Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*First Out Of The Gate: J.P, Morgan &amp; Co. (JPM.US) [JPM] reported 3Q20 results of USD 9.3 bn or USD 2.92 per share – well ahead of consensus of USD 2.22 per share. Results improvement was led primarily by JPM’s USD 9.9 bn (94.2%) reduction in loss provisions on a linked quarter basis. Offsetting the stellar bottom-line performance, we note several troubling trends: a) net interest income declined on the back of NIM compression and loan portfolio contraction; b) a significant decline in capital markets related revenues; and c) expenses increases;    *Credit Weakness Decelerates: Despite calculating that NCOs were actually a negative USD 1.4 bn, we find that net new NPLs linked quarter amounted to a positive USD 184 mn or 7.0% on an annualized basis. While still weakening, the pace of increase has decelerated from the 26% posted in 2Q20; and* CAPM and Cost Pressure: Volatile capital markets-related revenues took a bit of a digger – declining USD 3.9 bn (26.7%) linked quarter - representing a declining 66.9% of total revenues at 3Q20 (down from the 77.0% posted at 2Q20). When we exclude compensation costs which have a large variable component, we note that the more fixed expenses increased. Comp/revenue, despite the overall bottom-line improvement, worsened to 53.5% - up 3.8% during the period while JPM’s efficiency ratio worsened to 57.9% versus 51.4% in 2Q20.

*First Out Of The Gate: J.P, Morgan &amp; Co. (JPM.US) [JPM] reported 3Q20 results of USD 9.3 bn or USD 2.92 per share – well ahead of consensus of USD 2.22 per share. Results improvement was led primarily by JPM’s USD 9.9 bn (94.2%) reduction in loss provisions on a linked quarter basis. Offsetting the stellar bottom-line performance, we note several troubling trends: a) net interest income declined on the back of NIM compression and loan portfolio contraction; b) a significant decline in capital markets related revenues; and c) expenses increases;    *Credit Weakness Decelerates: Despite calculating that NCOs were actually a negative USD 1.4 bn, we find that net new NPLs linked quarter amounted to a positive USD 184 mn or 7.0% on an annualized basis. While still weakening, the pace of increase has decelerated from the 26% posted in 2Q20; and* CAPM and Cost Pressure: Volatile capital markets-related revenues took a bit of a digger – declining USD 3.9 bn (26.7%) linked quarter - representing a declining 66.9% of total revenues at 3Q20 (down from the 77.0% posted at 2Q20). When we exclude compensation costs which have a large variable component, we note that the more fixed expenses increased. Comp/revenue, despite the overall bottom-line improvement, worsened to 53.5% - up 3.8% during the period while JPM’s efficiency ratio worsened to 57.9% versus 51.4% in 2Q20.

JP Morgan & Co. – Good Credit Omen For US and Global Banks

Public Relations and Social Media Manager, Dechert LLP

Peggy Heffner

Public Relations and Social Media Manager

Dechert is a global specialist law firm

Dechert LLP

Dechert is a global specialist law firm.
Focused on sectors with the greatest complexities, legal intricacies and highest regulatory demands, we excel in delivering practical commercial judgment and deep legal expertise for high-stakes matters.

Our work is widely recognized. We have 20 standout practices noted by Chambers Global, including global-wide rankings for arbitration, corporate investigations, anti-corruption, investment funds and life sciences. Named Antitrust Team of the Year, Chambers USA commends our “accomplished group” as “routinely sought after to handle some of the most significant litigation and transactions in the antitrust world.” 

In an increasingly challenging environment, clients look to us to serve them in ways that are faster, sharper and leaner without compromising excellence. We developed a first-of-its kind legal project management department, which uses technology, people and processes to drive efficiency and deliver value for our clients.

We are innovators. Dechert ranked #7 in the Financial Times’ Top North American Innovative Law Firms. Financial Times also recognizes us among the Top European Innovative Law Firms and highly commends World Compass, our marketing compliance service, which offers investment firms advice in more than 100 jurisdictions.

