JPMorgan Chase (JPM)

Business Overview

JPMorgan Chase is the name analysts reach for when calibrating what a best-in-class US universal bank looks like on tangible book. The company spans consumer and commercial banking, markets, and asset management at a scale no domestic peer matches. Market capitalisation was roughly $834 billion as of 10 June 2026, and FY2025 return on tangible common equity (ROTCE) was 20%, the highest of the six large US banks covered here.

That return is what a franchise multiple is built on. The P/TBV vs ROTCE guide uses a 20%-ROTCE bank as its quality anchor: a bank earning well above its cost of tangible common equity, with the capital headroom to match, is what the top of the multiple range describes. Tangible book value per share ended 2025 at $107.56.

That premium rests on spread income and fee businesses compounding on tangible capital, with CET1 headroom to absorb a normal credit cycle. JPM is a durable earnings franchise rather than a commodity deposit gatherer.

How the Numbers Read

JPM does not label net interest margin the way most peers do. FY2025 net yield on average interest-earning assets was 2.50% on a fully taxable-equivalent basis. The firm reports net yield, not NIM; rank it against peers only after reading each filer's label. For deposit-franchise context, JPM's ex-Markets net yield was 3.75% in FY2025, a cleaner comparator when you want banking spread without the markets book mixed in.

JPM reports an overhead ratio of 52% for FY2025, not an efficiency ratio under the FDIC label, though the economic idea is the same: noninterest expense as a share of revenue. At 52%, JPM sits well below our screening threshold of 60% and anchors the low end of the peer ladder from JPM at 52% to Wells Fargo at 66%.

Credit is running above the industry benchmark but inside a range the franchise can absorb. FY2025 net charge-offs were $9,849 million, a 0.74% charge-off rate against 0.62% for all FDIC-insured institutions in the same year. The card book is most of the gap. Charge-offs are a lagging read in any case: provisions move first into a downturn, and for now the ratio says normalisation rather than stress.

CET1 ended FY2025 at 14.6% on the Standardised approach and 14.1% on the Advanced approach. A large bank has to clear its requirement on both, so the lower ratio is the one that binds, and at the end of 2025 that was the Advanced ratio for the first time in years. The firm-specific requirement is 11.5% (a 4.5% minimum, a 2.5% stress capital buffer and a 4.5% G-SIB surcharge), so the cushion the bank can actually spend is +2.6 percentage points, not the +3.1 the Standardised ratio suggests. Both readings sit in the comfortable band of the CET1 guide, at requirement plus 2.0 pp or better, with room for dividends and buybacks.

Valuation Framework

Bank equity research starts with P/TBV against sustainable ROTCE. At steady state, analysts use P/TBV ≈ ROTCE ÷ cost of tangible common equity as a sanity check; the model anchor is 10.5% COE, which would imply about 1.90× on 20% ROTCE. A durable franchise trades above that one-year line, because the market pays for return persistence across businesses and for the buyback capacity that +2.6 pp of spare capital buys, not a single-year ROTCE print.

The useful discipline is to keep returns and capital separate. Two banks can report the same CET1 ratio and deserve very different multiples, because what the market is buying is the return earned on tangible capital, and capital strength only decides how much of that return can be handed back. Rank on ROTCE first, then ask whether the balance sheet lets the bank sustain it.

TBVPS of $107.56 at year-end 2025 is the per-share capital anchor, and it grows out of retained earnings rather than buybacks. Repurchasing stock above tangible book actually lowers tangible book per share, and the higher the multiple paid, the more each buyback costs in book terms. That is defensible on a 20% return, because the shares can be worth more than the price, but it is a judgement about value and not a mechanical way of building book. The capital headroom means management can make that call rather than having it made for them.

What to Watch in the Financials

ROTCE versus COE spread. Twenty per cent ROTCE against a 10.5% illustrative COE is a wide spread. Any drift toward high-teens ROTCE without a matching improvement in credit or capital would pressure the franchise premium first, not the dividend.

Net yield label consistency. Compare JPM's net yield to peers' NIM or net interest yield only with the label footnote in hand. Mix shifts between Markets and Consumer & Community Banking change the consolidated yield without changing the deposit franchise underneath.

NCO trajectory versus 0.74%. The ratio sits above the FDIC industry 0.62% but below crisis levels. Watch whether provisions build faster than charge-offs, the CECL leading indicator the credit-cycle guide emphasises.

Where the binding ratio sits. Watch the Advanced CET1 ratio rather than the headline Standardised one, because the Advanced figure is the lower of the two and therefore the constraint. The requirement itself is unusually settled: the Fed has frozen stress capital buffers at current levels while it reworks its stress models, so JPM's 2.5% buffer holds through September 2027 rather than resetting each autumn.

Key Risks

Markets revenue volatility. A sharp fall in trading and investment banking fees shows up immediately in ROTCE even when the retail bank is stable; the markets book is not a diversifier on a quarterly earnings basis.

Rate path and deposit beta. Consolidated net yield of 2.50% embeds whatever deposit repricing the franchise experienced in FY2025. Faster-than-expected deposit beta on a lower policy rate path would compress spread income before noninterest fees can compensate.

Multiple mean reversion. A high franchise multiple has little cushion. A year of credit normalisation plus ROTCE in the mid-teens could compress it faster than TBVPS growth replaces it.

Regulatory stack. G-SIB surcharges and stress capital buffers are not static. At 11.5%, JPM's total CET1 requirement is among the steepest any US bank carries, a shade under Citigroup's 11.6%, and it is driven by the 4.5% G-SIB surcharge that scale itself earns. Any increase in that stack flows straight into the buyback maths.