Headwinds Still Blowing on J.P. Morgan

That said, the company is still dealing with macroeconomic and regulatory headwinds, which could prevent the firm from reaching its full potential in the near term. The aforementioned legal expenses are not an encouraging sign as another year begins. High-quality liquid assets grew by 14% during the year, contributing to net interest margin pressure. Perhaps most importantly, low levels of interest rates are still constraining net interest margin. While short-term rates are widely expected to begin rising over the course of the year--CME Group futures data indicates a 58% probability of a rate hike by December--it could be some time before banks receive the full benefits of a normal rate environment. The long-term track record of rate forecasters is not inspiring.

Morningstar Premium Members gain exclusive access to our full J.P. Morgan Report, including fair value estimates, consider buying/selling prices, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.