JPMorgan looks for big payoff from lead in deposit race

Mon Jan 16, 2017 12:11am EST
 
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By David Henry

NEW YORK (Reuters) - Over the past five years, stock analysts have challenged JPMorgan Chase & Co (JPM.N: Quote) executives for keeping so many branches open as customers did more and more banking online.

Giving up real estate, the analysts said, was an obvious way the bank could save money when interest income was flagging and regulatory and legal costs were climbing.

But executives at the largest U.S. bank resisted. They argued that branches are great billboards for the Chase brand and essential to attracting people who want to open accounts or make major transactions in person.

Now it looks like the executives were right, or at least closer than other banks to delivering the right mix of physical and digital customer service.

JPMorgan has grown deposits over the last five years faster than major competitors and twice as fast as the industry, according to analysts at Bernstein Research.

Deposits in the Chase consumer bank grew in 2016 by 11 percent, or some $61 billion, the bank said when reporting quarterly results last week. Chase now has $607 billion in deposits, setting it up for a massive payoff if it can keep those funds and the company can lend them at higher interest rates in a stronger economy.

"We've been growing our deposits very strongly and we're going to enjoy the benefits,” Chief Financial Officer Marianne Lake said on Friday.

For the first time in roughly a decade, banks’ ability to gather deposits is poised to matter mightily to financial performance.   Continued...

 
A sign outside the headquarters of JP Morgan Chase & Co in New York, September 19, 2013. REUTERS/Mike Segar