Inside JPMorgan’s Cost-Cutting Strategy

In the wake of the volatility that has rocked markets and has forced financial firms, large and small, to examine the way that they do business and preserve margins, banking giant JPMorgan Chase’s corporate and banking operations remain “focused on controlling what they can control in the near term” according to Matt O’Connor, a Deutsche Bank banking analyst, as noted in The Wall Street Journal.

O’Connor, who met with JPMorgan’s management in the middle of this month, said in a note that debuted earlier this week that the firm is committed to cost cutting and optimizing capital. The analyst stated that, at the meetings, there were no updates on trading activities — nor were there updates on investment banking guidance — but added that, with fresh data, “we sense activity levels have improved somewhat in March.” Thus, the analyst maintained his buy rating on the stock, which closed at recent levels near $59, with a $70 price target.

In evidence of cost-cutting efforts seen when the firm reported results earlier this year, JPMorgan said that its profits were up in the fourth quarter, even as its global trading business saw weakness.

The firm earned $1.32 a share in the quarter, which was down sequentially from the third quarter but was better than the $1.25 in consensus estimates for the period. The beat came from continued cuts to the expense structure and the size of the firm’s workforce, with those activities more than surmounting the 1 percent revenue growth that was seen year over year and, in fact, buoying up earnings in the low double digits over the same period.