J.P. MORGAN

                                 10/15/93

             10/14/93 52-Wk-Rng FY/Q  EPS93  EPS94 PE94 NxtQtr LyQtr
J. P. Morgan    77.75   79-59   12/4   8.30   7.45 10.4   1.75  1.09 JPM


* EQUITY GAINS EXPLAIN STRONG 3Q - ANOTHER $5.50 IN VALUE REMAINS
* TRADING STILL EXCEPTIONAL, ALBEIT OFF FROM 2Q PEAK
* CORPORATE FINANCE FEES REBOUNDS 22% - UP 17% YR-YR
* RAISING 93E $0.60 TO $8.30; 94E REMAINS $7.45

SYNOPSIS:  The more volatile revenue lines continue to dominate the
earnings, but nevertheless in a positive way.  Net interest and credit
related fees were flat from a year ago, yet other fee lines were all solid
double-digit trends, providing good balance to the total.  While
analysts raised their 1993 estimate $0.60 to $8.30 to incorporate the strong
equity gains, they remain with a $7.45 1994 estimate and $8.50 for 1995.
They are expecting trading results to moderate somewhat, although the
slack could easily be taken up in additional equity gains.

EXCEPTIONAL PERFORMANCE IN EQUITY GAINS:  The missing piece of analysts'
investment consideration is the valuation of their equity investments,
which are likely to provide recurring gains.  Yet the market appears
unwilling to capitalize this stream of gains as they flow through to
earnings.  The FAS 15 impact of marking up the value was disclosed at $1.7B
as of June, and the number is probably not appreciably different today.
Assuming an aftertax value of $1.1B, at least $5.50/share in inherent value
is available for future harvesting.
During the third quarter, $152MM in pretax equity gains were realized, with
$86MM from HCA.  With 20.1MM shares remaining at a $2.50 cost and a $28.62
current market, $525MM of the aforementioned $1.7B is in HCA stock.  The
remainder of the portfolio is more diversified with much smaller average
positions, and contains foreign names as well as domestic.

Valuing the equity portfolio at market and recognizing loan loss reserves
at least in excess of $750MM, analysts argue book value is presently
understated by at least $8.00/share.  This implies a market to adjusted
book ratio of 160%, wheras the domestic bank average is closer to 180%.

EXCEPTIONAL TRADING RESULTS:  Third quarters are not often as robust as
the first & second.  However, J.P. Morgan's $464MM in the trading account
still edged out the first quarter, and was not far below the $520MM peak
second quarter and still 50% ahead of last year.  One key assumption in
analysts'  EPS models is obviously the trading projection.  They assume
it will decline further in the fourth quarter, and are using a $375MM
number, ongoing into 1994 as well.  As important to their estimate as it
is, the range could obviously be much wider.
The trading mix is highly diversified, but Europe and emerging markets were
cited as the most important regions, and European markets currently appear
to be less active than they were.  Conversely, the mix is diversified by
product as well, and the derivatives universe continues to expand in both
size and product array, making the final call difficult.  In addition,
trading team expansion in emerging markets is likely to raise the base.
Finally,  Morgan has ample cross-sell capabilities.  The derivatives effort
has been prominent among capital markets customers, but clients that
historically were more corporate finance relationships are now becoming an
expanding market for risk management within Morgan's existing customer
base.

OTHER REVENUES SOLID:  Net interest, which partly reflects trading
operations, has remained in the $470MM/quarter vicinity for many quarters.
This is partly due to declining loan balances, and could be capped by the
yield curve, if it compresses in the U.S., but is likely offset in Europe.
Average loans are off 11%, and the loan-to-earning asset ratio is now below
20%, with a net interest margin of only 1.39%.  Loan erosion to this low
level is to be expected, as Morgan's client base is heavily concentrated in
institutions that have multiple access to capital markets.

The $1,648MM in total  third quarter revenues include $463MM (28%) outside
of trading, equity & investment gains, and net interest already discussed.
Here, the trends are generally robust.  Corporate finance fees are up 14%,
investment management was up 20%, and operational services advanced 14%.
Only credit-related fees were off, but this is the smallest category.

Expenses were up 18%, largely reflecting the extraordinary trading,
and it should be noted that total revenues were up 28%.