Uniform Bank Performance Report - Anderson School of Management

Capital ratios, as well as Tier Leverage Ratio vastly exceeded par values. These show that the bank is well
able to cover its risk‐weighted assets with capital.
Another promising element of JPMC’s analysis is its Net Income figure. Net income for the bank suffered
briefly in the fourth quarter of 2008, but has since made an amazing recovery. Since the beginning of
2009, net income has been fluctuating at around 75% of the levels they were at prior to the crisis.
Liquidity is adequate in JPMC. Its Net non‐core funding dependence ratio has been steadily decreasing,
meaning it is becoming less dependent on volatile sources of funding to settle its short‐term debt
obligations. Compared to banks in its peer group, JPMC has an average NNCFDR.
One of the factors that contribute to negative confidence in the bank is its relatively significant
susceptibility to market risk. The fact that its interest rate sensitive derivatives outweigh its capital is
frightening. However, the probability that these will end up forcing the bank into insolvency are slim.
This risk is simply something to be taken into consideration when addressing the health of the bank, and
should not necessarily deter potential depositors/investors.
Conclusion
Although its financial situation is far from perfect, JPMorgan Chase & Co. is financially stable and shows
potential for growth in the future. It has maintained adequate ratios and numbers in almost every area
of analysis, with an additional few that stand out as excellent. It continues to grow in size and scope
through acquisitions and operations, and stands strong among competitors. The major problems faced
by the bank are the large amount of toxic assets on and off its balance sheet, and its significant exposure
to market risk. While these may inhibit growth and hurt profits in the short and medium‐terms, there is
little chance that these problems will cause the bank to become insolvent. This claim is backed by
evidence showing the bank’s strong liquidity and capital adequacy positions, as well as increased
stability and recovery in the financial markets as a whole. In addition, the management of the company
has shown that they are well‐able to manage all aspects of the bank and its ability to endure financial
hardship as well as prosper in times of growth.