Investment Merits
Investment Actions
Initiation on the US Banking sector:
JP Morgan, the largest US bank, has a diverse business portfolio and the highest international presence among the three. Its revenue is split between net interest income (56%) and non-interest income (44%). Bank of America, the second largest, leans more towards net interest income (58%) and has a predominantly US-based asset distribution (87%). Wells Fargo, the third largest by market share, stands out with its extensive branch network and a significant revenue contribution from net interest income (63%). Despite having half the assets of JP Morgan, it has nearly as many branches, indicating a strong middle-market presence and potential for deposit growth.
Comparison of the three banks (JP Morgan, Bank of America and Wells Fargo)
JP Morgan is the largest US bank and has held that position for more than 10 years. The bank has two main businesses: consumer businesses comprising Consumer & Community Banking (CCB), and wholesale businesses comprising Corporate & Investment Bank (CIB), Commercial Banking (CB), and Asset & Wealth Management (AWM) (Figure 7). The largest segment is CCB (43% of FY23 revenue), followed by CIB (30%), AWM (12%), and CB (10%). Net interest income makes up the majority of revenue at 56%, while non-interest income makes up 44% of FY23 revenue. JP Morgan has the highest presence outside of the US amongst the three banks; the majority of deposits are in North America (38%), with Europe/Middle East/Africa closely behind (36%), and the rest from Asia-Pacific (20%) and Latin America/Caribbean (6%) (Figure 8).
Bank of America (BAC) is the second largest US bank by total asset size. The bank has four main business segments: Consumer Banking (CB), Global Wealth & Investment Management (GWIM), Global Banking (GB), and Global Markets (GM) (Figure 9). The largest segment is CB (43% of FY23 revenue), followed by GB (25%), GWIM (21%), and GM (20%). The revenue split is leaning towards net interest income, which makes up 58% of revenue, while non-interest income makes up 42% of FY23 revenue. As for geographical segmentation, the majority of assets are in the US (87%), with the remaining 13% of assets from Europe/Middle East/Africa closely behind (8%), Asia (4%), and Latin America/Caribbean (1%) (Figure 10).
Wells Fargo is the third largest by market share and fourth largest US bank by total asset size. Wells Fargo stands out from its peers due to its extensive branch network. Despite having half the consolidated assets of JP Morgan (US$1.93tn vs US$3.88tn), Wells Fargo has nearly as many branches (4,700 vs 4,800). This large network has given Wells Fargo two major advantages: a well-established brand in the middle-market space and significant potential for deposit growth among customers. The bank has four main business segments: Consumer Banking and Lending (CBL) – 46% of FY23 revenue, Commercial Banking (CB) – 16%, Corporate and Investment Banking (CIB) – 23% and Wealth and Investment Management (WIM) – 18% (Figure 11). Revenue consists mainly of net interest income, which makes up 63% of FY23 revenue, while non-interest income makes up 37% of revenue. Wells Fargo’s exposure is mainly in the US, with the top 20 country exposure outside of the US totalling US$108bn, or less than 6% of total assets.
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Glenn covers the Banking and Finance sector. He has had 3 years of experience as a Credit Analyst in a Bank, where he prepared credit proposals by conducting consistent critical analysis on the business, market, country and financial information. Glenn graduated with a Bachelor of Business Management from the University of Queensland with a double major in International Business and Human Resources.
