than competitor Citi bank which had losses of 24% and 13% respectively within the same divisions. Furthermore, Goldman Sachs has reported a quarterly drop of 58% in profits compared to the previous year.

In conclusion, we see that for 2Q23 JPMorgan Chase & Co has performed very strongly and continues to be a leading bank during a troubled macroeconomic climate.

Most recent year

For the fiscal year 2022, JP Morgan reported a net income of $35.89 billion. The annual revenue was $128.7 billion, an increase of 5.79% over the previous year.

Historic financials

Year	1	2	3	4	5	6	7	8	9	10
Year end date	31/12/2013	31/12/2014	31/12/2015	31/12/2016	31/12/2017	31/12/2018	31/12/2019	31/12/2020	31/12/2021	31/12/2022
Income Statement
Revenues ($'billion)	97.37	95.11	93.54	96.57	100.71	108.78	115.72	119.95	121.65	128.7
Net income ($'billion)	16.56	20.08	22.65	22.83	22.57	30.71	34.64	27.41	46.5	35.89
Balance Sheet
Total assets ($'billion)	2416	2572	2351	2491	2534	2623	2687	3385	3744	3666
Other
Employees ('000)	251	241	235	243	253	256	257	255	271	294

Business model, Macroeconomic factors & Potential Risks

Jamie Dimon Letter to shareholders 2023: “The Firm continued to demonstrate strong financial performance in 2022, building upon its momentum from prior years…” “…That said, our clients and customers, employees and communities continue to face headwinds coming from geopolitical tensions including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation that is eroding purchasing power and has pushed interest rates higher and unprecedented quantitative tightening. We have also seen a small number of bank failures and instability in pockets of our industry. While we are committed to doing our part in times of stress, we strongly believe that America’s financial system is among the best in the world…” “…the global banking system has strong credit, plenty of liquidity, and capital. Nonetheless, we remain vigilant and are prepared for whatever happens so we can work with our customers, clients and communities around the world across a broad range of economic environments, while remaining true to our fundamental business principles and commitment to building long-term value for our shareholders.” - Letter to shareholders in proxy statement, April 4th 2023, from Jamie Dimon (CEO/Chair) & Stephen B. Burke (Lead Director)

From this recent letter to shareholders on behalf of the top executives at JPMorgan Chase & Co it can be seen that there are many possible risks that the company faces. Most of these risks are those on a global and macroeconomic scale; faced by all firms. Some risks however are independent to JPMorgan Chase & Co, which will be covered in this section. This section also covers how JPMorgan Chase & Co manages their risks, their business model, and the current macroeconomic situation they face.

Business Model of JPMorgan Chase & Co:

JPMorgan Chase & Co is the largest bank in America, with a balance sheet boasting over $3.7 Trillion of assets. The bank is a one-stop shop for nearly all types of financial services to all types of consumers. This includes the 4 main segments: Consumer & Community Banking (CCB), Corporate & Investment Banking (CIB), Commercial Banking (CB), and Asset & Wealth Management (AWM). These respectively serve the average individual, small businesses, large businesses and institutions, midsize businesses, and wealthy individuals. This demonstrates how JPMorgan Chase & Co is a well diversified financial institution and their numbers reflect this, with each segment bringing in a significant portion of revenue on average. However, their two biggest segments tend to consistently be the CCB and CIB, which bring in over 50% of profits on average. Due to being a diverse financial institution, JPMorgan Chase & Co have been successful at thriving during difficult economic times such as the 2008 Financial Crisis, the Covid-19 pandemic, and currently during the brink of recession and shifting tides within the global financial system. Aside from offering highly diversified services, a quintessential reason for the success of the mega bank is due to its “Fortress Balance Sheet”.

Fortress Balance Sheet:

The centre of CEO Jamie Dimon’s risk management strategy for JPMorgan Chase & Co is the concept of the Fortress Balance Sheet - a large cushion of assets and capital to protect consumers deposits if the bank gets hit by unexpected losses. This currently stands at nearly $400 Billion, making the bank highly liquid, and making a run on the bank virtually impossible according to the CEO. This security is particularly attractive in the current economic climate following the multiple U.S. bank failures in the past year that have occured due to bad risk management practices. Depositors have flocked towards the biggest and safest banks as a result. Increased yields on these deposits as a result of rising interest rates have contributed greatly towards the 67% increase in net income seen during 2Q23 for JPMorgan Chase & Co. This practice of strong risk management made the bank emerge victorious in 2008 and put them in a position to help the U.S. government by acquiring 2 failing banks - Bear Sterns and Washington Mutual. Similarly in May 2023 they have acquired the failing bank First Republic Bank, which has already contributed to over $2 Billion in profit this quarter for the firm.

