Bank casestudyJP Morgan银行案例分析-摩根大通.pdf
-1-BankBankBankBankCaseCaseCaseCaseStudyStudyStudyStudyReport:Report:Report:Report:JPJPJPJPMorganMorganMorganMorganChaseChaseChaseChase&Co.Co.Co.Co.-2-ContentContentContentContentpagespagespagespagesExecutive summary-1Introduction-2Part 1:history-2Part 2:structure and management-3Part 3:products and services-4Part 4:strategic management-5Part 5:financial performance-7Part6:risk management-10Part7:future planning-12Conclusions-13References-14-3-ExecutiveExecutiveExecutiveExecutive SummarySummarySummarySummaryJP Morgan Chase&Co.is one of the biggest banks in the world.In this report,firstly itinvestigates the history of the company,which can be traced back to 1871.After a seriesof business activities over a century,now it is a huge banking consortium which providesa comprehensive products and services.In the second part,it discusses about themanagement and structure within the company.And then the third part introduces itsproducts and services in different business lines.In the part 4 and 5,it shows that the current performance and the SWOT respectively.JPMorgan chase is operating over 60 countries around the world now.As it is operatingsuch a huge and complex business,the risk management is critical for them.Accordingthe part 4 and 5,we are going to the risk management and future planning in part 6 and7.In the conclusion,after viewing the performance and management,it is optimistic aboutthe JP Morgans future.In this decade,JP Morgan is likely going to maintain the leadingposition in banking industry around the world.-4-IntroductionIntroductionIntroductionIntroductionJP Morgan Chase&Co is a big financial entity with a long history in finance industry.Inthe past century through a series of acquisitions and mergers,JP Morgan has becomeone of the biggest banks in the world.In this report we are going to investigate thecompany.There are total seven aspects of the JP Morgan Chase&Co are present bythis report.Those are the history of the history the structure and management,the mainproduct and services,strategic management,financial performance,risk managementand the future planning of the JP Morgan Chase&Co.PartPartPartPart 1:1:1:1:HistoryHistoryHistoryHistoryThe origin of JP Morgan&Co.dates back to19ths.In 1871,a firm named Drexel,Morgan&Co.was founded in New York,to serve as an agent for Europeans to invest inUnited States.Later,Drexel,Morgan&Co.changed its name to JP Morgan&Co.andhad conducted a series of financial activities such as financed the formation of the UnitedStates Steel Corporation.During 19thcentury,Morgan firms Morganization strategywas most welcomed by troubled businesses as it helped to reorganize the businessstructure and management and return them to profitability.After that,1933,the passageof Glass Steagall Act made JP Morgan&Co.decided to spin off its investing bankingand stay with commercial banking,and this result in the formation of Morgan Stanley.In order to strengthen its market position,JP Morgan&Co.merged with Guaranty TrustCompany to form Morgan Guaranty Trust Company in 1959.Ten years later,J.P.Morgan&Co.Inc.was established but continued to operate as Morgan Guaranty.Then,1980s,the firm changed the name back to J.P.Morgan&Co and it became the firstcommercial bank to underwrite a corporate debt offering.Since then,J.P.Morgan&Co moved quickly to rebuild its investing operations and ranked among the top fiveplayers in securities underwriting.In 2000,J.P.Morgan&Co.merged with The ChaseManhattan Corporation,effectively combining four of the largest and oldest moneycenterbankinginstitutionsinNewYork(J.P.Morgan,Chase,Chemicaland-5-Manufacturers Hanover)into one firm under the name of J.P.Morgan Chase&Co.In2004,J.P.Morgan Chase&Co.merged with Bank One,which is strong consumerbanking.Five years later,J.P.Morgan Chase&Co.acquired full ownership of its UKjoint venture,J.P.Morgan Cazenove.Today,JP Morgan Chase&Co.has become one of the big four banks of the UnitedStates and it has surpassed Bank of America becomes the largest US bank by assets.With operations in more than 50 countries,beside the economic influence,JP MorganChase&Co.also makes significant contribution to the local communities.PartPartPartPart 2:2:2:2:JPJPJPJP MorganMorganMorganMorgan ChaseChaseChaseChase&Co.&Co.&Co.&Co.s s s s StructureStructureStructureStructure andandandand ManagementManagementManagementManagementThe JP Morgan&Co is a financial services and banking company operate world widelyand the company is the largest bank in the United States by assets.The brand J.P.Morgan chase&Co.is the name of the holding company and firm serves its customersand clients under its JP Morgan and Chase brand(JP Morgan website).There are twomain division of structure and management depending on the geographically.TheAmerica and Europe are the two important major business-operating areas.Firstly,the JPMorgan chase&Co.is founded in the America and most of its business isdeveloped in the America and headquarter in New York City.JP Morgan Chase&Co.owns five banks subsidiaries in the United States and those subsidiaries are JP MorganChase Bank;National Association,Chase Bank USA,National Association;CustodialTrust Company;JP Morgan Chase Bank,Dearborn;J.P.Morgan Bank and TrustCompany,National Association(JP Morgan Chase SEC Form 10-K 2007 AnnualReport).Secondly,with the JP Morgan Europe,Ltd the Company put their regional office is inLondon,with offices in Bournemouth,Glasgow,and Edinburgh for asset management,private banking and investment(Wearden,2010).