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JPMorgan's (JPM) Costs to Rise in 2021 on Acquisition Plans
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JPMorgan’s (JPM - Free Report) CEO Jamie Dimon stated at an investor conference yesterday that as the company is looking to make acquisitions to accelerate growth, its expenses in 2021 might top $67 billion. While nothing particular has been mentioned yet, Dimon signaled that the bank is considering buying asset management businesses or financial technology companies.
While there are expectations that under the administration of president-elect Joe Biden, the regulatory environment for banks will become stricter, Dimon is of the opinion that they would be “very open” to JPMorgan doing a deal in a variety of industries or regions.
With this belief, Dimon stated at the conference, “If you’ve got brilliant ideas, give me a call” and “If you’re a competitor investment bank and you bring the idea, you get the fee.”
In fact, last week, JPMorgan’s asset management division — J.P. Morgan Asset Management — signed an agreement to acquire Boston-based Fintech start-up, 55ip, which helps financial advisors automate the creation of tax-efficient investment strategies.
Given the increase in demand for technology amid the pandemic, various firms are engaging in acquisitions to expand business. Blackstone (BX - Free Report) recently announced an agreement to buy San Francisco-based DCI, an investment management firm that uses “a proprietary, fundamental-based, technology-driven model to deliver differentiated returns to clients.”
While speaking of his acquisition plans at the conference, Dimon expressed that he is impressed with the acquisitions of its competitors of late. He said, “Morgan Stanley’s done a good job with a couple of deals they’ve done.”
Notably, in October, Morgan Stanley (MS - Free Report) acquired E*TRADE Financial in an all-stock deal worth $13 billion. The deal is likely to position it as a leader in the Wealth Management industry across all channels and segments, with a significant increase in the scale and breadth of its franchise.
Also, Morgan Stanley agreed to acquire Boston, MA-based Eaton Vance Corp. (EV - Free Report) for an equity value of about $7 billion. Post deal closure, Morgan Stanley Investment Management (“MSIM”) will have $1.2 trillion of assets under management (“AUM”) and more than $5 billion of combined revenues.
Thus, like its competitors, JPMorgan is also seeking to make meaningful acquisitions in the near future. However, Dimon understands that his bank is too big to be allowed to acquire another bank.
Hence, he said, “So asset management, my line is open. It’s a scaled business. It’s a distribution business. It’s a brand business. It’s got to make sense.”
At the conference, Dimon separately mentioned that JPMorgan’s trading and investment-banking businesses are expected to record a year-over-year revenue increase of 20% in fourth-quarter 2020.
Over the past six months, shares of JPMorgan have rallied 15%, outperforming the industry’s growth of 10.6%.
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
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JPMorgan's (JPM) Costs to Rise in 2021 on Acquisition Plans
JPMorgan’s (JPM - Free Report) CEO Jamie Dimon stated at an investor conference yesterday that as the company is looking to make acquisitions to accelerate growth, its expenses in 2021 might top $67 billion. While nothing particular has been mentioned yet, Dimon signaled that the bank is considering buying asset management businesses or financial technology companies.
While there are expectations that under the administration of president-elect Joe Biden, the regulatory environment for banks will become stricter, Dimon is of the opinion that they would be “very open” to JPMorgan doing a deal in a variety of industries or regions.
With this belief, Dimon stated at the conference, “If you’ve got brilliant ideas, give me a call” and “If you’re a competitor investment bank and you bring the idea, you get the fee.”
In fact, last week, JPMorgan’s asset management division — J.P. Morgan Asset Management — signed an agreement to acquire Boston-based Fintech start-up, 55ip, which helps financial advisors automate the creation of tax-efficient investment strategies.
Given the increase in demand for technology amid the pandemic, various firms are engaging in acquisitions to expand business. Blackstone (BX - Free Report) recently announced an agreement to buy San Francisco-based DCI, an investment management firm that uses “a proprietary, fundamental-based, technology-driven model to deliver differentiated returns to clients.”
While speaking of his acquisition plans at the conference, Dimon expressed that he is impressed with the acquisitions of its competitors of late. He said, “Morgan Stanley’s done a good job with a couple of deals they’ve done.”
Notably, in October, Morgan Stanley (MS - Free Report) acquired E*TRADE Financial in an all-stock deal worth $13 billion. The deal is likely to position it as a leader in the Wealth Management industry across all channels and segments, with a significant increase in the scale and breadth of its franchise.
Also, Morgan Stanley agreed to acquire Boston, MA-based Eaton Vance Corp. (EV - Free Report) for an equity value of about $7 billion. Post deal closure, Morgan Stanley Investment Management (“MSIM”) will have $1.2 trillion of assets under management (“AUM”) and more than $5 billion of combined revenues.
Thus, like its competitors, JPMorgan is also seeking to make meaningful acquisitions in the near future. However, Dimon understands that his bank is too big to be allowed to acquire another bank.
Hence, he said, “So asset management, my line is open. It’s a scaled business. It’s a distribution business. It’s a brand business. It’s got to make sense.”
At the conference, Dimon separately mentioned that JPMorgan’s trading and investment-banking businesses are expected to record a year-over-year revenue increase of 20% in fourth-quarter 2020.
Over the past six months, shares of JPMorgan have rallied 15%, outperforming the industry’s growth of 10.6%.
Currently, JPMorgan carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>