Sunday, June 2, 2019

JPMorgan Building On Strengths Outside Of Banking

JPMorgan (JPM) is one of the largest, and in my opinion also one of the best-run, banks in the U.S., but core deposit/lending banking operations are only part of the story. JPMorgan also has a significant payments business, and management has made it clear that they view growing this high-margin, high-returns business as a core priority. To that end, the company recently announced its largest deal since the financial crisis, and I expect further investments (both organic and M&A) to grow this business.

Although I continue to believe that core banking has more or less plateaued for this cycle, JPMorgan continues to stand out for the quality of its operations. Looking ahead a bit, I believe the company’s plan to drive organic growth (new branch openings) and leverage its substantial IT investments will drive better-than-average growth and cost leverage. There are bigger bargains in the banking sector today, but in terms of quality and value, I believe JPMorgan’s double-digit discount to fair value still makes it a name worth considering.

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JPMorgan Building On Strengths Outside Of Banking

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