TEXT-Fitch revises JPMorgan Chase & Co rating outlook to stable

(The following statement was released by the rating agency)

Oct 10 - Fitch Ratings has affirmed JPMorgan Chase & Co.'s


Long-term Issuer Default rating (IDR) at 'A+' and Short-term IDR at 'F1'.Fitch also affirmed JPM's Viability Rating (VR) at 'a+', its Support Rating at'1' and its Support Rating Floor at 'A'. The Rating Outlook has been revised toStable from Rating Watch Negative. A full list of ratings follows at the end ofthis release.

Today's rating action on JPM was taken in conjunction with Fitch's globaltrading and universal bank periodic review. Fitch's outlook for the industry isstable on balance. The positive rating drivers include improved liquidity,funding, capitalization and more streamlined businesses, all partly driven byregulation. Offsetting these positive drivers are substantial earnings pressure,regulatory uncertainty and heightened legal and operational risk.


The ratings affirmations reflect JPM's dominant domestic franchise and growinginternational franchise. The firm continues to maintain a leading position inits businesses, particularly in U.S. domestic commercial banking and investmentbanking. It has not suffered meaningful damage to its franchise from the lossesin its Chief Investment Office (CIO). The firm has not demonstrated any materialweakening in funding flexibility or access to the capital markets as a result ofthe CIO incident. Fitch believes that most of the risk management weaknesseswere centralized in the CIO and have been addressed or are being remediated.Importantly, some broader risk governance issues such as greater centralizationof processes are also being addressed by the firm.

The Stable Outlook recognizes that the firm still has some work to do inaddressing its risk governance weaknesses arising from the losses in the CIO.However, the firm appears to have identified and addressed most of the problemsin the CIO and has similarly looked across the entire firm to enhance its riskmanagement and governance framework. Fitch believes the firm is committed to abest-in-class risk framework and will continue to address any unresolved issues.The firm's significant earnings power, diverse earnings sources, strongfront-end risk culture, leading franchise, and liquidity management are corestrengths.

Capital is also sufficient for its rating level, though JPM tends to be a moreaggressive capital manager than some of its global peers. Share repurchases havebeen suspended for 2012 but Fitch expects these to resume in 2013, which isnegative for credit ratings in a business that is not contracting. Basel IIITier 1 Common Ratio is estimated to be 7.9% at 2Q'12 and the firm shouldcomfortably reach Basel III capital requirements within the prescribed timeframe.

The mortgage business, particularly JPM's real estate portfolios continue tohave relatively weak asset quality. However, the firm's charge-off rates,non-performing assets and late stage delinquencies continue to improve. JPM'sdiverse business franchise and underwriting have helped to offset this weakness,but the improving trend has also benefited from the impact of quantitativeeasing on the U.S. economy and could, therefore, be vulnerable to any change inthis. The credit card business has performed very well and Fitch expects thatthere will likely be some deterioration in card asset quality as the businessreverts to more historical performance. Commercial banking, Treasury & SecurityServices and the Asset Management businesses remain stable performers.

Like other global trading and universal banks, Fitch believes the investmentbank creates greater volatility in JPM's earnings and serves as a ratingconstraint. While the agency recognizes the firm's leading position in IB, thebusiness is vulnerable to cyclicality and more sensitive to market conditionsthan many of its other business lines. In addition, IB has been an importantcomponent of the firm's earnings.

Given the company's size and scale in many businesses, along with many otherlarge financial firms, continues to be subject to various investigations andlitigation. The most costly so far are mortgage related, including foreclosuresand repurchases. LIBOR investigations are pending as well as several litigationsstemming from the crisis and as a result of the CIO losses.

Fitch believes the firm manages liquidity well, though wholesale funding is ameaningful component which mainly supports its global broker/dealer operations.However, the company has a solid core deposit base, mainly in the U.S.


Going forward JPM is going to be challenged to continue to deliver consistentstrong revenues, particularly in light of the current regulatory environment andthe low interest rate environment. Higher capital charges and difficult marketconditions present a challenge for all global trading and universal banks, whichmay be encouraged to seek more aggressive ways to generate profits that takeadvantage of regulatory loopholes.

However, Fitch expects that JPM's strong global franchise, liquidity riskmanagement, and current earnings power from its diverse businesses mitigate someof these concerns.

JPM's ratings could be sensitive to weakening in the global

(particularly the U.S.) macro-environment that goes beyond what Fitch's stresstests incorporate. Slow on-going growth or recession would affect asset qualityand investment banking activity. Material asset quality weakening across assetclasses could put negative pressure on the ratings unless the capital buffer isstrengthened. Further, significant risk management or operational failures thatresult in material losses to the firm could also result in a negative ratingaction. Fitch believes that the rating is currently constrained and thereforeupward rating momentum is unlikely for the foreseeable future.


JPM's current 'A+' Long-term IDR is equalized with its 'a+' VR, which remainsabove its support rating floor. JPM's '1' Support Rating 'A' Support RatingFloor factor in government support in the event of need for JPM and other U.S.G-SIFIs. While Fitch believes the broad policy goal is to no longer provide fullsupport to systemically important banks, this is progressing at an uneven paceglobally. Fitch could reassess its support ratings for U.S. G-SIFIs if globalmarket conditions normalize and resolution regimes become more harmonized acrossinternational jurisdictions. At JPM's current VR, the firm's Long-term IDR wouldnot be affected by a change in support rating floor.


