JP Morgan Chase Analysis

JP Morgan Chase Analysis

Chase: Business Performance and Goals

Business performance, goals, and focus, and offerings are some of Chase Bank’s core operations.

Overview

  • According to Chase’s official website, the bank serves nearly half of America’s households by offering a wide array of financial services such as credit cards, mortgages, personal banking, auto financing, small business loans, investment advice, and payment processing.
  • Despite the ongoing global recession due to the coronavirus pandemic, Chase’s quarterly revenue indicates stability and proof that the business has been soaring. In the second quarter, Chase recorded a $33.8 billion revenue, yielding a $4.69 billion in profit for the period.
  • With almost 4,900 branches and 16,000 ATMs, Chase Bank has operated for over 200 years, and today, it is part of the largest financial institution in the US, with assets worth $2.6 billion around the world. More so, the bank can waive checking fees by enabling direct deposit, linking eligible accounts, or carrying a minimum balance.
  • Chase Bank’s main focus areas include; supporting climate change, economic development, innovation, and infrastructure growth. The bank’s multi-layer performance highlights a robust 9% CAGR across the business segment. Chase Bank’s big part of the success has been the result of the bank’s investment plan. Through Interbank Information Network with 400 participants, Chase Bank has managed to deliver new services and products to their clients.
  • Chase Bank’s growth target seeks to make the next significant acquisition across the board. The takeovers could be in adjacent business lines, such as payment firms or new territories. Previously, the bank has acquired firms such as WePay and InstaMed. Still, the recent acquisitions in 2020 could extend to technology, even though the bank prefers to grow businesses organically rather than through takeovers.
  • In the initial quarter of 2020, Chase Bank continued to execute on its branch expansion goal, penetrating 16 new markets since it started its expansion in 2018 and opening almost 100 new branches. The bank’s ultimate goal is to establish a branch presence in the US, whose populations sum to 95% of America’s population. Meanwhile, the bank managed to simultaneously prioritize its digital platform in 2019, with a tech budget of $11.4 billion, which eclipsed America’s other big banks’ tech budget.
  • Chase Bank’s goal is to address the wealth gap between rich and poor Americans, particularly in the Black and Latino families. As a commitment, the bank has dedicated $30 billion in loans, investment, and philanthropy over the past five years. The amount is meant to encourage an inclusive economic recovery, support employees, and remove barriers caused by systemic racism.
  • Chase Bank has expanded its offerings to incorporate new enhancements with a slate of updates. These include Ultimate Rewards, such as Chase Sapphire Preferred and Chase Sapphire Reserve personal cards, and the Ink Prefered Business Card. These offerings are valuable partly because they are redeemable for a bonus in the Ultimate Rewards travel portal.
  • Credit cardholders can also enjoy offerings such as the new Pay Yourself Back, which has proven to be an outperforming service that allows Chase Bank customers to use points for groceries, home-improvement, and dining purchases. The Pay Yourself Back service is a new offering that has helped the bank’s customers, especially during the ongoing pandemic.
  • While Chase Bank’s offerings are not as extensive as some top banks in the US, Chase credit cards are some of the most sought-after in the market, mainly for their offerings. Chase Bank’s credit card holders are assured of perks such as premium travel cards, an easy cash-back option, an introduction into the points and miles world, or a small business credit card. More so, Chase cards are easily compatible with each other, therefore, giving maximum value.

JP Morgan: Business Performance and Goals

JPMorgan is presenting positive results, predominantly in the Corporate & Investment Banking and the Asset & Wealth Management segments. The financial institution is managing to gain some organic growth, as clients readjust their portfolios and some products show significant year-on-year growth.

Wholesale Operations

  • JPMorgan Chase divides its operations into Consumer Businesses and Wholesale Businesses. The wholesale business is divided into three distinct categories: Corporate & Investment Bank, Commercial Banking, and Asset & Wealth Management. Private Banking and USWM are considered segments (asset management). Business metrics describe the second quarter of 2020 results, the most recent publicly available data (third-quarter results will be published on October 13). Key business goals were based on the company’s 2019 annual report and recent statements from executives.
  • JPMorgan wholesale business attained positive results in Q1 and Q2 of 2020, as clients adjusted their portfolios and bond-buying programs slashed interest rates, lifting trading volumes. Like other financial institutions, JPMorgan was impacted by loan losses charges and low-interest rates in Q1; however, these losses were mitigated by a boom in trading, particularly fixed-income trading.
  • During Q2 Earning Calls, the bank predicted a decline in activity and results for the next quarters. However, on September 15, Jennifer A. Piepszak, Chief Financial Officer, said the bank had a stronger than anticipated Q3, as wholesale losses are being delayed by the amount of liquidity available. She further adds, “we still haven’t seen the typical recessionary indicators that you would expect to see at this point. And so, while things do look a little bit better than we thought they would, we’re still dealing with an enormous amount of uncertainty looking ahead.” She expects that the real losses will begin to emerge in the first half of 2021.
  • Piepszak also declared that despite initial predictions, Securities Services remain elevated, clients are holding liquidity, Fixed-Income is thriving, and JPMorgan is actually having some organic growth on the wholesale side. She concludes, “we’re not seeing what we would have expected even on the wholesale side.” She also states that IB fees were more robust in Q3 than they expected in Q2.
  • Expanding internationally and consolidating its position in China is a business priority. The company agreed to spend over $1 billion to “move to 100 per cent ownership of CIFM and also signed a wealth management strategic partnership with China Merchants Bank.”

Asset & Wealth Management

  • Asset & Wealth Management (AWM) revenue was up 1% year-on-year (YoY), reaching $3.6 billion, with “higher deposit and loan balances, along with higher brokerage activity, largely offset by deposit margin compression.” Net income was $658 million, an 8% drop, driven by reserve builds.
  • Assets under management totaled $2.5 trillion, and overall client assets of $3.4 trillion, up 15% and 12% respectively, “predominantly driven by cumulative net inflows into liquidity and long-term products.”
  • Net long-term inflows reached $29 billion, “positive across all channels and all regions led by Fixed Income and Equity.” Net liquidity inflows were $95 billion, making JPMorgan the “number one institutional money manager globally.”
  • Deposits were up “20% year-on-year on growth in interest-bearing products, and loans were up 12% with strength in both wholesale and mortgage lending.”
  • JPMorgan adopts a long-term approach. Key goals and priorities for the next decade include, according to its 2019 annual report:
  • In September 2020, Piepszak stated that in AWM, the company believes International Private Bank is an opportunity, and that JPMorgan will continue to “have opportunities in Asset Management, China being a good example.”

Corporate & Investment Bank

  • Corporate and Investment Banking (CIB) witnessed substantial growth in the second quarter of 2020, with a net income of $5.5 billion, up 85% year-over-year (YoY), and revenue of $16.4 billion, up 66% YoY. According to JPMorgan’s Chief Financial Officer, CIB “reported its highest quarterly revenue on record with IB fees up 54% and Markets revenue up 79% year-on-year, each representing record performances with strength across the board.”
  • Fixed Income Markets revenue was up 99% YoY, “driven by strong performance across products.” Equity Markets showed a 38% YoY gain, “predominantly driven by strong client activity in derivatives and Cash Equities,” while Securities Services, driven by “balance and fee growth partially offset by deposit margin compression” was up 5%.
  • Piepszak, adds: “In Advisory, we were up 15% driven by the closing of a few notable transactions. Debt Underwriting fees were up 55% and maintained our number one rank in overall wallet and were the leaders in lead-left across leveraged finance. In Equity Underwriting, fees were up 93% and we grew share by approximately 200 basis points relative to the first quarter.”
  • The financial institution grew its CIB market share to 9.8% in the first half of 2020, up from 9% in 2019. It ranks number one in wallet share for both Equity and Debt Capital Markets.
  • Providing a full suite of products and services, despite profit margins on each product, is a priority, as the company believes it is mutually beneficial for JPMorgan and its clients. It is also planning to bring its full suite of corporate banking capabilities to China.
  • Talent recruitment and retention is a priority, particularly in the Investment Banking business, as well as scaling up technology capabilities, a goal further driven by the pandemic and the “shift towards electronic trading.”
  • The company recently announced that it is adopting a “financing commitment that is aligned to the goals of the Paris Agreement” and shifting its portfolio away from fossil fuels.
  • In September 2020, Piepszak stated that JPMorgan is investing in “Cash Equities and Prime Brokerage and really making great progress there. And then even in Investment Banking, there are opportunities at sub-product or regional market level.” In the Market’s business, the company is currently investing in talent and technology.

