Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q1 2005 Earnings Presentation
27 slides from Jp Morgan Chase &'s earnings presentation, Apr 20, 2005
Slide 1: Financial Results First Quarter 2005
FINANCIAL RESULTS A P R I L 2 0, 2 0 0 5 First Quarter 2005
Slide 2: First Quarter 2005 Earnings
First Quarter 2005 Earnings Most businesses show good momentum over the last year IB revenues near record levels of 1Q04 with strength in trading and IB fees Expense management and merger saves evident in results Wholesale and consumer credit quality are strong WorldCom litigation settled Strong cap
Slide 3: 1Q05 Earnings - GAAP Comparison
1Q05 Earnings - GAAP Comparison Non-Operating Charges (After-Tax)
Slide 4: 1Q05 LOB Operating Earnings - GAAP Comparison
1Q05 LOB Operating Earnings - GAAP Comparison
Slide 5: Proforma Discussion
Proforma Discussion The proforma combined historical lines of business information presents the business segments of the company as if these segments had existed as of the earliest date indicated. For further information regarding the proforma combined historical financial information, including rec
Slide 6: 1Q05 Significant Items
1Q05 Significant Items New method for adjusting tax equivalent revenue1 Increases operating tax rate to 35% Operating earnings and EPS unchanged Corporate segment more transparent 1 See illustration in appendix
Slide 7: 1Q05 Proforma Operating Performance Comparison
1Q05 Proforma Operating Performance Comparison 1 Operating basis excludes merger costs, charges related to conforming accounting policies and litigation charges incurred in 2Q04 and 1Q05, and presents revenues and credit costs without the effect of credit card securitizations. All references to cred
Slide 8: 1Q05 Operating Expenses
Revenues up 4% QoQ with expenses flat at $8,892mm Higher compensation expenses Lower noncompensation expenses $150mm incremental/$380mm total merger saves 2Q05 expenses Performance-based compensation $60mm incremental/$440mm total merger saves $70mm estimated from acquisitions1 $200-$250mm estimated
Slide 9: LOB Operating Earnings
LOB Operating Earnings - Proforma Comparison 1 Change from 1Q04 includes the impact of non-core portfolio actions related to the sale of Bank One's brokered home equity portfolio. The pre-tax impact was $86mm, the after-tax impact was $53mm. Excluding the impact of these actions the change versus 1Q
Slide 10: Investment Bank
Strong revenue performance - up 31% QoQ, near record levels of 1Q04 IB fees up 33% YoY; sequentially down from strong 4Q Fixed Income and Equity Markets up QoQ due to strong client activity and portfolio management trading Credit costs benefited from improved portfolio quality and reduced loan balan
Slide 11: Retail Financial Services
Retail Financial Services - Proforma Comparison 1 Change from 1Q04 excludes the impact of non-core portfolio actions related to the sale of Bank One's brokered home equity portfolio. 2 See appendix for more detail on Auto & Education Finance. 3 Actual numbers for all periods, not over/under. Earning
Slide 12: Consumer & Small Business
Consumer & Small Business - Proforma Comparison 1Actual numbers for all periods, not over/under. Business drivers trending well, with good growth in deposits and new accounts as well as increases in credit card and investment sales Good progress in legacy Chase branches 108 net new branches YoY 191
Slide 13: Home Finance
Home Finance - Proforma Comparison 1 Actual numbers for all periods, not over/under 2 Includes prime first mortgage and subprime loans Prime Production & Servicing Strong secondary marketing results offset drop in prime mortgage originations Favorable MSR risk management performance Expense trends r
Slide 14: Card Services (Managed)
Card Services - Proforma Comparison (Managed) 1Actual numbers for all periods, not over/under. ROO of 2.52%, up 81bps YoY Revenues increased 4% YoY driven by higher loan balances, higher charge volume and improved spreads Managed margin up 34bps QoQ due to pricing initiatives partially offset by inc
