Uniform Bank Performance Report - Anderson School of Management

Performance Analysis
As one of the major international financial institutions, JP Morgan has endured the financial meltdown
that plagued the global economy, and is beginning to show signs of recovery through its financial
statements. An analysis of the annual statements of 2007, 2008, and the first two quarters of 2009
show how the company has been affected through years of slow economic decline, sharp economic
decline, and one year of economic/financial uncertainty.
Income Statement Analysis
Revenue
The principal function of a bank is to facilitate the flow of
capital from those with excess funds (savers), to those
who are in need of additional funds (borrowers).
Therefore, the issuance of loans and the collection of
interest serve as the primary sources of income to any
commercial bank. However, due to the uncertainty of the
lending market, JP Morgan Chase & Co. has recently
decreased lending, and is instead using more of its
deposits as reserves for future defaults. This has in turn
decreased interest revenue from loans in recent quarters.
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In the first two quarters of 2009, interest revenue had
accumulated to $34,475 million. This is a slow start for the year compared to 2007 and 2008, where
interest revenue was $71,387 million, and $73,018 million, respectively. Still, compared to other banks
in its peer group (Bank of America, Citibank) JP Morgan ranks higher in terms of taking in more deposits
and issuing more loans.
In addition to interest revenue, another revenue stream provided by deposit accounts and lending
activities is the fees they generate. In 2007, service charges accounted for $3,938 million in revenue.