...Dominant Domestic Franchise: JPMorgan Chase & Co.'s (JPM) solid domestic franchise, growing international business and demonstrated capital-generation capacity underpin the ratings. The firm maintains a leading position in its businesses, particularly in commercial and investment banking. Raising the Capital Bar: JPM exceeded its targeted Basel III Tier I common capital (CETI) ratio in 2014, reaching 10.2% at year-end. However, in December 2014, the Federal Reserve issued an NPR that would establish a new capital surcharge for G-SIBs. JPM estimates its surcharge to be 450 bps instead of the 250 bps required by the Financial Stability Board. This would require JPM to have a minimum CETI ratio of 11.5%. Fitch believes JPM has the ability to meet higher requirements given its earnings capacity. Record Earnings: JPM generated record earnings in 2015, despite headwinds from interest rates and provision expenses, as litigation costs fell $8.2bn and adjusted expenses declined 1.7%. Credit costs...