Commercial Banking

  • Commercial Banking suffered a net loss of $691 million. Net interest income was down 5% YoY, driven by “lower deposit margin, largely offset by higher deposit and loan balances.” Net revenue was up 5%, driven by “higher deposit and loan balances, a gain on a strategic investment, as well as higher deposit fees and investment banking revenue, predominantly offset by lower deposit margin.”
  • Average Loans increased by 13%, while Average Deposits were up 41% YoY. EOP deposits reached $241 billion, up 42% YoY and 7% quarter-on-quarter (QoQ), “predominantly driven by client liquidity needs.”
  • Furthermore, Piepszak explained that in Commercial Banking, the company is expanding internationally and can take advantage of the “existing infrastructure that’s in many of these markets from the CIB.”

JPMChase and Co: Business Performance and Goals

JPMorgan Chase & Co. has made substantial accomplishments with respect to its impact initiatives. Advancing Black Pathways, Women on the Move, and its Office of Military and Veterans Affairs, which are just three of its many impact initiatives, have all contributed positively to the welfare and empowerment of Blacks, women, and veterans. As can be seen below, JPMorgan Chase & Co. has invested significant amounts of time, effort, and money in achieving its goal of promoting racial equity.

Performance

Goals

  • As far as impact initiatives are concerned, JPMorgan Chase & Co.’s overarching goal is to promote racial equity. Supporting this overall goal of advancing racial equity are more specific goals of promoting affordable housing, growing Black- and Latinx-owned businesses, promoting financial health in Black and Latinx communities, improving workforce diversity and inclusivity, and exercising philanthropy.
  • Over the next five years, JPMorgan Chase & Co. aims to originate 40,000 more home purchase loans for Black and Latinx households, help 20,000 more Black and Latinx households secure lower mortgage payments, finance 100,000 more affordable rental housing units, offer 15,000 more loans to small businesses in communities where residents are mostly Black or Latinx, help one million individuals open new low-cost savings or checking accounts, assist Black- and Latinx-led financial institutions, make its workforce more diverse and inclusive, promote inclusive economic recovery, and assist underserved communities.
  • JPMorgan Chase and Co.’s Advancing Black Pathways initiative aims to promote economic empowerment in Black communities by improving the financial health of Black households, expanding the access of Black-owned small businesses to capital, advancing Black homeownership, improving the access of Black students to better opportunities for education and training, and recruiting and developing Black talent.
  • Over the next five years, it aims to hire over 4,000 Black students into full-time roles, apprenticeships, and internships.
  • Its Women on the Move initiative, on the other hand, aims to provide better professional and personal opportunities for women by growing women-led businesses, improving the financial health of women, and helping women with their career growth.
  • It aims to extend $10 billion in credit to women entrepreneurs or business owners. It has until 2021 to fulfill this goal.
  • Its Office of Military and Veterans Affairs, which was established by JPMorgan Chase and Co. in 2011 to promote the welfare of the veteran community, aims to make JPMorgan Chase & Co. “an employer of choice for veterans” and “the bank of choice for veteran entrepreneurs,” and promote veteran employment, entrepreneurship, education and workforce development, and community engagement.
  • The Veteran Jobs Mission led by JPMorgan Chase & Co. has the end goal of hiring one million veterans.
  • JPMorgan Chase & Co. has committed $30 billion to the implementation of its five-year plan for advancing racial equity. Of this amount, $26 billion will go to affordable housing programs for Black and Latinx families. Though JPMorgan Chase & Co. promotes the advancement of Blacks, Latinos, women, and veterans, this allocation suggests an emphasis on Black and Latinx communities.

Chase: Marketing

Marketing Strategy

  • Chase Bank puts a great deal of effort into sports marketing with strategies such as signing with sports teams to be their “official bank” and opening stadiums with their name, such as the Chase Center that is home to the Golden State Warriors.
  • Chase’s director of sports marketing says that their goal is to tie the Chase name and logo with important memories for people, such as going to a big sports game.
  • The bank is working their marketing strategy to adapt to the COVID-19 crisis by creating advertisements that show their employees working at home. The messaging revolves around still being their for customers, just in a different way.
  • Chase used to do a lot of marketing at in-person events, but have since scaled back their spending on that type of marketing and focused it instead on broadcast TV spots.
  • In its social media marketing, Chase often has advertisements that link to their bank’s information web pages with the aim of encouraging people to get answers to the questions they need without leaving the house.
  • Much of Chase’s social media marketing is done through short video spots.
  • They also have a lot of messaging surrounding current trending issues, such as gender and race equality and promoting businesses owned by minorities.
  • Some of their video spots feature topics that people often struggle with, such as budgeting, and use messaging to both provide tips on the topic and show their viewers how Chase can help.

