Rev & Cost Drivers - JPM

Question 1

IB Rev Lines

Answer 1

1. Underwriting - buys securities from client at a discount and resells them to investors, earning revenue from spread (difference between purchase and sale price)
2. Advisory (M&A, restructuring) - JPM collects advisory fees, usually a percentage of the deal value

Question 2

Chase Rev Lines

Answer 2

1. Net Interest Income (interest earned on loans - interest paid on deposits)
2. Card Fees - annual and late fees, merchant transaction fees
3. Account-related fees (ATM fees, overdraft, etc.)

Question 3

Commercial Banking Rev Lines

Answer 3

1. NII
2. Fee-Based Services

Question 4

AWM Rev LINES

Answer 4

1. Asset MGMT Fees
2. Advisory / Planning Services

Question 5

IB: Underwriting Rev & Cost Drivers

Answer 5

Price:
+ Underwriting spread (% of capital raised; higher for equity than debt)
+ Syndication fees

Volume:
+ Number and size of deals (IPOs, bond issuances, follow-ons, convertibles)

FC:
+ Licensing and compliance
+ Tech systems for book building, investor roadshows
+ Staff salaries

VC:
+ Deal-specific legal, accounting, and marketing expenses (roadshows, filings)
+ Syndication fees to partnering banks

Question 6

IB: Advisory Rev & Cost Drivers

Answer 6

Price:
+ Advisory fee (typically 0.5–2% of deal value, depending on size/complexity)

Volume:
+ Number of transactions

Fixed Costs:
+ Salaries
+ Research and pitch infrastructure (CRM, valuation tools, data platforms)
+ Training and development of junior bankers

Variable Costs:
+ Deal-specific diligence and modeling work (consultants, legal)
+ Discretionary bonuses tied to deal closings
+ Travel and client engagement expenses

Question 7

Chase NII Rev & Cost Drivers

Answer 7

Revenue = Net Interest Margin × Volume of Loans/Deposits

FC:
+ Technology platforms for origination and servicing
+ Credit risk infrastructure, fraud monitoring systems
+ Branch network and corporate real estate
+ Call centers and operational hubs

VC
+ Loan origination costs (sales, underwriting, closing)
+ Loan loss provisions (provision for credit losses)
+ Customer acquisition (marketing, offers)
+ Deposit servicing costs (e.g., debit card issuance)

Question 8

Chase Account Fees Rev & Cost Drivers

Answer 8

Revenue = Fee per Account × Number of Accounts

FC:
+ ATM and branch network infrastructure
+ Digital banking platform development
+ Compliance and regulatory reporting systems

VC:
+ Paper statements, check processing
+ Customer service interactions (e.g., fee disputes)
+ Fraud/dispute handling costs

Question 9

Chase Card Fees Rev & Cost Drivers

Answer 9

Revenue = Card Fee per Account or Transaction × (purchase per cardholder) x (# of cardholders)

FC:
+ Technology & fraud detection infrastructure
+ Customer service support for cardholders
+ Partnerships (e.g., with travel brands for co-branded cards)

VC:
+ Rewards points and cashback expenses
+ Acquisition costs (mailers, sign-up bonuses)
+ Chargeback costs, fraud reimbursements
+ Card printing / distribution

Question 10

Commercial Bank NII Rev & Cost Drivers

Answer 10

Revenue = Net Interest Margin × Volume of Loans/Deposits

Fixed Costs
+ Loan origination systems
+ Relationship manager (RM) salaries and teams
+ Credit risk infrastructure and underwriting platforms

Variable Costs
+ Loan loss provisions (based on credit quality)
+ Commission-based RM incentives
+ Loan servicing and monitoring costs

Question 11

AWM Asset MGMT Fees Rev & Cost Drivers

Answer 11

Revenue Drivers
+ Price: Fee rate charged on assets under management (AUM)
+ Volume: Total AUM

FC
+ Fund platform infrastructure
+ Investment teams (PMs, analysts)
+ Compliance and legal systems
+ Research & data subscriptions

VC
+ Fund servicing (custody, admin, transfer agents)
+ Distribution fees (to brokers, platforms)
+ Performance-linked PM compensation
+ Marketing and client communication costs

Question 12

AWM Wealth MGMT Fees Rev & Cost Drivers

Answer 12

Revenue Drivers
+ Price: Advisory fee % (usually 0.25–1.5%)
+ Volume: Total advised assets or number of advised clients

FC
+ Advisor platforms (e.g., CRM, planning tools)
+ Office space for advisors (Private Bank)
+ Regulatory infrastructure (fiduciary standards, disclosures)

VC
+ Advisor bonuses/commissions (tiered by AUM, revenue)
+ Onboarding and client servicing costs
+ Financial planning tool licenses per user
+ Client event/travel budgets

Question 13

If a case tells you to improve NII, focus only on ____, not _____ because NII is a top-line metric

Answer 13

Improving revenue, not costs
Because Net Interest Income (NII) is a top-line metric that does not include costs like marketing, servicing, tech, or support staff — those affect net income or profitability, but not NII itself.

Question 14

Type of asset management clients

Answer 14

Institutional Investors: pension funds, sovereign wealth funds, endowments and foundations, central banks, insurance companies, and corporates managing large treasury investments.

Retail intermediaries: financial advisors, broker-dealers, wirehouses like Merrill Lynch and Morgan Stanley Wealth, and retirement plan providers such as 401(k) platforms.

Direct investors: In some cases, J.P. Morgan also serves direct investors—individuals who invest directly in its mutual funds or ETFs.