Retooling the JPMorgan Chase Machine for the Future
Monks, Matthew, American Banker
Byline: Matthew Monks
JPMorgan Chase & Co. laid out plans Tuesday to gradually boost profits a third by expanding overseas, building fewer retail branches and wooing more wealthy clients.
The goal is to generate $24 billion a year in net income, up from $18 billion in 2011, Doug Braunstein, JPMorgan's chief financial officer, said at the New York company's annual investor day.
Higher regulatory costs and the slow economy are forcing JPMorgan Chase to tweak its strategy, Chairman and Chief Executive Jamie Dimon said. Its record profits in 2011 and 2010 stemmed from growth plans set in motion five to ten years ago, he reminded attendees.
"I'll be damned if we don't have record profits" in coming years, Dimon said.
Getting there hinges on overcoming the $7.5 billion it spent in 2011 resolving mortgage problems and corporate litigation, as well as the $500 million of net income sapped by the Durbin amendment, Braunstein said.
Growth initiatives across its seven primary businesses should deliver at least $800 million in additional net income over time as it spends more in certain areas and less in others.
Its investment bank plans to open a prime brokerage business in Asia this year, after launching an emerging markets brokerage in 2011, said Jes Staley, JPMorgan Chase's chief executive of investment banking. It also will cut 700 investment bank technology jobs.
Meanwhile, its consumer and business bank is scaling back aggressive branch expansion plans announced a year ago. JPMorgan Chase now plans to open 900 additional branches, mostly in Florida and California, said Todd Maclin, chief executive of consumer and business banking. At last year's investor day, the company unveiled plans over five years to add another 1,500 to 2,000 new offices across its entire 5,500-branch, 23-state retail banking territory.
Maclin said his unit's pre-tax income would decline 14% year over year in 2012 because of low interest rates and curbs on deposit fees. But the payoff from cost savings and the addition of clients and offices could boost his division's annual income by $1 billion by 2015, and by more than 6 billion by 2020.
New fee restrictions would make unprofitable about 70% of customers with less than $100,000 of investments, he said.
To that end, JPMorgan Chase sees its best growth prospects in banking wealthy people. …