Marketing Examples

  • In this Chase TV commercial, the bank talks about being able to use the Chase mobile app to access one’s bank virtually anywhere. The ad features examples of how the app is used, as well as the image of a family having a video call, which ties into the current COVID-19 pandemic and how people are communicating.
  • Chase also sends out print advertisements to current customers, such as this one that aims to encourage members to use their tap-to-pay feature on their cards.
  • This Facebook video advertisement uses celebrity Kevin Hart to talk about new features that are being added to Chase’s Freedom Unlimited Card.

JP Morgan: Marketing

J.P. Morgan (JPM) Marketing Strategy

Overview:

1. Competitor and issues analysis : JP Morgan is the world’s largest and best financial services firm, with the main competitor being Bank of America Merill Lynch.

2. Action programs : JPM is dedicated to helping non-profit organizations and corporate responsibility. Specifically their “New Skills at Work” which helps people learn more skills to help them in their careers.

3. Product: JPM offers financial services, investment banking, and asset management.

4. Price: JPM is a fee-based financial services firm, charging fees based on the assets an individual has with them.

5. Promotion: JPM does not have a large social media presence but has been very well-known for well over 100 years.

6. Place: JPM has a presence all over the world, in more than 30 countries.

7. Brand Visibility: JPM and Chase have entered into several sponsorship deals to maintain brand visibility. It sponsors Chase Field, Major League Soccer, Chase Center, the US Open games, and the English Premiership Rugby (7S Series). It has received several awards including Best Banking Performer in the year 2016 in the US by Global Brands Magazine Award.

J.P. Morgan Chase Sports Marketing:

TV Advertisement:

  • In 2019, JP Morgan and Chase invested $2.79 billion in advertisement in the U.S, which is an increase of $270 million from its spending in 2018.
  • The company’s latest campagin, “JPMorgan Advisors Are Here For You,” came as a response to the pandemic crisis. The ad demonstrated real wealth advisors working from home. The spot ran for eight-weeks, and was aired on dozen networks which includes ABC, CBS, CNBC and ESPN TV channels.
  • The spot is running on more than a dozen TV networks — including ABC, CBS, CNBC and ESPN — and addressable and connected TV, plus finance and news sites, a company spokesman said. The ad, which began airing last week, is expected to have an eight-week run.
  • During the pandemic era in early 2020, the marketing expenses for the first quarter (until Mar. 31) only dipped around 2%, despite the bank’s profit plunging to 69%.

Online Advertisement:

  • In 2018, JPMorgan Chase hired Apoorv Saxena, Google’s head of product management for cloud-based artificial intelligence, with the aim of using AI to transform financial services.
  • In 2019, JPMorgan signed a five-year contract with AI-based start-up, Persado. The company aims to use artificial intelligence to generate optimized digital ads, for targeted audience.
  • Preliminary data demonstrated that AI-based ads generated by Persado, have been highly effective with a 450% click through rate.

Corporate Social Responsibility

  • As part of JPM Corporate Social Responsibility’s ‘AdvancingCities Program,’ the company launched a $500 million, five-year tenure initiative, in doubling down commitment to increase jobs, develop new affordable housing, and foster economic and inclusive growth. Beneficiary cities include San Francisco, Detroit, Chicago, Greater Washington,
  • In San Francisco and Oakland, Chase invested $22 million to preserve and develop affordable housing.
  • In Chicago city, in 2017, the company committed $40 million to the South and West sides, in developing community, fostering business, promoting philanthropic works, and funding public sector leaders. In 2018, the company committed additional $10 million in finding low-cost, small businesses and retail stores on the South and West sides. With its social efforts, the company has been promoting its agenda, “to create equal economic opportunity in Chicago, and we are proud to be invested in Chicago for today and tomorrow.”
  • The company is committed to investing $200 million in Detroit’s economic comeback by the end of 2022.
  • JPM has been hosting a ‘Corporate Challenge’ since past 35 years, for a series of 3.5 mile foot races in cities across the globe.
    • According to the company’s take on Corporate Challenge, “It’s not a conventional sports sponsorship but is as important to the brand as the wide-appeal of its professional sports partnerships. We own and operate the event, and have done so every year since 1977.”
    • More than 225,000 people participate in the annual race event.
    • JP describes this event on its website as “a global celebration of corporate teamwork, camaraderie, and community giving.”
    • Through this event, JP Morgan Chase hopes to achieve key business objectives, such as:
      • Increase brand awareness – Position events for B2B and B2C marketing.
      • Build community outreach – Establish the bank as a socially responsible leader.

Social Media Presence:

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