I need to do this project for my financial markets & institutions.
Lily&marlon
PowerPoint-Example-2FIN4303.pptStudent A
Student B
Student C
Student D
March 1st, 2013
Business Strategy
Large, nontraditional bank
6 Business Segments:
Investment Bank
Retail Financial Services
Card Services
Commercial Banking
Treasury & Securities Services, and Asset Management
Corporate/Private Equity
Noninterest income
Core Deposits
Loans to Assets
Non Interest Income as a % of Operating Income
Loans to Assets Ratio
Core Deposits to Total Deposits
S.W.O.T. Strengths
Leading global financial brand
Each business segment ranks in top 3
Advantages of scale
Breadth of product offerings,
Extensive retail distribution network
High quality asset investments
Strong credit quality
Capital strength
Fortress Balance Sheet
Risk management,
- Expense control and effective pricing
Long term earnings power higher than pre-crisis
WM and BSC additions
S.W.O.T. Weaknesses
- Deteriorating Consumer Loans
- Increased Delinquency
- Increased reserves
- Subprime exposure
- Increasing credit costs
- Consumer and mortgage loans
- Pressure on home prices
- Poor underwriting standards
- Investment Bank write-downs
- Leveraged lending and mortgage exposures
- Increasing debt pay-back period
- Low Loan Demand
- High solvency risk
- Utilizes a higher percentage of debt to fund its assets than the industry
S.W.O.T. Opportunities
- Banking and brokerage global investments
- Asset management market
- Continued growth in credit card market
- Growth in commercial banking industry
- As recession improves, more companies will be looking for lending opportunities and increased availability of lines of credit extended
- Opportunistic acquisitions & further industry consolidation
- Made possible by strong balance sheet
S.W.O.T. Threats
- New banking regulations in the US and Europe
- Limited credit card profitability
- Community Reinvestment Act requirements
- IB Compensation
- New capital requirements
- Less attractive returns due to regulation call for capital allocation changes
- Weak U.S. mortgage market
- Increased regulation in interchange rates
- Unemployment Levels
- Decreasing incomes in the U.S.
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Major Events
- 2000
- Weak Economy
- JP Morgan & The Chase Manhattan Bank
- 2001
- Higher non-interest expenses (merger and restructuring costs)
- Lower net income and reductions in asset values
- Less liquidity in equity markets
- Losses on private equity investments and lower investment banking fees
- 2004
- JP Morgan and Bank One merger
- Noninterest expenses increase
- Lower net income from merger costs
- charges to conform to accounting polices
- charge to increase litigation reserves
- Increase in equity capital
- Increase in competitive pressures
December 2000 JP Morgan and The Chase Manhattan Bank merger
2001 Higher non-interest expenses (merger and restructuring costs)-> higher cost efficiency ratio
Higher cost efficiency ratio and lower net income from unfavorable spreads, reductions in asset values, less liquidity in equity markets. Losses on private equity investments and lower investment banking fees caused revenues to decline ->lower profit margin
Lower profit margin and equity multiplier -> lower return on equity
2004 JP Morgan and Bank One merger
Noninterest expenses increase relating to Merger and charges to increase litigation reserves -> higher cost efficiency ratio
-> Asset Utilization decreased
Without merger costs, charges to conform to acct policy as result of merger, and charge to increase litigation reserves ROE would have been 11%, instead of 3%
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Major Events
- 2006
- Acquisition of consumer, business banking, and middle-market banking of The Bank of New York/ Stronger Economic Environment
- Acquired 339 branches
- Gain on sale of corporate trust business
- Short term interest rates rose
- Strong capital and equity markets
- 2007-08
- Acquisition of Washington Mutual and Bear Stearns
- Recession
- Large noninterest expense
- Increase in allowance for credit losses, write-off of loan loss provisions
- Increased equity capital
- Increasing LIBOR rates, increased counterparty risk, less liquidity
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Cost Efficiency Ratio/ Profit Margin
- Cost Efficiency Ratio/ Profit Margin reflects how well the firm is able to control costs
- 2000-2001: Higher non-interest expenses (merger and restructuring costs Chase merger)
- 2002-2003: Low performance based incentive
- 2003-2004: Bank One merger
- 2004 to 2007 was a direct result of a decrease in performance-based compensation, and a decrease in revenue.
- increase in 2008 resulted directly from its acquisition of Washington Mutual and Bear Stearns related to acquisition costs and an increase in JPM’s provision for loan losses
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Net Interest Margin & Asset Utilization
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Non Interest income as a % of Operating income: need to cut down intervals
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Future Expectations
- What to expect
down the road
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