Everyone is eager to make money, but, come to think of it, you don’t just make money overnight you have to start from somewhere. In today’s article, we will be looking at how JP Morgan Chase makes money. In addition, you know that JPMorgan Chase is a notable multinational investment bank and financial services company in the world today. Similarly, its full name is J.P. Morgan Chase & Co. It is also the largest bank in the United States of America and also the sixth largest bank in the world. S&P Global ranking confirms this, by its total assets which as of 2018 stood at $2.534 trillion. Also, the bank started its business on December 1, 2000. The headquarters is at 383 Madison Avenue, New York City, New York, United States. The bank renders services for consumers and small businesses, investment banking, commercial banking, financial transaction processing, and asset management.
How JP Morgan Chase Makes Money
JPMorgan Chase makes money through four major reportable business segments. They include consumer & community banking, corporate & investment bank, commercial banking, asset & wealth management, and corporate. Therefore, we will analyze these four segments to show you how JP Morgan makes Money.
We begin by looking at the consumer and community banking services immediately.
Consumer & Community Banking (CCB)
This service is for consumers and businesses. The bank renders this service through its bank branches, ATMs, online, mobile and telephone banking. However, CCB services are divided into three. They are as follows.
- Consumer & Business Banking. This is where they offer deposit and investment products and services to consumers. So, as a customer, if you have a small business and you want cash management and payment solution, then you need to go for this option.
- Mortgage Banking is another way they serve you by giving you home equity loans. Also, you can get a mortgage origination and related services in this segment of their business.
- They also give you Card, Commerce Solutions and Auto services. Here, you can a get credit card if you need one for personal use or for your small business. In addition, they also offer student loans, auto loans and, leases.
Corporate & Investment Bank (CIB)
If you are an investor this is the best options for you. Corporate & investment bank arm of the bank renders in investment banking solutions to their customers. They also render services like market-making, prime brokerage, and treasury and securities products and services to its global clients. Global clients consist of corporations, financial institutions, government, municipal entities, and investors.
However, the Corporate and Investment Bank services are divided into two and, also show you how JP Morgan Chase makes Money.
They are as follows:
- This banking service includes treasury, lending, and investment banking. They also offer capital-raising in equity and debt markets, capital market, advising on corporate strategy and structure, syndication and loan origination.
- The second service here is called Markets & Investor Services. Also, this service includes Credit adjustments, Securities, Fixed income markets, etc. In addition, they also offer securities lending products principally to insurance companies, public and private investment funds, and assets managers.
Commercial Banking (CB)
If you need comprehensive financial solutions, then this is the best options for you. Here the bank gives you financial solutions based on your profit entity, lending, treasury services, investment banking, domestic and international needs.
Furthermore, here their services are divided into four. Surely from these services we have listed so far, you can see how How JP Morgan Chase makes money. Let us examine them further.
- Middle market banking. So, if you are a Client with annual revenue ranging between $20 million and $500 million, this is the kind of service you should go for.
- Corporate Client Banking. This service is for clients with a general annual revenue range of between $500 million and $2 billion. You can also use this option if you have a broader investment banking needs.
- Commercial Term Lending is where you can get term loans. However, this term finance is for real estate investors, owners of multifamily properties and industrial properties.
- Real Estate Banking. You can go for this service if you are an Investor and developer of institutional-grade.
Asset Management (AM)
This type of segment is for investment management. This asset management service will also show you How JP Morgan Chase makes money. Here, they render fixed income, alternatives, money market funds and equities to its customers. However, this product is also divided into two ways, namely;
- Global Investment Management. Here you can get comprehensive services for active risk-budgeting strategies, asset-liability management, asset management, and pension analytics.
- Global wealth management. So, through this service, the bank offers investment advice to global wealth managers. They give you advice based on their capital markets and risk management, tax and estate planning, lending and speciality-wealth capabilities.
This is an additional segment that is for chief investment officers and other Corporate. This service is also divided into two. Namely:
- Treasury and CIO. The CIO stands for chief investment office. This option is good for you if you need services like monitoring, reporting, funding, and structural interest rate, etc.
- Other Corporate. Corporate groups like, enterprise technology, internal audit, risk management, and oversight & control, etc. should go for this type of service.
The ways JP Morgan Chase makes money using the different segments?
Form all we have discussed so far, you can see that JPMorgan makes money or generates revenue from several segments of its business services. So, your next question could be, how do they generate revenue? The simple answer to that question is that they generate revenue through the following ways.
- Net interest income. This is the total revenue they generate from loans and other interest-earning assets minus all interest expenses leaving them with a net interest income.
- Asset management. In addition, they generate revenue from fees form investments, insurance premiums, brokerage services, and other products.
- Principal transactions. This is the total revenue on market-making activities and on private investments.
- Investment banking fees. Equity and debt are under this revenue type.
- Card income. They also earn fees from credit and debit cards.
- Furthermore, they earn lending and deposit-related fees from their numerous clients.
- Similarly, they earn Mortgage fees and related income too.
Lastly, JPMorgan Chase is not just an ordinary bank but a well-known investment bank out to create wealth for you. Also, it is a good investment bank with several ways of generating revenue. Furthermore, as of 2018, its assets were put at $2.534 trillion. So, my friend, this numerous stream of income is how JP Morgan Chase makes money.