Thematic (Sector/Industry)

<ul><li>The presidential election has opened the possibility of significant changes to the Dodd-Frank Act regime that has been implemented over the last six years.</li><li>It remains to be seen what plans the incoming administration will bring to this area.</li><li>However, new regulatory proposals and other developments continue to present a complicated regulatory climate for banks and other large financial institutions.</li></ul>

The presidential election has opened the possibility of significant changes to the Dodd-Frank Act regime that has been implemented over the last six years.It remains to be seen what plans the incoming administration will bring to this area.However, new regulatory proposals and other developments continue to present a complicated regulatory climate for banks and other large financial institutions.

The New Future of US Banking and Financial Services Regulation

Campaign promises rarely turn into specific actions, but when they do, they are necessarily impacted by the dynamics of the legislative process. History suggests, however, that the policies of candidates can be a predictor of likely regulatory trends.

Campaign promises rarely turn into specific actions, but when they do, they are necessarily impacted by the dynamics of the legislative process. History suggests, however, that the policies of candidates can be a predictor of likely regulatory trends.

Implications of the 2016 Election for Banks and Systemically Important Financial Institutions

Founder and CEO, Europacifica Consulting

Naomi Fink

Founder and CEO

Europacifica Consulting

Macroeconomics

The combined monetary policy outlook suggests that Japanese megabanks’ window of US middle market acquisitions is limited, even despite the current “perfect storm” of conditions in the respective sectors.

The combined monetary policy outlook suggests that Japanese megabanks’ window of US middle market acquisitions is limited, even despite the current “perfect storm” of conditions in the respective sectors.

Fed, BOJ Could Rain on the Megabank Middle Market Acquisition Parade

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

A shrinking work week and lackluster hourly wage growth amid higher inflation could be pinching consumers.A weak consumption report for February and huge downward revisions to the January consumption growth rates indicate that some of last week's caution may have been warranted.  Soft auto data at the end of the week indicated that consumption growth may not accelerate in March.The two other big pieces of data last week were the U.S. employment report, which was slightly better than expected, and purchasing data from around the world that came in better than hoped, with forward-looking data on new orders driving the composite index sharply higher, especially in the United States.Analysts: Robert Johnson &amp; Alina Tarlea

A shrinking work week and lackluster hourly wage growth amid higher inflation could be pinching consumers.A weak consumption report for February and huge downward revisions to the January consumption growth rates indicate that some of last week's caution may have been warranted.  Soft auto data at the end of the week indicated that consumption growth may not accelerate in March.The two other big pieces of data last week were the U.S. employment report, which was slightly better than expected, and purchasing data from around the world that came in better than hoped, with forward-looking data on new orders driving the composite index sharply higher, especially in the United States.Analysts: Robert Johnson &amp; Alina Tarlea

United States

Jefferies Financial Group Inc. is a global diversified financial services company focusing on investment banking and capital markets, asset management and direct investing. The Company offers a full range of investment banking, equities, fixed income, asset and wealth management products and services.

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Jefferies Financial Group (JEF US)

JP Morgan & Co. – Good Credit Omen For US and Global Banks

JPM Results, A Good Credit Omen For US and Global Banks. Reserve Reversals Likely To Be A Trend For 4Q20 Results Season -Although Issues Persist

Thomas J. Monaco

The New Future of US Banking and Financial Services Regulation

The presidential election has opened the possibility of significant changes to the Dodd-Frank Act regime that has been implemented over the last...

Dechert LLP

Implications of the 2016 Election for Banks and Systemically Important Financial Institutions

Campaign promises rarely turn into specific actions, but when they do, they are necessarily impacted by the dynamics of the legislative process....

Dechert LLP

Fed, BOJ Could Rain on the Megabank Middle Market Acquisition Parade

The combined monetary policy outlook suggests that Japanese megabanks’ window of US middle market acquisitions is limited, even despite the current...

Naomi Fink

Slower Income Growth Lurking

A shrinking work week and lackluster hourly wage growth amid higher inflation could be pinching consumers.A weak consumption report for February...

Morningstar, Inc.

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