JPMorgan (JPM) Stock Up After Exiting Government Securities Settlement Business

JPMorgan (JPM) stock is higher this afternoon as it announced that it would no longer settle government securities for dealers so that it can focus on more profitable areas.
By Natalie Walters ,

NEW YORK (TheStreet) -- Shares of JPMorgan Chase (JPM) - Get Report are up 0.50% to $64.01 in late-afternoon trading, as the company announced on Friday that it would drop its services to settle government securities in favor of more profitable areas. 

The New York-based banking and financial services company has been handling the settlements of said securities for 30 of its hundreds of clients, Bloomberg reports. Now the company will be able to focus on more lucrative areas such as prime brokerage and custody services. 

"After careful review, we have determined that it [government securities settlement] is a non-core service, particularly as we simplify our business and continue to prioritize strategic growth opportunities," a JPMorgan spokesperson said in a statement.

While the transition won't affect many clients, it means that Bank of New York Mellon (BK) will be the only remaining company handling such transactions for clients as it is a niche market. 

The company expects the exit to be completed by the end of 2017. 

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate JPMORGAN CHASE & CO as a Buy with a ratings score of A-. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, growth in earnings per share and attractive valuation levels. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

You can view the full analysis from the report here: JPM

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