JPMorgan Chase 4Q20 Earnings Analysis

Unfriendly Banking environment

  • ● Zero interest rates, QE and banking regulations (Dodd-Frank Act of 2011) makes makes it harder for banks to do business

  • ● CEO Jamie Dimon noted in the conference call, "I mean, our capital cup runneth over, OK. We have so much capital we cannot use it. If you look at what happened this year, our capital went from 12.4% to 13.3%. I think advanced is more representative of real risks so it will be 13.8%."

  • ● Deposits for all US commercial banks grew by 21% in the TTM while loans grew by only 8%

  • ● As for JPMorgan Chase, the average loans were $996B up 1% YoY and 1% QoQ

  • ● Average deposits of $2.1T up 35% YoY and 6% QoQ

  • ● Revenues of $30.2 Billion and net income of $12.1 billion

● Positive results across all segments

  • ● Playing safely in terms of allowance for credit losses with $30.8 billion in reserve

  • ● Credit losses for 4Q20 were only $4.0 billion with over $33 billion in reserve with release of $2.9 billion and $1.1 billion charge off

● CET1 Capital Ratio of 13.1%

Analysis and Conclusion

  • ● JPMorgan Chase continues to expand both its domestic and international businesses, hoping to have commercial banks in all of the 48 Lower States by mid 2021

  • ● Still playing safely as uncertainties about pandemic and recession continues

  • ● Will restart buying back shares

  • ● Currently fairly valued and I’ll give a HOLD (forever) rating

Full Analysis and Research:

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