JPMorgan Chase & Co. (JPM), Bank of America Corp (BAC): From Safest to the New Bad Bank

According to a Forbes article, the nation’s strongest and safest bank, JPMorgan Chase & Co. (NYSE:JPM) is now finding itself in unfamiliar territory as it is being impounded by all quarters, including investors and regulators. This article aims to compare JPMorgan’s performance to its closest peers and see whether JPMorgan has actually become the new bad bank.

JPMorgan Chase & Co. (JPM)

Just a few days ago, the regulators downgraded JPMorgan Chase & Co. (NYSE:JPM) and demanded improvement in its management. The Office of the Comptroller of the Currency downgraded JPMorgan in a confidential scoreboard to level 3, meaning the bank’s board’s abilities may be insufficient. Reuters reported that this downgrade is not solely because of the London Whale’s outsized bets, however, I believes his trades are at least one of the major reasons for the downgrade.

The London Whale’s trading loss has led JPMorgan’s executives to be invited to Washington more often for Congressional testimony, a trend more seen at Bank of America Corp (NYSE:BAC), Citigroup Inc. (NYSE:C) and Goldman Sachs Group, Inc. (NYSE:GS) .


JPMorgan Chase & Co. (NYSE:JPM)’s fourth quarter earnings saw a jump of 53% on higher revenues and continued strengthening credit. The bank reported a profit of $5.69 billion up from $3.73 billion a year ago. Revenues for the quarter of $24.38 billion were up 9.8% over the same time period.

In contrast, profits for the fourth quarter of 2012 plunged 63% at Bank of America Corp (NYSE:BAC) due to charges related to a dispute with Fannie Mae. According to Wall Street Journal, the bank’s revenues for the same quarter also fell, though part of the drop was associated to the accounting issues arising from the way the settlements were booked and changes in the value of the bank’s debt.

The bank also witnessed a 25% decline in its revenues as its non-interest income fell 41%. Revenues in its core consumer and business banking segment also saw a decline. However, on the whole, the bank showed some progress and growth. Bank of America Corp (NYSE:BAC)a is the second-largest bank in America by assets.

A similar trend was witnessed at Citigroup when it reported its fourth quarter performance. The results remained far short of forecasts on higher litigation charges. Overall, the bank’s bottom line increased 25% from a year ago. However, operating earnings of $0.69 per share fell short of the expected $0.96. Revenues for the same quarter increased 8.7%.