-6-J.P.Morgan Chase&Co Company is running their business through most of the finicalservices,for management report purpose it broke up as six business segments.Thosesix segments are investment bank,retail financial services,card services,assetmanagement,treasury&security services and commercial banking(JP Morgan Chase&Co annual report 2011).The companys product and services are based on these sixbusiness segments and financial reporting is based on these six business segments aswell.PartPartPartPart 3:3:3:3:TheTheTheThe mainmainmainmain productproductproductproduct andandandand servicesservicesservicesservices underunderunderunder sixsixsixsix businessbusinessbusinessbusiness segmentssegmentssegmentssegmentsInvestment bank:J.P.Morgan is one of the worlds leading investment banks.Most ofthe corporations,financial institutions,government and institutional investors are theclients of the company.The investment-banking department offers a full range ofproducts and services in all major capital markets.Their products and services include:aadvising on corporate strategy and structure,Capital-rising in equity and debt markets,risk management,etc.(JP Morgan Chase&Co annual report 2011).Retail financial services:in this segment,the JP Morgan chase&co serves theccustomers and business through personal services at bank branches.For example,they have the ATMS online banking and telephone banking.Their retail banking has thepersonal banking and business banking.They offer deposits and small business loans.Also they have the mortgage services and activities for their customers such asresidential mortgages and home equity loans(JP Morgan Chase&Co annual report2011).Card services:the company is also one of the nations largest credit card issuers,withover$132 billion in credit card loans.Furthermore,the company also has goodmanagement of their credit card merchant through their business(JP Morgan Chase&Co annual report 2011).-7-Commercial banking:the clients of the commercial banking are including corporationsmunicipalities,financial institutions and not-for profit entities.The commercial bankingdepartment has the extensive industry knowledge,local expertise and dedicated servicefor their customers.Moreover,with partners of commercial banking,its offers lending,treasury services,investment banking and asset management services and products tosatisfy their customers need(JP Morgan Chase&Co annual report 2011).Treasury&securities services:for the companys Cash management services it includesthe settlement of cross-border trade,import and export project cash management,liquidity support.It is also have the Global securities trading leverage Service.(JPMorgan Chase&Co annual report 2011)Asset management:Asset management offers Investment Management in fixedincome,real estate,hedge funds,private equity and liquidity products.Trust and estate,banking and brokerage services to high-net worth clients,and retirement services areprovided by the asset management for corporations and individuals(JP Morgan Chase&Co annual report 2011).PartPartPartPart 4:4:4:4:StrategicStrategicStrategicStrategic managementmanagementmanagementmanagementSWOT is an acronym for the internal strengths and weakness of a firm and theenvironmental opportunities and threats facing that firm.It is widely used techniquethrough which managers create a quick overview of a companys strategic situation.Agood fit maximizes a firms strengths and opportunities and minimizes its weaknessesand threats.Accurately applied,this simple assumption has powerful implications for thedesign of a successful strategy(Kotler et al.,2009).For JP Morgan Chase&Company(JPMC),it maintains a leading position in amount ofdebt,equity and equity-related transactions undertaken globally.However,a weakmortgage market that could have an adverse impact on the companys earnings from thesector threatens the company.Therefore,how to according these current situations to-8-make a useful and powerful strategic management to help the company have a gooddevelop that depends on the JPMCs SWOT factors,as follow:StrengthStrengthStrengthStrength factors:factors:factors:factors:1.JP Morgan chase is a globally leading financial brand name.Its brand loyalty willattract more customers choose this firm.2.Strong retail distribution network.It has more subsidiaries and branches located in thedifferent country in the world.3.High asset quality,capital strength4.Global presence and employs over 