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Biggest Banks Seek Rebound from Crisis

By    |   Thursday, 15 Mar 2012 11:44 AM

The nations’ biggest banks continue to seek a rebound from the financial crisis of 2007 through 2009. All of the institutions continue to face problems, mainly the billions of dollars’ worth of bad assets on their books. But JPMorgan Chase (JPM) may represent the bank that is faring best.

It is better off largely because it avoided most of the mistakes made by the other money-center banks during the meltdown. For example, it maintained much more capital on its balance sheet than did Citigroup (C).

And while Bank of America (BAC) made the disastrous purchase of Countrywide mortgage firm during the financial crisis, JPMorgan made the beneficial acquisition of Washington Mutual.

Over the last three years, JPMorgan shares provided an annualized total return of 23.6 percent, compared to 19.2 percent for Bank of America, 7.6 percent for Citigroup, and 14.3 percent for Morningstar’s global bank average.

Size matters


JPMorgan now stands as the biggest bank in the country, with more than $2 trillion in assets. In banking, size matters. JPMorgan is able to offer its customers one-stop shopping for whatever financial services they might need, from investment banking to treasury services.

The fact that JPMorgan emerged from the financial disaster in better shape than its peers also helps it draw customers.

Standard & Poor’s analyst Erik Oja has a hold rating on the company’s shares. “As the U.S. economy continues to improve, JPM's capital levels should rise from retained earnings and be sufficient to meet upcoming Basel III requirements,” he writes.

“We remain cautious on the shares pending further clarity on Europe and a better outlook for trading.”

JPMorgan’s profit dropped 23 percent to $3.7 billion in the fourth quarter from a year earlier. Revenue dipped 9 percent to $14.5 billion.

The company next reports earnings April 13.

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