Slide 15: Commercial Banking
Commercial Banking - Proforma Comparison 1 Actual numbers for all periods, not over/under. 2 Includes deposits and deposits swept to on-balance sheet liabilities Revenue growth of 2% YoY was driven by 14% growth in Treasury Services revenue. QoQ decline of 4% primarily a result of lower IB revenue i
Slide 16: Treasury & Securities Services
Treasury & Securities Services - Proforma Comparison 1 Actual numbers for all periods, not over/under. 2 Includes deposits swept to on-balance sheet liabilities 3 Includes an estimated $400 billion of assets under custody from ITS as of 3/31/2005 Revenues increased 16% YoY and 5% QoQ NII up due to s
Slide 17: Asset & Wealth Management
Asset & Wealth Management - Proforma Comparison 1 Actual numbers for all periods, not over/under Earnings up 21% YoY due to net asset inflows, growth in deposits and market appreciation partially offset by increased compensation expense Earnings up 5% QoQ due to shift in asset mix to higher margin p
Slide 18: Corporate
Corporate - Proforma Comparison 1 NII, other income and expenses are included in Private Equity, Treasury and Other Corporate Earnings 2 Actual not over/(under) Corporate includes: Private equity Treasury Net expenses FTE offsets removed Private equity gains very strong Treasury results includes los
Slide 19: Continue to build fortress balance sheet
Continue to build fortress balance sheet Capital strength with 3/31/05 Tier 1 estimate of 8.6% Stock buyback: $1.3bn in 1Q05 Capital
Slide 20: Merger Milestones
Merger Milestones Roll-out of branding changes Technology Treasury Services clearing conversions Card conversions Strategic Data Center mainframe migration Ongoing platform conversions & consolidations Texas market integration (Estimated timeframe: 3Q05) and Tri-state market integration Lending plat
Slide 21: Outlook - 2Q 2005
Outlook - 2Q 2005 Investment Bank IB fee pipeline: continues to be strong Trading: 1Q seasonally strong Credit Portfolio: lower NII & gains from loan workouts Credit: returning to normal over time Retail Financial Services MSR hedging gains/losses: don't plan for ($106mm Q1) Portfolio sales: impact
Slide 22: Disclaimer
Disclaimer This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of JPMorgan Chase's management and are subject to significant risks and uncertainties. Actu
Slide 23: Appendix
APPENDIX JPMorganChase © a
Slide 24: Auto & Education Finance
Auto & Education Finance - Proforma Comparison 1Actual numbers for all periods, not over/under. ($ in millions) Pre-tax After-tax Transfer of auto loans to HFS Markdown ($88) Reduction in allowance 10 Total ($78) ($47) Joint venture cancellation charge ($40) ($25) RV sale Other income $24 Reduction
Slide 25: Fully Taxable Equivalent (FTE) Restatement
Fully Taxable Equivalent (FTE) Restatement Total operating revenue (Noninterest Revenue and Net interest income) for each of the segments and the Firm is presented on a tax- equivalent basis. Accordingly, revenue from tax-exempt securities and investments that receive tax credits are presented in th
Slide 26: 1Q05 Operating Results - Heritage JPMC Comparison
1Q05 Operating Results1 - Heritage JPMC Comparison JPMorgan Chase ($mm) Investment Bank ($mm) Retail Financial Services ($mm) Card Services (Managed, $mm) 1 Operating basis excludes merger costs, charges related to conforming accounting policies and litigation charges incurred in 2Q04 and 1Q05, and
Slide 27: 1Q05 Operating Results - Heritage JPMC Comparison
1Q05 Operating Results1 - Heritage JPMC Comparison Commercial Banking ($mm) Treasury & Securities Services ($mm) Asset & Wealth Management ($mm) Corporate ($mm) 1 Operating basis excludes merger costs, charges related to conforming accounting policies and litigation charges incurred in 2Q04 and 1Q05