JP Morgan targets $24 billion in annual profits

JPMorgan Chase & Co is using size to its advantage, leveraging the various components of its business to help increase annual earnings more than 25 percent over time, Chief Financial Officer Doug Braunstein said on Tuesday.

At the banking giant's investor day, Braunstein said JPMorgan was targeting $24 billion in annual net income, up from the $19 billion it earned last year.

It will achieve that goal, Braunstein said, via its franchise -- the combination of investment banking, asset management, consumer banking and lending, card services and other products that has made it one of the world's largest financial institutions.

Braunstein conceded, though, that the company would need to do more to achieve its $24 billion target. He identified the need for nearly $1 billion in income from growth efforts, including branch expansion, commodities products and international growth.

At the same time, he said the company was "reasonably unlikely" to make any acquisitions in the near term. Given its financial strength, JPMorgan is often mentioned as a potential suitor for various regional retail banks.

The company is aiming for a 16 per cent return on tangible common equity, up from the 15 per cent it achieved in 2011.

The bank expects to keep overall expenses flat in 2012, even as it invests in select businesses, Braunstein said. One area where the bank expects to lower expenses during the year is mortgage loan servicing, where delinquent loans are declining.

JPMorgan and other big banks are under pressure from investors to slash costs as they struggle to increase revenue amid low interest rates and new restrictions on fees they can charge.

After Braunstein, the bank's business leaders outlined prospects for their divisions and fielded questions from analysts.

JPMorgan has identified 900 new branch locations it could build in coming years, with a focus on California and Florida, consumer banking and business banking head Todd Maclin said. But he cautioned the bank will be "super careful" in deciding how many it actually builds.

JPMorgan currently has 5,500 locations, behind Wells Fargo & Co's 6,200 and Bank of America Corp's 5,700.

At the same time that the company is continuing to build branches, it is also seeing a surge in customers using their computers for their banking. Chase's online site is used five times as frequently as its branches now, said Gordon Smith, a senior executive leading bank's digital push.

While that might suggest branches are becoming obsolete, Smith said the online use bodes well for the investments in advanced teller machines in the branches and other moves to use technology to cut branch costs. The bank's digital channel began to take hold with customers in 2010 and "is going to see explosive growth," Smith said.

The bank is testing self-service teller stations in six locations in a drive to lower costs and speed up traditional teller lines. The stations perform ATM functions as well as additional services, such as check cashing. The test is in an early stage and the bank will be careful not to "jam it down the throats" of wary customers, Maclin said.

The bank's shares were up 1.3 percent in early afternoon trading at $39.54, mirroring the increase in other big bank stocks. JPMorgan Chase Chief Executive Officer Jamie Dimon will make closing remarks Tuesday afternoon and answer questions from analysts.

Copywright Thomson Reuters 2012