You always know there's trouble ahead when your CEO begins a memo to staff: 'To my teammates'.
'To my teammates,
Financial markets around the world are going through a period of great uncertainty. We are seeing volatility in the equity markets, including our own stock price. The management team and I understand that this is an unsettling time not just for our shareholders, but also for all of our teammates across our company who are working hard every day to deliver for our customers and clients.
The most important point to keep in mind is that our company remains financially strong - in particular, much stronger than we were either during or coming out of the economic downturn of 2008-9.
A few facts:
- We continue to build our fortress balance sheet. Our Tier I Common capital ratio (8.23%) and excess liquidity ($402 billion) are much higher than they were a year ago, and all our capital ratios are well in excess of regulatory requirements.
- We have resolved a large portion of our legacy mortgage issues, and have more than quadrupled reserves for mortgage-related issues remaining to be settled to $18 billion over the past year.
- Our customer-focused strategy is working, and five of our six major businesses are strong and profitable.
Many economic issues are contributing to uncertainty in the markets, but one important factor is the effort of policy leaders around the world, and especially here in the U.S., to reduce sovereign budget deficits and overall debt. I hope you'll read the other articles on Flagscape today on this and related topics.
Most of the factors driving market volatility are beyond our control. But for matters within our control, we are taking action. Most important is that we continue to execute our customer-focused strategy. This is our core responsibility - by serving customers and clients, we are growing relationships and earning healthy profits outside of the mortgage business.
As we continue to focus on serving customers and clients, it is vitally important that we adhere to all our operating principles, another of which is to resolve legacy issues stemming from the economic downturn. That's why we are aggressively taking action to put the legacy mortgage issues behind the company - even at great short-term cost - and to help get the U.S. housing market going again. This will help put the U.S. economy on a stronger footing.
Be certain of this above all else: Our customer-focused strategy is working. Customers and clients are doing more business with us across the franchise and we are deepening and strengthening their relationships with us. Deposit levels and new account openings are increasing. Loan growth outside the U.S. shows that we are effectively serving our clients' global needs. Customer satisfaction is improving. And referrals across lines of business are increasing as we build broader relationships with customers and clients. The trends we have seen for the first two quarters this year have continued in July.
We do not know how long this period of uncertainty will continue. Because we serve one in two households in the U.S. and have leading positions with the global Fortune 500 companies here and around the world - a market advantage in most respects - turbulence in the global economy will affect us as well. But we have weathered challenging times before and we will now.
We are doing everything we must do to move forward. We are strengthening our balance sheet, addressing our mortgage issues and reducing the risks in that portfolio. We are executing for our customers, especially by working with teammates to provide integrated financial solutions. We are tightening expense management, and delivering against our growth opportunities.
Our course is set, and we know our destination. We cannot control the seas around us, but with the best franchise in the industry, and the best team in place to deliver its benefits to our customers, I am confident we will achieve our goals working together.
Source - The Wall Street Journal
image: © Tatsuo Yamashita