American lender JPMorgan Chase & Co. (NYSE:JPM) is planning to spend roughly $15.7 billion on new initiatives in 2023, paving the way for it to become a too-big-to-fail bank. Even though JPM is already among the biggest spenders in the sector, this year it increased its budget by $2 billion compared to the previous year. The business stated during the investor conference that the funds will be directed towards employee contracting, marketing, and technological investments.
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JPM’s Consumer and Community division, co-headed by Marianne Lake, will be one of the beneficiaries of the increased spending. The unit is expected to increase spending on new initiatives by $800 million this year, to reach $7.9 billion. Speaking about the competitiveness of JPM, Lake said, “Our competitors have not and cannot invest at the levels that we do. And these investments represent significant future operating leverage for years to come.”
Updates on the First Republic Bank Takeover
At the investor conference, JPM also updated investors about its recent First Republic Bank takeover. JPM is now expecting to earn net interest income (NII) of $84 billion in FY23, with the additional $3 billion coming from First Republic. At the same time, overall expenses are expected to remain unchanged at $84.5 billion, but the bank will bear an additional $3.5 billion in integration expenses. Even so, the bank has cautioned that the targets may be marred by the uncertain and challenging macro environment.
Meanwhile, JPM also seeks to leverage First Republic’s wealthy clients and grow its wealth management business.
Dimon’s Succession Plans
CEO Jamie Dimon was also asked about his retirement plans. He replied that he does not expect to leave anytime soon, while stating, “I can’t do this forever. I know that. But my intensity is the same. I think when I don’t have that kind of intensity, I should leave.” Lake, along with co-head Jennifer Piepszak, is in the race to take over the helm from Dimon.
Is JPM Good to Invest In?
In the current scenario, JPMorgan looks like a solid bank to invest in. The recent banking crisis has shifted power to the big banks, especially JPM, which remained the biggest beneficiary of deposit flight from smaller regional banks. Year-to-date, JPM stock has gained 3.7%.
On TipRanks, JPM has a Moderate Buy consensus rating based on 14 Buys and five Hold ratings. Also, the average JPMorgan price target of $160.35 implies 16.2% upside potential from current levels.
