What Investors Don't Want To Hear From JP Morgan: CLSA Analyst Shares His Perspective

JPMorgan Chase & Co. JPM had the best year in its history during 2014, but the bank’s stock doesn’t seem to reflect that. As investors get ready for the bank's Investor Day Conference on Tuesday, Michael Mayo, analyst CLSA Americas LLC, was on Bloomberg Monday to discuss what they must expect from the bank.

What Do You Want To Hear At The Investor Day Conference Tomorrow?

“Our concern with JP Morgan is, 'What have you done for us lately?'” Mayo said.

“Over the last decade, JP Morgan has done well. They won the war, but lost the peace to last three years,” Mayo replied. “In 2012, they had a trading loss; 2013, they had higher expenses; 2014, a little bit of lower oil redo to higher capital. So, the last three years the stock hasn’t done that well. So, JP Morgan, what have you done for us lately?”

He continued, “The last three years, the efficiency has been stalled out – has not gotten better. They had to absorb all sorts of extra costs because they are complex. They had to take lot of extra capita,l because they are large. So, what we don’t want to hear is a lot of whining and excuses tomorrow.”

Related Link: 5 Stocks That Have JPMorgan Analysts Talking

Additional Efficiency Savings

“I think the challenge for JP Morgan is to show the benefit of scale,” Mayo said.

“JP Morgan has $2.3 trillion dollars of assets. So, if you are going to be the biggest bank that’s you become the most efficient, and in the last three years the efficiency progress has stalled. Now, having said that, this could be a sweet spot of banking.

“So, for JP Morgan, they have absorbed a lot of the regulatory costs over the last three years, so that the bad news is in there. And now I think they are on the cusp of additional efficiency savings in both the retail and the wholesale business.”