This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Deal: JPMorgan Cautious on M&A, Defensive on Dimon

Stocks in this article: JPM UBS

JPMorgan has denied that Blythe Masters, who oversees the commodities arm of the bank, lied during a FERC investigation. "We'll be standing behind some of the people you have read about," Cavanagh said.

On the debate on Dimon's responsibilities, he added, "It should be for the board to decide. It makes complete sense to maintain the status quo when you look at three years running of record results and businesses across the board in great shape."

JPMorgan posted a 25% rise in first-quarter profit to $6.5 billion, though much of this came from releasing funds put aside for potential losses from credit cards and mortgages.

Consumer banking profit fell 12% to $2.6 billion, while corporate and investment banking profit shed 2% to $2.5 billion.

Cavanagh reiterated a target return on equity of 16% for JPMorgan, a level well above most of its peers and one that has prompted several observers to take an "if it ain't broke, don't fix it" approach to the firm's corporate governance scandals.

As an indicative measure, JPMorgan had a return on equity of 11.32% for the first quarter, as opposed to 10.69% for Goldman, Sachs & Co., 13.45% for Wells Fargo & Co. and 4.52% for Citigroup Inc. However, bank analysts caution against using these ratios for direct comparison, given the differing business mixes across banks. Before the credit crisis, ROE was often above 15% for the sector.

More broadly, Cavanagh acknowledged competitive pressure across the securities services business for banks. This is the segment that provides custody, fund accounting and administration to institutional investors, alternative asset managers, and debt and equity issuers. "All clients in financial services want the same for cheaper or more for the same price," Cavanagh said. "So it's no surprise there is a steady pressure on returns . You need scale and ability to drive costs lower."

The banker defended JPMorgan's capital levels. While the company used to lead its rivals, it has now fallen into the middle of the range. The firm had Basel III Tier 1 common ratios of 8.9% at the end of the first quarter, which is well above regulatory requirements.

2 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs