SWOT analysis of JPMorgan Chase

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SWOT analysis of JPMorgan Chase

This is a detailed SWOT analysis of JPMorgan Chase. It aims to analyse the strengths and the weaknesses of JPMorgan Chase. It also aims to explore the opportunities and the threats facing the bank. JPMorgan Chase & Co. is an American multinational bank headquartered in New York.

Strengths of JPMorgan Chase

JPMorgan Chase is the largest bank in the United States. This is the result of the merger of J.P. Morgan and Company and Chase Manhattan Corporation in 2000. JPMorgan Chase is also one of the oldest financial institutions in the United States with a history dating back 200 years (JPMorgan Chase & Co., 2019).

Global reach is also a very important area to consider. JPMorgan Chase has presence in over 100 markets. As of December 2018, the total asset of the bank is $2.6 trillion. It serves a diverse groups of customers e.g. small and medium size businesses, corporations, government clients, and individual consumers (JPMorgan Chase & Co., 2019).

JPMorgan Chase enjoys a strong financial position and has performed strongly across its businesses over the years. For instance, the bank earned $24.4 billion in net income on revenue of $103.6 billion in 2017 (JPMorgan Chase & Co., 2018).  Its profit in 2018 was a record $32.5 billion (Horowitz, 2019).

JPMorgan Chase has bought back approximately $40 billion in stock in the last five years potentially making earnings per share in the next five years to be 2%—3% higher. The bank reported a 6 percent rise in its core loan portfolio and a 12 percent increase in credit card sales volume in 2018 (Sweet, 2018). In fact, the bank has increased market share substantially in most of its businesses.

Weaknesses of JPMorgan Chase

A number of controversies have affected JPMorgan Chase the last few years. For instance, the UK Financial Services Authority (FSA) fined the bank £33.32 million for failing to protect billions of dollars of clients’ money from 2002 to 2009. In 2011, the bank made an admission of wrongly overcharging thousands of military families for their mortgages.

JPMorgan Chase suffered from a technical glitch in February 2018. Its online banking system experienced a security challenge that allowed some users to access to the account information of others (Panda Security, 2018). The affected customers had expressed their frustration on social media over the issue.

While JPMorgan Chase operates in over 100 markets, it depends heavily on its US operations. This over-dependence on the US market is also regarded as a weakness.

Opportunities for JPMorgan Chase

JPMorgan Chase offers its customers different types of credit cards. Credit card use is on the rise around the world, particularly, Americans are using their credit cards more than ever (Hoffower, 2018). The bank has good potential to benefit from this rise.

Expansion of the bank’s geographic reach is also worth exploring. This should help JPMorgan Chase increase its global market share. It has recently created a crypto-currency (JPM Coin) to help settle payments between clients in its wholesale payments business (Russon, 2019). Crypto-currency is another area of future growth and development.

Threats to JPMorgan Chase

Threat is the last element to address in the SWOT analysis of JPMorgan Chase. The bank faces threats from a number of competitors because of its operations in over 100 markets. The main competitors of JPMorgan Chase are Bank of America, Wells Fargo, Citigroup, Goldman Sachs, Morgan Stanley, and HSBC.

Regulatory changes, recession, and financial crisis (both domestic and international) are likely to impact on the operations of JPMorgan Chase badly. However, it is worth noting that these factors may affect any bank, not JPMorgan Chase only.

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Last update: 10 March 2019

References:

Horowitz, J. (2019) JPMorgan earnings: A master class in how market volatility can hurt banks, available at: https://edition.cnn.com/2019/01/15/investing/jpmorgan-earnings-trading/index.html  (accessed 08 March 2019)

JPMorgan Chase & Co., (2019), About us, available at: https://www.jpmorganchase.com/corporate/About-JPMC/about-us.htm (accessed 05 March 2019)

Panda Security (2018) JP Morgan Chase Becomes a Victim of a Technical Glitch, available at: https://www.pandasecurity.com/mediacenter/news/jp-morgan-technical-glitch/ (accessed 01 March 2019)

Russon, M. (2019) JP Morgan creates first US bank-backed crypto-currency, available at: https://www.bbc.co.uk/news/business-47240760 (accessed 09 March 2019)

Sweet, K. (2018) JP Morgan Chase earnings rise 24 percent in third quarter, helped by U.S. consumer, available at: https://eu.usatoday.com/story/money/2018/10/12/jpmorgan-chase-posts-strong-third-quarter-earnings/1611721002/ (accessed 08 March 2019)

Photo credit: Forbes.com

Author: Jo David

Jo David has years of experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality and tourism management.