Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — 2005 Bernstein Strategic Decisions Conference
25 slides from Jp Morgan Chase &'s conference presentation, Jun 1, 2005
Slide 1: Jamie Dimon, President & COO, 2005 Bernstein Strategic Decisions Conference
JPMorgan Chase & Co. J U N E 1, 2 0 0 5 Jamie Dimon President & Chief Operating Officer 2005 Bernstein Strategic Decisions Conference
Slide 2: 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. Actual results
Slide 3: The new JPMorgan Chase - financial highlights
$1.2T Total Assets $137B Wholesale Loans (2.11% allowance to loans) $265B Consumer Loans (1.69% allowance to loans) $531B Total Deposits $105B Common Equity $52B Tangible Common Equity $122B in market capitalization Tier 1 capital - 8.6%; Total capital - 11.9% Operations in more than 50 countries 16
Slide 4: Investment Bank: 2005 Priorities and Key Statistics
2005 Priorities 1Q05 Key Statistics (3/31/05) 2004 Proforma & 1Q05 Operating Results ($B) Average loans of $47.5B Allowance for loan losses to average loans of 3.03% Total assets of $567B Total equity of $20B 18,000 employees Sources: Thomson Financial: FY04 and April 2005 YTD, Institutional Investo
Slide 5: Trading Risk
Credit Risk Active management and mark-to-market of credit risks Independent credit approvals Operating Risk Comprehensive policies and control framework Independent control functions e.g., Finance, Legal Legal & Reputational Risk Client suitability and appropriateness Legal and compliance reviews M
Slide 6: Derivatives - Credit and Market Risk
Derivatives - Credit and Market Risk $66bn derivative receivables MTM2 in line with peer group $57bn exposure net of collateral3 is 86% investment grade 79% of deal population is subject to collateral agreements Maturity profile of average exposure in line with peers Interest rate 0.7 FX 0.12 Equity
Slide 7: Hedge Fund Exposure Overview
>$2B 43.3 >=$1B and <=$2B 18.23 >=$500MM and <$1B 8.37 >=$100MM and <=$500MM 20.52 <$100MM 9.57 Slice 12 Slice 13 Slice 14 Slice 15 Slice 16 Credit Portfolio Breakdown Exposure Breakdown by Fund NAV Hedge Fund Exposure Overview 1 95% of collateral is cash and treasuries; 5% is highly-rated munis
Slide 8: Retail Financial Services: 2005 Priorities and Key Statistics
2005 Priorities 1Q05 Key Statistics (3/31/05) 2004 Proforma & 1Q05 Operating Results1 ($B) Leadership Positions $149B in avg. core deposits 2,517 branches; 17 states; 6,687 ATMs $496B of mortgage loans serviced $67B of avg. home equity loans $27B of mortgage loan originations $53B of avg. auto loans
Slide 9: Home Finance Prime First Mortgage
Home Finance Prime First Mortgage Solid first mortgage business with average origination FICO scores in our held portfolio above 730 and origination LTV's of 71% (prior to any property appreciation). Last year only 4% of our first mortgage originations were I/O and, while that percentage will grow t
Slide 10: Home Finance Risk Profile
Home Finance Risk Profile Credit performance continues to be strong with credit losses favorable to comparable levels the previous two years due to improved credit quality and portfolio business decisions. 2004 Home Finance Statistics 1 I/O originations in 2004 of $6 billion with a weighted average
Slide 11: Card Services (Managed)
Card Services (Managed) 2005 Priorities 1Q05 Key Statistics (3/31/05) 2004 Proforma & 1Q05 Operating Results ($B) Leadership Positions $134B of avg. managed loans $70B of charge volume $125B of merchant processing volume Managed net charge-off ratio of 4.83% 94mm credit cards issued 20,150 employees
Slide 12: The New Chase Brand
The New Chase Brand TV: Checking, Credit Card TV: Credit Card TV: Rebranding Debit Card Credit Cards: RFID, Partners Print
Slide 13: The New Chase Brand - Retail Branch
