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 JPMorgan's chief executive, Jamie Dimon, and at least five of his
top executives are expected to give presentations on the bank's
diverse range of businesses at the day-long event, with forecasts on
revenue, expenses and shareholder returns. They're also expected to
offer some fresh details on how the bank is using technology to
improve operations and slash costs - an initiative Dimon and his
deputies have long been touting.
But for the first time in years, JPMorgan is not expected to expand
further its cost-cutting targets. The bank is only halfway through a
previously announced $4.8 billion cost-cutting target, and cutting
any deeper could hurt its businesses, analysts said. JPMorgan has
already cut more than 25,000 jobs since 2011.
That would run counter to what other big banks have been doing.
Executives from banks including Morgan Stanley <MS.N>, Goldman Sachs
Group Inc <GS.N>, Bank of America Corp <BAC.N> and U.S. Bancorp <USB.N>
have all recently talked about further cost-cutting efforts.
Because of that, and the troubles at European rivals, top brass at
JPMorgan have an incentive to reinvest in key businesses to take
market share from competitors who are pulling back.
"This is the sort of environment that Jamie Dimon and JPMorgan live
for: sluggishness in the environment, competitors feeling pain,"
said Mike Mayo, a bank stock analyst with CLSA.
Even so, analysts said they and their investor clients will want
more insight into how JPMorgan strikes the fine balance between
cutting costs to protect profits, and spending money for growth at a
time when interest rates remain stubbornly low and the economy shows
signs of becoming sluggish.
Some analysts and investors worry that JPMorgan may have to lower
its profit target again.
The bank's publicly stated goal going into investor day is to
achieve a 15 percent return on tangible common shareholder capital
over the long term. That is down from a 16 percent target in 2013,
which JPMorgan lowered to a range of 15-to-16 percent in 2014.
JPMorgan delivered returns of 13 percent in both 2014 and 2015.
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"What is that going to be and how can they get there without higher
interest rates?" said Chris Mutascio, an analyst with Keefe,
Bruyette & Woods. He should have an answer at 6:45 a.m. on Tuesday,
when JPMorgan is expected to post a slidedeck on its website ahead
of the event.
Last year, executives showed a slide in which higher rates would
contribute about half of the additional profits needed to reach the
15 percent target. But, with the exception of the small boost to
rates from the Federal Reserve in December, that tailwind has not
appeared.
JPMorgan's investor day is about more than just one bank. As the
biggest U.S. lender by assets, with widespread consumer and
investment banking operations, its executives are well placed to
offer broad perspectives on the state of banking and the global
economy. As in years past, Dimon is likely to opine on topics
ranging from interest rates and energy markets to financial
regulations and foreign affairs.
"Given the size and breadth of their consumer and commercial client
base," said Mutascio, "JPMorgan has the pulse of the U.S. economy."
(Reporting by David Henry in New York; Editing by Lauren Tara
LaCapra and Leslie Adler)
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