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JPMorgan Chase (JPM) Stock Price Drivers

STOCK PRICE DRIVERS Note: All EPS figures used exclude abnormal items. All revenue cotributions are calculated as averages from the years 2008-2012, Revenue Drivers Net Interest Margins (NIM): Since Consumer and Business banking is the largest of JPMorgan's five business segments (in terms of revenues), net margins are the main revenue driver. JPM's net interest income amounted to around 50% of its net revenues. JPMorgan has the lowest NIM of 2.20% when compared to its three peers. There are two reasons for this: firstly, Wells Fargo - the peer with the highest NIM of 3.46% - has a different business model that is more inclined towards mortgage banking (long-term lending). Secondly, Wells Fargo has substantially lower long-term debt originations - around $125bn - as compared to JPMorgan-whose long term debt stands at around $270bn. Long term interest rates are higher than short term interest rates. EPS Change vs. NIM 200°% EPS NIM 4% 150% 3.5% 100% 30% 2.5% 50% 20% 0% 1.5% -50% 1% -100% 0.5% 2005 2006 2007 2008 2009 2010 2011 0% 2012 SOURCES: BIDNESS Company Data, SEC filings, Bloomberg Professional Services DISCLAIMER: Bidness Etc(TM) and related marks are owned by Bidness Etc. Any other trademarks appearing on this website are the property of their respective owners, and are not used to indicate the origin of goods or services offered or provided by Bidness Etc herein or to suggest approval for or affiliation with Bidness Etc. Percentage Change in EPS Net Interest Margin

JPMorgan Chase (JPM) Stock Price Drivers

shared by bidnessetc on Dec 07
Interest rates affect almost all the companies involved in the financial sector. JPMorgan generates half of its net revenues from interest, making interest rate changes all the more important for its ...


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