The New Chase Brand - Retail Branch Branch Interior Rebranding Merchandising Branch Interior - Urban Pylon Sign Branch Exterior Banker Apparel
Slide 14: Commercial Banking
Commercial Banking 2005 Priorities 1Q05 Key Statistics (3/31/04) 2004 Proforma & 1Q05 Operating Results ($B) Leadership Positions $72B of avg. liability balances $50B of loans and leases Nonperforming loans to avg. loans - 0.87% Allowance for loan losses to avg. loans - 2.63% 4,500 employees Operati
Slide 15: Treasury & Securities Services
Treasury & Securities Services 2005 Priorities 2004 Proforma & 1Q05 Operating Results ($B) Leadership Positions #1 in USD clearing #1 in ACH originations, Chips & Fedwire #1 in assets under custody #1 trustee for U.S. corporate debt #1 ADR bank2 #1 global trustee for CDOs Leader in securities lendin
Slide 16: Asset & Wealth Management
Asset & Wealth Management 2005 Priorities 1Q05 Key Statistics (3/31/05) 2004 Proforma & 1Q05 Operating Results ($B) Leadership Positions $1.1T of assets under supervision $790B of AUM $326B of mutual fund assets $26B of avg. loans $42B of avg. deposits 79% of customer assets in funds ranked 3 or bet
Slide 17: Financial Aspirations
Financial Aspirations Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Column 12 Column 13 Column 14 Column 15 Column 16 3Q04 0.12 4Q04 0.13 1Q05 0.27 Goal 0.2 Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column
Slide 18: Corporate Private Equity and Treasury Investment Portfolio
Corporate Private Equity ($mm) Treasury Investment Portfolio2 ($B) Other Corporate Non-performing Loans Column 3 Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11 Column 12 Column 13 Column 14 Column 15 Column 16 1Q04 89.2 2Q04 85.5 3Q04 65.5 4Q04 63.4 1Q05 65.6 Central expen
Slide 19: Financial Discipline Largely in Place
Financial Discipline Largely in Place Detailed bottoms-up budget with thousands of P&Ls Corporate expense allocation changes effectively complete Expenses above market levels are retained in the Corporate Sector Revenue shares reflecting third party economics largely in place Need to drive continued
Slide 20: Creating a Fortress Balance Sheet
Creating a Fortress Balance Sheet Strong Tier 1 ratio of 8.6% at 3/31/05 Excess capital generation creates capital flexibility Dividend - 30-40% payout target Stock buyback - $1.3bn in 1Q05 Investments in the business Conformed capital, reserves and risk process Reduced Treasury investment portfolio
Slide 21: Merger Milestones
Merger Milestones Final card conversion in 3Q (31mm accounts) Texas market integration (Estimated timeframe: 3Q05) and Tri-state market integration Lending platforms Deposit systems Check processing Retail channels Network Merger investments 3/04 - Financial reporting architecture 6/04 - Branding de
Slide 22: Quality earnings
Quality earnings What it takes to run a good business Superior financial reporting; fortress balance sheet; accountability; superior risk management; waste- cutting Tightly controlled capital; appropriate levels of capital; good returns on capital through the cycle from operating businesses Recurrin
Slide 23: Conclusions
Conclusions Significant progress on merger integration Investments on track -- enhancing future growth Financial aspirations represent upper quartile business performance -- aiming for 2007 Capital markets remain challenging this quarter Consumer business environment remains positive Complete belief
Slide 24: Appendix
Appendix 3PMorganChase Q
Slide 25: Corporate 1Q05 Operating Results
Corporate 1Q05 Operating Results ($mm) Net interest income: Treasury NII drag will diminish over time Other NII is funding cost of assets held in Corporate (private equity, buildings, pension, etc) Non interest income includes private equity gains and Treasury securities gains/losses Long term aspir
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