Uniform Bank Performance Report - Anderson School of Management

price of the company could increase. This could result in larger capital reserve requirements, higher
interest rates, and many other factors that could negatively affect the company’s profits.
Income statement analysis of JPMC reveals that Interest revenue from loans in 2009 has been slow, yet
still above that of its competitors. Service charge revenue has been high, bringing in $3.5 billion in
revenue in the first half of 2009 alone. Card services are also successful and should prove to be an even
bigger source of revenue as the economy continues to grow. Interest expense was low in 2009
compared to prior years, while non‐interest expense has been increasing. However, the non‐interest
expense statistic has been skewed by the acquisition of Bear and WaMu. Overall analysis of the income
statement yields positive results.
Balance sheet analysis shows an abundance of toxic assets held by JPMC. These have caused the bank to
raise their provisions for credit losses account to over $16.6 billion, meaning that the bank anticipates
the continued growth of these losses. Loans made by JPMC have decreased as a result of tightened
credit markets and widespread declines in the economy. This will inhibit its future growth prospects. In
addition, JPMC’s investment and underwriting activities have suffered substantially. Debt and equity
investments held for clients decreased by 14%, while derivative investments decreased by 40% in the
most recent year. These drastic decreases reflect consumers’ loss in confidence in JPMC and the
financial markets in general. However, as the economy continues to recover, these numbers may
recover quickly as well.
JPMC’s ROA has been steadily declining, but is on par with competitors, and appears worse than it really
is due to the huge acquisition of assets from Bear Stearns and WaMu. ROE has also been in a steady
decline, but is similar to that of competing banks. The NIM for JPMC is a promising statistic. Not only has
it been steady and on par with competition, but has shown an increase in 2009 which shows JPMC’s
ability to manage interest rate risks during volatile times.
Asset quality figures do not look good, but are similar to what can be expected by a bank heavily
affected by the mortgage and asset backed securities crisis. The value of JPMC’s credit portfolio is $1.92
trillion, with non‐performing / past‐due receivables at $17.5 billion. However, this should not pose a
deadly threat to the bank as it is still well capitalized. Capital ratios, including Tier 1, Tier 2, and Total