JPMorgan Chase, the biggest U.S. bank by assets, reclaimed the No. 1 title by market value as the impact of last year’s wrong-way bet on derivatives fades and investors wager on an investment-banking rebound.
JPMorgan shares rose 1.6 percent this week, valuing the bank at $184.9bn through Wednesday. That eclipsed the $184.2bn for Wells Fargo, which slipped to No. 2 on February 5th after being the most valuable since October 28th, 2011, according to data compiled by Bloomberg.
The recovery shows JPMorgan CEO Jamie Dimon has blunted fallout from last year’s trading loss, which wiped out as much as $51bn in shareholder value. Wells Fargo, led by CEO John Stumpf, 59, has seen the rise of its shares slow amid investor concerns that weaker mortgage lending and shrinking margins will crimp profit.
'Capital-market firms like JPMorgan have been burdened quite heavily by the financial debacle, more so than regional or national banks like Wells Fargo', said Gerard Cassidy, an analyst at RBC Capital Markets. 'As they continue to throw the baggage overboard, all of these legacy issues that have been hampering profit are going away. Owning the riskier names is more attractive today in this economy'.
Investors should bypass regional lenders for universal banks such as New York-based JPMorgan because the larger firms have lower price-to-earnings and price-to-book ratios and the Federal Reserve’s bond purchases will encourage trading and hurt lending spreads, David Konrad, a KBW Inc. analyst, said in his 2013 outlook.
Hit the link below to access the complete Bloomberg article: