JPMorgan Chase (NYSE: JPM)
Profitable throughout 2008 financial crisis
Biggest of the big four
Allocated big reserves
Bank of America (NYSE: BAC)
Nearly didn't survive 2008 financial crisis - made them stronger
Integrating AI
Allocated big reserves
Citigroup Inc. (NYSE: C)
Partnered with Google for consumer services
Has far more global presence (consumer base) than the other 3
Wells Fargo & Co (NYSE: WFC)
The most criticised bank - employees were creating fake accounts to get bigger bonuses (more in mortgage, unlike others that are in corporate space)
Opportunities to invest at low prices
Allocated big reserves
BANKS ALWAYS CARRY HIGH DEBT (they use debt to make money)
1. Can they handle their debt?
How big is their allowance for bad debt
How risky are their liabilities
What is their loan level
What is their bad loan level
2. Are they growing?
JPMorgan
Only concern: they are not generating enough cash from operating activities
Bank of America
Inconsistent
Citigroup
A lot of inconsistency and has bad operating cash flow
Wells Fargo
Inconsistency from earnings per share and operating cash
3. Margin of safety
ROE: how much money does the business generate for the shareholders
ROA: how well the bank is using its resources
Net interest margin: (IMPORTANT FOR BANKS) difference between the interest bank receives and the interest bank pays out
Dividend - Wells Fargo has quite high payout ratio, may be difficult to sustain
16/09/2020
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