JPMorgan remains one of my better investment ideas going into 2016, especially in large cap banks. The bank built out the various scenarios in which it could lower its risk, by reducing exposure to riskier assets while maintaining firm wide return on total common equity above 15%. Given the nature of the firm’s restrictive capital environment it’s noteworthy if the bank reaches this level of efficiency, but it also restricts JPM’s ability to invest more aggressively into riskier assets. That being the case, I still believe the firm is better positioned to whether financial storms given the amount of high quality liquid assets on the balance sheet. Source: JPMorgan The bank currently has $350 billion in total loss absorbing resources, so even after $100 billion in depletion they’d still meet CET1 regulatory minimum. As such, I view the risk-to-reward on the balance sheet fairly compelling. The bank also mentions that they can sustain this type of asset liquidity while maintaining a 15% return on equity. Therefore, there’s a very high probability that JPM can sustain its share repurchase program, as the firm has enough capital to meet federal reserve capital requirement for a significant pattern of time. Source: JPMorgan The firm anticipates that they can reach $30 billion in net income with 11% average net income growth over the next three-years, which seems relatively realistic. However, for them to accomplish this rate of growth, the net interest margin will need to expand, which requires interest rates to continue trending higher. However, the degree to which interest rates move higher may be negatively affected assuming negative macro scenarios. Therefore, while I’m still optimistic on JPMorgan, investors may have to settle for a slightly slower net income growth rate. I anticipate cost reductions to exceed expectations, as JPM is really astute at reducing its net charge off rate, and SG&A due to technological implementation of software or mobile applications. I continue to favor JPM in this environment, as the stock is relatively cheap. In future articles I will characterize the qualitative characteristics of the business and why it seems more appealing when compared to alternative banks.