Market & Macroeconomic outlook (2Q23):

The past year has been one of many significant shifts in the global financial system. We have seen multiple massive bank failures within the U.S. starting with Silicon Valley Bank and Signature Bank, and spreading recently to First Mutual Bank. The main reason for these failures has been the constant interest rate hikes imposed by the Federal Reserve, the central bank of the United States. As a result of these hikes, banks that were holding long-term assets lost value rapidly. Furthermore, the failed banks mentioned had a large percentage of their deposits uninsured which led to panic amongst depositors and ultimately a large concentrated withdrawal of money that could not be dealt with as the cash had been tied in long-term assets that were losing value (such as 10-year treasuries and mortgages).

Despite this, JPMorgan Chase & Co reported one of their best quarters ever with sky high profits. As the bank is a massive lender, it has profited from increased yields as a result of the hikes in interest rates. However, we have seen that their Corporate & Investment Banking segment has reported decreases in earnings this quarter, with a 6% drop in revenue from M&A and 10% in trading from the previous year. Revenue from investment banking and trading operations are down across the sector. This may be a risk to consider before investing in the bank as uncertainty with interest rates continues, and the Federal Reserve progresses with its goals of Quantitative Tightening.

“The uncertainty on the Federal Reserve’s stance on interest rate hikes has been a large driver of a fall in deal activity as it makes it tricky to establish a reliable discount rate to value companies by.” said Sandy Pomeroy, senior portfolio manager of the Neuberger Berman equity income fund.

Globally, the total deal value of mergers and acquisitions fell about 39% during the first half of this year compared with the same period last year. Total deal value for initial public offerings was down 32%.

Risks:

Here I highlight some possible risks faced that are unique to JPMorgan Chase & Co, and which may affect stock price negatively in the future.

1. Alleged links to criminal activity - the bank has been accused by multiple sources of being involved with and facilitating the activities of Jeffrey Epstein, including human trafficking. JPMorgan Chase & Co has already agreed to pay $290 Million to settle a lawsuit on behalf of the victims. The U.S. Virgin Islands also filed a lawsuit last year related to the topic, seeking a further $190 Million in settlement. Aside from the monetary harm this would cause the bank, this may lead to a greater reputational damage as JPMorgan Chase & Co publicly prides itself on ‘being a force of good’ according to CEO Jamie Dimon.
2. The ‘too big to fail’ hypothesis - JPMorgan Chase & Co has been accused of being an institution that is deemed ‘too big to fail’, due to its status as the largest U.S. bank. The question of monopolistic practices comes into play as the bank has repeatedly bypassed constitutional laws in this domain when it acquired Washington Mutual, Bear Sterns, and recently First Republic Bank. This is because the law states that a bank that holds over 10% of the deposits from U.S. customers is not allowed to acquire other banks.
3. Succession of CEO position - Jamie Dimon, the current CEO, has been with JPMorgan Chase & Co since 2005. Many consider him to be the engine for the wild success of the firm over the last two decades, thus his name has become synonymous with the bank. This calls into question the uncertainty of how markets would react were he to step down for any reason. Currently Daniel Pinto, current COO is next in line to take the position.

Valuation

Comparable Company Analysis

Comparable company analysis derives metrics and ratios from financial statements and compare similar companies to determine the fair value of the company. The assumption for this is similar companies has similar valuation multiples, such as P/E ratio.

Information from Financial statements

Company	Share Price	Shares outstanding	Total debt	Minority Interest	Preferred stock	Total cash	Total Assets	Total liabilities	Total physical asset	Operating income	Depreciation & amortization	Net income	Preferred dividends	Weighted average number of common shares outstanding	Total shareholder's equity
JP Morgan Chase & Co.	125.58	2.92B	563.3B	0	27.4	53.1B	3.67T	3.37T	35.52B	47.11B	7.051B	$37.49	0	2.92B	292.33B
Bank of America	32.46	7.97B	508.91B	0	28.4	30.33B	3.05T	2.78T	21.27B	32.17B	1.978B	27.53	1.51B	7.97B	273.2B
Citi Group	47.285	1.95B	524.22B	0.089B	19	47.55B	2.42T	2.22T	26.25B	19.3B	4.262B	$14.96	1.03B	1.95B	201.19B
Goldman Sachs	333.71	0.33245B	7.87B	0	10.7	7.87B	1.44T	1.32T	19.16B	14.06B	2.455B	11.26	0.497B	0.33245B	117.19B
Wells Fargo	42.045	3.75B	230.48B	-0.3B	19.45	34.6B	1.9T	1.72T	17.98B	65.38B	6.832B	13.18	1.12B	3.75B	179.89B
Morgan Stanley	86.52	1.67B	329.33B	0.15B	8.75	5.41B	1.18T	1.08T	4.07B	14.07B	3.998B	11.03	0	1.67B	100.14B
HSBC	40.47	3.96B	300.28B	0.52B	0	277.91B	2.47T	2.32T	8.62B	16.79B	3.873B	12.03	0	3.96B	139.44B
Barclays	7.665	15.56B	185.84B	0.045B	0	368.95B	1.51T	1.46T	3.61B	8.74B	1.786B	5.02	0	15.56B	55.01B

