JPMorgan Chase & Co. (JPM) is now worth more than competitors Bank of America (BAC) and Citibank (C) combined after 2023 consolidations and shakeups in the regional banking sector, according to a Bloomberg report.
Yahoo Finance Senior Reporter David Hollerith joins the Live show to summarize the state of the financial sector (XLF) and the outlook and challenges for these major banks.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
This post was written by Luke Carberry Mogan.
Video Transcript
- But to explain more about how JPMorgan Chase is set to continue to be America's biggest bank and what's to expect in 2024, we want to bring in Yahoo Finance's David Hollerith.
So David, thanks so much for coming on today and kind of breaking down where JPMorgan Chase stands and how it's set up for the year.
I mean, we've had-- we had Jamie Dimon on earlier this year, and we've had people come on our program and talk about how much he's done for the bank.
So David where does JPMorgan Chase stand when it comes to 2024?
DAVID HOLLERITH: Yeah, I mean, I think if we just look at the last quarter, which is still has not quite ended.
JP Morgan is a really big bank and it's expected to show full year 2023 profits on par with the GDP of the country Jordan, which is just gives you an idea of how large they are.
Now, one of the main reasons why JP Morgan has outperformed other big bank peers has been that it's largely navigated around some of the pitfalls that those peers are dealing with, and that's due to it playing more conservatively, and this is not so much of something that's happened this year as something that JPMorgan has been doing for years.
Now, of course, the bread and butter of banking is taking in deposits to make loans, and big banks have an advantage there.
That's largely a story of scale.
Smaller banks have been having to pay higher costs during higher interest rate increases that we've seen over the past year and a half.
And so that's obviously been a benefit to the largest banks.
Crucially, though, JP Morgan this year has stood out by being able to purchase first Republic Bank from the FDIC, and that also proved to be sort of a game of scale.
JPMorgan was competing against smaller banks, and ultimately, it offered the best deal to the FDIC.
Now, we can also take this and flip it on its head, and just look at some of JP Morgan's peers just to evaluate what it's dealing with versus the peers.
Now, Citigroup and Wells Fargo are both dealing with profitability problems that have been years in the making.