Research on JP Morgan and Citigroup: Banking Industry Adapts to Changing Regulatory Environment

   Research on JP Morgan and Citigroup: Banking Industry Adapts to Changing
                            Regulatory Environment

PR Newswire

LONDON, February 11, 2013

LONDON, February 11, 2013 /PRNewswire/ --

The financial crisis of 2009 led regulators to create a set of new regulations
for the banking industry. It will be interesting to see how major U.S. banks
such as JP Morgan Chase & Co. (NYSE: JPM) and Citigroup Inc. (NYSE: C) adapt
to the changing regulatory environment. StockCall has posted free technical
research reports on JP Morgan and Citigroup, and these can be accessed by
signing up at

Regulatory Environment

Banks' role in the housing market bubble that led to the financial crisis had
been criticized by regulators. Post-financial crisis, the biggest question for
regulators across the world was how to prevent a similar crisis from happening
in the future?

In the U.S., President Obama signed the Dodd-Frank Wall Street Reform and
Consumer Protection Act into a federal law in 2010. The Dodd-Frank act is the
biggest regulatory overhaul of the U.S. financial system since the Great

The legislation increases government oversight of trading in complex
instruments such as derivatives. It may be recalled that use of complex
derivative instruments had fueled the housing market bubble. The legislation
also restricts banks' proprietary trading activities.

Low Interest Rate Environment

Apart from regulatory reform, another challenge for major U.S. banks is the
low interest rate environment. With the Federal Reserve committed to keep
interest rates at record low level for a considerable period, banks are
expected to continue to face margin pressure. Net interest margin, an
important measure of lending profitability at banks, has fallen sharply,
hurting banks' bottom-line.

However, the low interest rate environment has also boosted lending
activities. This is benefiting banks and the trend is expected to continue.

Stabilizing Financial Markets

Financial markets have stabilized as concerns over the Eurozone debt crisis
have eased. This should boost banks' trading activities.

Trading activity at big banks had remain muted in recent years as market
participants remained cautious in the wake of debt crisis in the Eurozone and
global economic uncertainty. However, measures taken by the European Central
Bank (ECB) last year have helped in stabilizing the region and boosted market

Q4 Results at JP Morgan and Citigroup

Last month, JP Morgan Chase and Citigroup reported their financial results for
the fourth quarter ended December 31, 2012. Download the free report on JP
Morgan upon registration at

Despite the challenging environment, JP Morgan reported record net income of
$21.3 billion for the full-year 2012. For the fourth quarter, the bank's net
income was $5.7 billion, up from $3.7 billion reported for the same period in
the previous year.

JP Morgan CEO Jamie Dimon noted that the company's results reflected strong
underlying performance across virtually all its businesses for the fourth
quarter and the full year, with strong lending and deposit growth. Dimon noted
that the company continues to see favorable credit conditions across its
wholesale loan portfolios and strong credit performance in its credit card

Meanwhile, Citigroup reported fourth quarter net income of $1.2 billion, or
$0.38 per share, and revenue of $18.2 billion. Michael Corbat, who took over
the role of CEO from Vikram Pandit last year, said that the company's
bottom-line earnings reflect an environment that remains challenging, with
businesses working through issues like spread compression and regulatory
changes. Citigroup technical report can be accessed for free by signing up at

About is a financial website where investors can have easy, precise
and comprehensive research and opinions on stocks making the headlines. Sign
up today to talk to our financial analyst at 


Contact: William T. Knight, Email: , Contact Number:
+1(646)396-9857 (9:00 am EST - 01:30 pm EST)
Press spacebar to pause and continue. Press esc to stop.