5.22.23 - Super-big JPMorgan lays out plans to get even bigger
' JPMorgan Chase executives laid out a case Monday for the nation’s biggest bank, with nearly $4 trillion in assets, to grow bigger still by providing more services to affluent clients.
“We’re breaking records for the number of times we say ‘wealth management,’” Jennifer Piepszak, co-CEO for community and consumer banking, said at JPMorgan’s annual investor day.
The bank already does quite a bit in wealth management, managing $3 trillion in clients assets, but Piepszak said there are “real opportunities” to do even more by serving existing clients online and through a branch network that spans all states except Alaska and Hawaii. Those branches hold 11% of all bank deposits in the nation, up from 7% a decade ago, and the bank is No. 1 in the New York, Los Angeles and Chicago markets. It is unlikely regulators would let the bank increase its total deposit share, although that was also the conventional wisdom before JPMorgan was essentially handed First Republic Bank.
Wall Street is confident the bank can continue to grow, especially when smaller banks are hobbled by rising interest rates and lack the diversification of JPMorgan, which in addition to serving average depositors and small businesses is also a major corporate bank and lender to private equity firms. (Its market share has grown there, too.)
JPMorgan’s stock trades for 10 times next year’s expected earnings, a hefty 40% premium over regional banks. Its market value of $400 billion is almost twice that of the second-biggest U.S. bank, Bank of America.
“The point is simple: The company is resilient, and we believe we are well positioned for a broad range of environments,” Chief Financial Officer Jeremy Barnum said, noting the bank expects a “mild” recession this year.
JPMorgan is a “steady disciplined growth story that we’ve all gotten accustomed to,” Evercore ISI analyst Glenn Schorr said in a client note today. “The fortress balance sheet…allows JPMorgan to weather storms and benefit from the occasional crisis casualty.”
The benefits from the latest crisis casualty, First Republic Bank, became even more clear today when JPMorgan said the acquisition would raise net interest income this year to $84 billion, $3 billion higher than the previous projection. At its investor meeting, JPMorgan served the freshly baked cookies First Republic has been serving at its branches for years. '