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JPMorgan readies for commercial lending revival


JPMorgan Chase & Co. is considering a commercial lending comeback, Reuters reported.

Though commercial loan losses have been stacking up – JPMorgan’s commercial banking unit reported $181 million in net charge-offs in the second quarter, an increase of $49 million from the same period last year – CEO Jamie Dimon said the bank’s “fortress balance sheet” gives it more stability than its competitors.

Todd Maclin, JPMorgan’s head of commercial banking, said he believes the next business year may provide an opportunity to capitalize on the company’s relatively limited exposure to commercial real estate, compared with its peers.

“These assets are rapidly re-pricing, there are a number of distressed sellers, there are a number of financial institutions that are overexposed, and from our past experience those sorts of things generally translate into an opportunity as you approach the bottom,” Maclin said.

The bank’s expansion efforts have included the hiring of 40 local bankers and associates to bolster its middle-market and commercial banking business and a partnership between the JPMorgan’s commercial bank and investment bank, which has led to a number of financing deals with hospitals, colleges and local governments.

In the second quarter, JP Morgan’s commercial real estate exposure accounted for just $12.3 billion of its total $109 billion in commercial banking loans. Small and mid-sized companies borrowed $15 billion from the commercial banking unit in the second quarter, an increase of more than 50 percent from the first quarter.

“By keeping our nose clean, we’re open for business right now at a time when frankly a lot of our competitors are distracted,” Maclin said. “If you keep your wits about you during the boom periods, then it really pays off in the downturn.”

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