JPM - JPMorgan: Potential For Underperformance In A Falling Rate Environment

2024-06-09 09:30:30 ET

Summary

• JP Morgan Chase has historically performed well compared to peers and remains a healthy operator with high ROE and a solid balance sheet.
• The majority of JPM's revenue comes from net interest income (NII), which is at risk due to potential lower interest rates.
• The bank's business segments show diverging trends, with some experiencing weakness in NII and lower deposits. There is no significant structural driver to offset potential NII pressure.

Relatively to peers, JP Morgan Chase ( JPM ) shares have performed well over time, with total book value per share expanding each year since 2004 at a compound annual growth rate of ~10%, corresponding to 510bps above peers. The stock has also outperformed the S&P 500 in the last 10 years, but mostly due to a higher beta....

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