The total average value of checking, savings, time and other
deposits held by JP Morgan (
) in its retail financial services group has been steadily rising
over the years, from $207 billion in 2007 to $341 billion in 2009
mainly due to the acquisition of Washington Mutual (WaMu) in
September of 2008. JP Morgan competes with Bank of America (
), Citigroup (
), Wells Fargo (
) and others in the retail banking sector.
We expect this positive trend to continue as higher savings rate
and uncertainty about economy lead to growth in deposits, as well
as improvements in the company's bank services. Compared to our
estimate of $540 billion in average deposits by the end of Trefis
forecast period, Trefis members expect a steep increase to $671
billion in 2013, followed by a gradual decline thereafter..
We currently have a
Trefis price estimate of $48.00 for JP Morgan's
, about 10% above the current market price of $43.64.
Rising Savings Rate, Economic Uncertainty Will Result in
Growth in Deposits
JP Morgan's asset base grew as more customers chose to safeguard
their assets in checking/savings accounts. Growth in personal
savings rate which is expected to remain as consumers change their
consumption patterns will also help increase deposits. The personal
savings rate grew from an average of 1.25% in 2005 to 5 % in 2009.
JP Morgan currently has an estimated 9% share of the US deposit
Improving Retail Banking Services
JP Morgan has been continuously trying to improve its position
in the retail banking space. In 2009 , the company added 2,400
branch sales staff such as personal and business bankers to meet
the needs of customers. The company revamped its overdraft policies
to meet regulatory requirements and providing services that will
make it easier for consumers. Customers now have the ability to
monitor on a real time basis their balances over the course of the
Trefis Community Forecast
The Trefis community forecasts that JP Morgan's average deposits
will increase from near $414 billion in 2011 to $591 billion by the
end of the Trefis forecast period, compared to the baseline Trefis
estimate of an increase from $359 billion to $539 billion during
the same period. The member estimates imply a slight upside to the
Trefis price estimate for JP Morgan's stock.
complete analysis for JP Morgan's stock is
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