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Liquidity Jp Morgan's Liquidity Risk Essay

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However, JP Morgan's performance has been volatile in this span. Its current level of 64.9% is not its lowest, but is still lower than the 74.5% recorded by its Peer Group. For the past three years, the Peer Group has been substantially higher than JP Morgan, so this outperformance reflects less on JP Morgan's excellence than on the Peer Group's inability to maintain its performance level of four years ago. A higher level of unused commitments to net loans is desirable. JP Morgan's ratio has declined significantly since 2007 from 2.063 to 1.257. However, JP Morgan has consistently outperformed its Peer Group in this ratio. While the Peer Group figures have not dropped as precipitously as JP Morgan's, they have been worse in each year.

The Net Non-Core Fund Dependence ratio should be lower. In this ratio, JP Morgan has underperformed the Peer Group. Its UBPR is 2.145 compared with 0.945. It is worth noting that JP Morgan has improved its performance in this ratio significantly over the past four years from 3.931 in 2007 to its current level. However, the Peer Group has also seen steady...

Even where it does not outperform, JP Morgan has been able to improve its measures over the past four years or hold them to a consistent range. This has generally been the trend with the Peer Group as well, however, so the overall degree to which JP Morgan outperforms has changed little in the past four years.
Appendix: Ratios

2007

2008

2009

2010

Liquidity Ratio

JP Morgan

Peer

JP Morgan

Peer

JP Morgan

Peer

JP Morgan

* Assumptions

A couple of assumptions had to be made since the materials provided did not include the definitions requested:

Core deposits were assumed to be line 20: Deposits held in domestic offices.

There was no information provided in the spreadsheets about the level of brokered deposits and the definition provided…

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