250,000 around the world.5.Good brand visibility in the B2B segmentWeaknessWeaknessWeaknessWeakness factors:factors:factors:factors:1.Sub-prime exposures2.over dependence on the US3.Increasing DSR and debt payback period.4.Stiff competition from other financial service providers5.Fluctuating markets result in instabilityOpportunityOpportunityOpportunityOpportunity factors:factors:factors:factors:1.Global investment banking&brokerage prospects.2.Buoyant asset.It means it can be used for expand more business products to increaseprofit.3.Growth in the US credit and market.4.Growth in the commercial banking industry.ThreatsThreatsThreatsThreats factors:factors:factors:factors:-9-1.Weak mortgage market in the US.2.Increased regulatory pressures on interchange rates.3.Consolidation in financial service industry.These factors above are critical for the corporate to set up a valid and plausible strategyfor the future.PartPartPartPart 5:5:5:5:FinancialFinancialFinancialFinancial performanceperformanceperformanceperformanceFinancial Performance can be identifying in terms of financial performance that areassets,liabilities and profits which are used to measure the results of a firms policiesand operations in monetary terms.These results are reflected in the firms return oninvestment,return on assets,value added,etc.(investopedia,2012).(Sources:BusinessWeek,2012)(In millions)20112010200920082007-10-JPMorgan,based in New York,reported income of$5.7 billion,more than a third aboveyear-ago earnings of$4.26 billion.But nearly the entire difference came on reducedprovision for loan losses in its residential mortgage portfolio,which gave the bank$900billion earnings boost(ibtimes,2012).It means the company noticed the loan lossproblem leads to a decreased net income in the past years.From this table that we can see it has an increase investment income trend in the past 5years which from 2007 to 2011.And all the increases come from the bank interest andthe mainly spending are loan loss provision and tax.As we know government tax is fixedand inevitable so that the company reduced provision for loan loss to keep their goodfinancial performance.(Sources:Business Week,2012)-11-ROA is significantly related to productivity,capitalization and portfolio composition.Dueto the financial crisis in 2008,in order to help the organization avoid sub-prime mortgagerisk,it gives investment office more than 1 billion us dollar used for investing to earnprofits so that it has a good financial performance in that period.After that JP Morganchase customer deposit speed is far more than loan speed.This regulation apply make itreturn on asset is very good as the table 2 shows.We can see it asset has a stable raisefrom 2008 to 2011.However,although the asset has an increased trend in the past fouryears,the recent financial report stated the ratio of deposits-to-loans went from 1.53 lastquarter to 1.57,and its net interest margin declined,as the table 3 shows,a reflection ofincreased deposits with the bank,but also a sign that JP Morgan,as the company noteditself on the investor presentation accompanying the release of results is finding limitedreinvestment opportunities(ibtimes,2012).-12-PartPartPartPart 6:6:6:6:RiskRiskRiskRisk ManagementManagementManagementManagement-CapitalCapitalCapitalCapital adequacyadequacyadequacyadequacyRisk management is an inherent part of J.P.Morgan Chases business activities.Thefirms risk management strategy is aimed to provide comprehensive controls andongoing management of the major risks inherent in its business activities.The firmsoverall risk management is established in the context of the firms capital,earning power,and diversified business model.A strong capital position is essential to the risk management.J.P.Morgan set thestrategy focused on long-term stability,which enables the firm to build and invest inmarket-leading businesses,even in a highly stressed environment(J.P.Morgan Chase&Co.2011).J.P.Morgan(2001)states that the firms capital management is trying to:(1)Cover all material risks under regulatory activities(2)Maintain well-positioned status under regulation(3)Maintain Debt ratings(4)Keep flexible to make investment for the future(5)Maintain stable investment strategy,even in highly stressed marketJ.P.Morgan(2011)indicates that the quality and composition of capital are key factors inrisk management and capital adequacy.Accordingly,it holds a significant amount of itscapital in the form of stocks.And,the firm uses three measurements in assessing itslevel of capital(J.P.Morgan Chase&Co.2011):Regulatory capital-The capital required according to standards stipulated by U.S.Bankregulatory agencies.Economic risk capital-The capital required as a result of a bottom-up assessment of theunderlying risks of the firms business activities,utilizing internal risk-assessmentmethodologies.-13-Line of business equity-Each business segment world requires different level ofrequirementsThe firms Tier 1 common was$122.9 billion at