Subordinated debt and other hybrid capital issued by JPM and by various issuingvehicles are all notched down from JPM's or its bank subsidiaries' VRs inaccordance with Fitch's assessment of each instrument's respectivenonperformance and relative loss severity risk profiles. Their ratings areprimarily sensitive to any change in the VRs of JPM or its bank subsidiaries.


JPM's IDR and VR are equalized with those of its operating companies and banks,reflecting its role as the bank holding company, which is mandated in the U.S.to act as a source of strength for its bank subsidiaries. It has modest doubleleverage of 107% at 2Q12.


The IDRs and VRs of JPM's bank subsidiaries benefit from the cross-guaranteemechanism in the U.S. under FIRREA and therefore IDRs and VRs are equalizedacross the group. JPMorgan Securities LLC (JPMS) is a wholly owned subsidiarythat is the firm's U.S. broker dealer and is considered core to JPM's business.As a result its IDR is equalized with that of its parent JPM. Bear StearnsCompanies, LLC and JPMorgan Clearing Corp. benefit from a parent guarantee andtherefore their IDRs are equalized with JPM's. Collateralized Commercial PaperCo., LLC's ST IDR benefits from JPMS's guarantee of the amounts payable by therepo seller, JPMCC, and as result its ST IDR is equalized with that of JPMS.Collateralized Commercial Paper II Co., LLC's ST IDR is based on the reposeller, JPMS's ST IDR.

JPM is a leading global trading and universal bank with $2.3 trillion in totalassets and $5.0 billion of net income as of June 30, 2012.

Fitch has affirmed the following ratings:

JPMorgan Chase & Co--Long-term IDR at 'A+';--Long-term senior debt at 'A+;--Long-term debt guaranteed by TLGP at `AAA';--Long-term subordinated debt at 'A';--Preferred stock at 'BBB-';--Short-term IDR at 'F1';--Commercial paper at 'F1';--Viability at 'a+';--Market linked securities at 'A+emr';--Support at '1';--Support Floor at 'A'.JPMorgan Chase Bank N.A.

--Long-term deposits at 'AA-';

--Long-term IDR at 'A+';

--Long-term senior debt at 'A+';

--Long-term subordinated debt at 'A';

--Short-term IDR at 'F1';--Short-term debt at 'F1';

--Short-term deposits at 'F1+';

--Viability at 'a+';

--Market linked deposits at 'AA-emr';

--Market linked securities at 'A+emr';

--Support at '1';--Support Floor at `A'.Chase Bank USA, N.A.

--Long-term deposits at 'AA-';

--Long-term IDR at 'A+';

--Long-term senior debt at 'A+';

--Long-term subordinated debt at 'A';

--Short-term IDR at 'F1';--Short-term debt at 'F1';

--Short-term deposits at 'F1+';

--Viability at 'a+';--Support at '1';--Support Floor at 'A'.Custodial Trust Co.

--Long-term deposits (market linked securities) at 'AA-emr';

JPMorgan Bank & Trust Company, National Association

--Long-term deposits at 'AA-';

--Long-term IDR at 'A+';--Short-term IDR at 'F1';

--Short-term deposits at 'F1+';

--Viability at 'a+';--Support at '1';--Support Floor at 'A'.

JPMorgan Chase Bank, Dearborn

--Long-term deposits at 'AA-';

--Long-term IDR at 'A+';--Short-term IDR at 'F1';

--Short-term deposits at 'F1+';

--Viability at 'a+';--Support at '1';--Support Floor at 'A'.Bear Stearns Companies LLC--Long-term IDR at 'A+';

--Long-term senior debt at 'A+';

--Long-term subordinated debt at 'A';

--Short-term IDR at 'F1';

--Market linked securities at 'A+emr'.

J.P. Morgan Securities LLC--Long-term IDR at 'A+'';--Short-term IDR at 'F1'.

JPMorgan Clearing Corp (formerly Bear Stearns Securities Corp)

--Long-term IDR at 'A+';--Short-term IDR at 'F1'.Bank One Capital Trust IIIBank One Capital Trust VIChase Capital IIChase Capital IIIChase Capital VIFirst Chicago NBD Capital I

JPMorgan Chase Capital X-XIV, XVI, XIX, XXI, XXIII, and XXIV

--Preferred stock at 'BBB'.Bank One Corp

--Long-term subordinated debt at 'A'.

JP Morgan & Co., Inc.

--Long-term senior debt at 'A+';

--Long-term subordinated debt at 'A'.

Morgan Guaranty Trust Co. of New York

--Long-term senior debt at 'A+'.

NBD Bank, N.A. (MI)

--Long-term subordinated at to 'A'.

Providian National Bank

--Long-term deposits at 'AA-'.

Washington Mutual Bank

--Long-term deposits at 'AA-'.

Fitch has affirmed ratings on the following special purpose vehicles:

Collateralized Commercial Paper Co., LLC

--Short-term debt at 'F1'.

Collateralized Commercial Paper II Co., LLC

--Short-term debt at 'F1'.

Fitch has withdrawn the following ratings:

Custodial Trust Co.--Long-term IDR at 'A+';--Short-term IDR at 'F1';--Viability at 'a+';--Support at '1'.Banc One Financial LLC--Short-term IDR at 'F1'';--Short-term debt at 'F1'.

The ratings for Custodial Trust Co. are being withdrawn because the entity hasbeen merged into J.P. Morgan Chase Bank N.A. The ratings for Banc One FinancialLLC are being withdrawn as the entity is no longer used for funding purposes.

(Caryn Trokie, New York Ratings Unit)

((Caryn.Trokie@thomsonreuters.com; 646-223-6318; Reuters Messaging:rm://caryn.trokie.reuters.com@reuters.net))