How JPMorgan is Consolidating Its Gains in India

Jamie Dimon, CEO of JPMorgan Chase, the largest bank in the US, is often spotted in India. While the India operations may not be big, Dimon strongly believes in the long-term India story.

A year and a half ago, the global major even started focussing on emerging mid-sized corporates in the country. “Mid will be fairly large entities in the Indian context,” says Madhav Kalyan who has been at the helm of the Indian arm for more than a decade. “It is not SMEs or MSMEs. It would be big corporates and emerging local stars. That segment has started taking off well for us.”

JPMorgan is largely a wholesale bank, with four sets of customers in India—foreign portfolio investors, multinationals, Indian corporates and financial institutions. The bank is reaping the benefits of surplus liquidity both in the domestic and global markets, a buoyant stock market with huge interest from foreign investors, and consolidation in the industry where big corporates are strengthening their positions by mergers and acquisitions. In the BT-KPMG Best Banks Survey 2020-21, JPMorgan has emerged as the topmost foreign bank.

The bank has gained big time in growth parameters especially fee income and operating profit. The cost to income is also the lowest at 14.42 per cent. The bank is also rated high on return parameters like return on assets and return on capital employed. The capital adequacy ratio at 23.95 per cent is also at a very comfortable level to expand the loan book in the near future.

“We have always been a banker’s bank,” says Kalyan. Focussing on a wholesale business model has helped the bank achieve better efficiencies and cost to income ratio, says Kalyan. It recently got in-principle approval to open a branch in GIFT City and is eyeing launching its services from the international finance centre in the first half of the calendar year, subject to approvals.

But there are challenges, especially from the large private banks in the country that are not only technology savvy, but also ready with a product suite for large as well as MNC clients in India. JPMorgan is also betting big on blockchain and cryptos, and has launched its own digital currency—JPM Coin.
“We believe there is a lot of benefit in the underlying technology for removing friction in cross-border payments and making cross-border trades digital, which is something banks have been dealing with as an issue for many years,” says Kalyan.“Getting all intermediaries onto a blockchain to track and trace, find solutions, can only make the payment systems much more efficient. So, we believe that there’s a lot to go that can be built on this underlying technology, and we continue to invest as a firm in all these platforms,” he adds.