One thing can be said about JPMorgan Chase bank: if it’s sweating tough economic environments, it has a poker face that’s matched by none and likely has a lot of folks fooled. Even though the possibility of weaker lending rates are becoming a more likely scenario, the nation’s biggest bank says it will continue with its plans of building new branch offices around the nation. It says this will allow it to make more loans, both for consumers and small businesses. This, from a member of the executive branch, will keep the Chase brand front and center. Chief Financial Officer Doug Braunstein told a group of investors on Tuesday,
Even in the current rate environment, deposits are a very good business,
after one analyst asked him if he or his bank would consider “spending less on new branches”.
Already the company has more than 5,500 branches around the country. Wells Fargo holds the top spot for most branches, but if Chase gets its way, it will be leaving its competition in the financial dust.
Of course, the 18% in deposit growth that translates into more than $1 trillion helps, too. It says it’s already opened 150 branches this year alone. Expansion plans are sure to follow as the banking giant continues to find ways to increase profits.
The banking giant serves individuals with credit cards, mortgages and bank accounts, but it also plays a role in small businesses and their financial needs. Braunstein said it’s the branches that are is bank’s core business.
The question is why would Chase choose this point in time to expand when stock analysts are not happy with any kind of expansion plans? Citing historic lows and the increasing reliance on technology, bank branches are minutes away from being antiquated.
Not only that, but some of the biggest and most visible banks have begun closing branches. Braunstein, despite the neon signs pointing to anywhere but expansion, insists the timing is right to overtake the market, with all of its shares of deposits while “cementing the relationships with customers”.
He also said the bank was prepared to wait it out until rates began rising again. He also said he knows it could take some time,
To the extent the rate environment normalizes over time – and it may take some time to do so – there is going to be significant upside.
Braunstein wasn’t the only speaker during the Goldman Sachs meeting. Bank of America CEO Brian Moynihan likely got a kick out of hearing Braunstein insist his bank was on the right path.
For his part, Moynihan said his bank has no plans at all to grow or even change at this point; it’s likely he knows just how volatile the markets are and how skittish American consumers remain.
Still Braunstein continued to reiterate earlier statements from JPMorgan CEO Jamie Dimon that the bank should easily make $24 billion in annual profit in more “normal times”. Of course, defining normal these days is little more than wild guessing.
Not only that, but the company has recently been falling significantly short of its goals as mortgage losses and credit card loans are going into default. That, coupled with lower interest rates on loans, makes anyone wonder what the banking officials are thinking. Last year alone JPMorgan Chase lost $19 billion in net income.
Now, the bank has announced a shifting of bank executives. In July, the bank merged two of its banking segments into one. A memo was routed to all company employees on Tuesday and before long, Reuters had secured a copy.
It reads, in part its efforts to, “raise the profiles of two emerging markets specialists and leave an ambiguous status for Greg Guyett”. Guyett at one time was CEO of the bank’s global corporate offices.
The memo was authored by the bank’s dual-CEOs from the recently merged corporate and investment banking, also outlined the way it would cover banking clients and how it would split the responsibilities between Jeff Urwin, who continues in his role as global head of investment banking, and Don McCree, who is the global head of treasury services, but who will also now oversee corporate banking.
In the meantime, Guyett will be assisting in the transitional phases before he assumes his new role in the banking conglomerate. What the memo did not say, however, is exactly what the role would encompass. Either way, he’s golden.
The global division increased its revenue by a whopping 29% last year while also hitting 22% in treasury services. Finally, the memo outlined the new role for its Latin America and Japan offices, stating Nicholas Aguzin would transition out of Latin America and will fill a role in Hong Kong in 2013. He has been with the bank for more than two decades.
What are your thoughts on these bold statements the bank’s leaders have been making? Are they arrogant or realistic?