Share price: the average price of the minimum and maximum stock price (52 weeks period) | B = Billions, T = Trillions

Weighted average number of common shares outstanding: used the same value of shared outstanding for this because it is hard to find short term period(quarter) value for common shares outstanding

Company	Market Capitalization	Enterprise Value	Book value	Liquidation Value	EBIT	EBITDA	EPS	Market value per share	P/E	EV/EBIT	EV/EBITDA	Debt to Equity	Return on Equity
JP Morgan Chase & Co.	366.68B	904.28B	0.3T	-3.33448T	47.11B	54.161B	12.84	125.58	9.78	19.20	16.70	11.53	0.13
Bank of America	258.71B	765.69B	0.27T	-2.75873T	32.17B	34.148B	3.45	32.46	9.40	23.80	22.42	10.18	0.10
Citi Group	92.20575B	587.96475B	0.2T	-2.19375T	19.3B	23.562B	7.67	47.29	6.16	30.46	24.95	11.034	0.07
Goldman Sachs	110.1243B	120.8243B	0.12T	-1.30084T	14.06B	16.515B	33.87	333.71	9.85	8.59	7.32	11.26	0.096
Wells Fargo	157.66875B	372.69875B	0.18T	-1.70202T	65.38B	72.212B	3.51	42.05	11.96	5.70	5.16	9.56	0.073
Morgan Stanley	144.4884B	477.3084B	0.1T	-1.07593T	14.07B	18.068B	6.60	86.52	13.10	33.92	26.42	10.78	0.110
HSBC	160.2612B	183.1512B	0.15T	-2.31138T	16.79B	20.663B	3.04	40.47	13.32	10.91	8.86	16.64	0.086
Barclays	119.2674B	-63.7976B	0.05T	-1.45639T	8.74B	10.526B	0.323	7.67	23.76	-7.30	-6.06	26.54	0.0912

Dividend Discount Model

The current stock price is 142.37. Using the H model, a target price of 180.68 is obtained, giving a 21% upside difference after 5 years. This model gave assumptions of 15% initial high growth rate (g1), 3% terminal growth rate (g2) and a 7% discount rate.

Advantages of using the H-model include:

1. Consistency

One of the benefits of using the H-model is the fact that dividends remain steady over a long period. Usually, a company will experience fluctuation in certain measures, such as its total earnings and cash flow.

However, it always tries to ensure that dividends are obtained from the cash flow that it expects to achieve every year. For that reason, most companies never set an unrealistically high dividend target because if they fail to achieve it, that can cause a fall in their share price.

2. No bias

The main unit of measurement used in the H-model is the dividend. The good thing about that is that the definition of a dividend payment is the same for every company. However, the same cannot be said for many other measures. For example, what makes up “total earnings” may differ from one company to another.

3. Sign of maturity

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.

Other key assumptions made include:

1. Length of High-Growth Phase

The H model assumes a specific duration for the high-growth phase before transitioning to the stable growth phase. The duration of the high-growth phase should be determined based on the company's historical performance, future growth prospects, industry analysis, or management guidance.

2. Transition to Stable Growth

The H model assumes a smooth transition from the high-growth phase to the stable growth phase. This implies that the company will experience a gradual slowdown in growth rates without any significant disruptions or sudden changes in its operations or competitive landscape.

3. Dividend Stability

The H model assumes that the company will maintain a stable dividend pay-out policy during the stable growth phase. This assumes that the company has a consistent track record of paying dividends and is expected to continue doing so in the future.

4. Stability of Growth Rates

The H model assumes that the growth rates (g1 and g2) remain constant during their respective phases. However, in reality, growth rates can vary due to changes in the company's operating environment, industry dynamics, or specific factors impacting its performance. It's important to acknowledge this assumption and consider any potential risks or uncertainties that could affect the stability of growth rates.

Sensitivity Analysis

A sensitivity analysis was conducted to determine the effect of the initial high growth rate, discount rate and terminal growth rate on the target value of the company.