Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q2 2005 Earnings Presentation
21 slides from Jp Morgan Chase &'s earnings presentation, Jul 20, 2005
Slide 1: Financial Results Second Quarter 2005
J U L Y 2 0, 2 0 0 5 FINANCIAL RESULTS Second Quarter 2005
Slide 2: Second Quarter 2005 Earnings
Second Quarter 2005 Earnings n Investment Bank - weak trading results; strong fees n Good momentum in Card Services, Treasury & Securities Services, Consumer & Small Business Banking and Asset & Wealth Management – double-or triple-digit earnings growth n Merger saves on track to achieve $2.2bn run-
Slide 3: 2Q05 Earnings – GAAP Comparison
2Q05 Earnings – GAAP Comparison Heritage JPMC ($ in millions, except per share) 2Q05 1Q05 2Q04 Reported Net Income $994 $2,264 ($548) Non-Operating Charges (after-tax) 1,334 648 2,354 Operating Earnings $2,328 $2,912 $1,806 Reported EPS $0.28 $0.63 ($0.27) Operating EPS $0.66 $0.81 $0.85 Non-Operati
Slide 4: 2Q05 LOB Operating Earnings – GAAP Comparison
2Q05 LOB Operating Earnings – GAAP Comparison $ O/(U) Heritage JPMC ($ in millions) 2Q05 1Q05 2Q04 Investment Bank $606 ($719) ($38) Retail Financial Services 980 (8) 584 Card Services 542 20 366 Commercial Banking 174 (69) 109 Treasury & Securities Services 229 (16) 128 Asset & Wealth Management 28
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: 2Q05 Proforma Operating Performance Comparison
2Q05 Proforma Operating Performance Comparison $ O/(U) ($ in millions) 2Q05 1Q05 2Q04 Revenue (FTE)1 $13,900 ($840) ($876) Credit Costs1 1,517 173 (89) Expenses 8,748 (144) (91) Earnings $2,328 ($584) ($459) EPS $0.66 ($0.15) ($0.11) Quarterly Results2 2Q05 1Q05 2Q04 Return on Equity 9% 11% 11% Retu
Slide 7: LOB Operating Earnings – Proforma Comparison
LOB Operating Earnings – Proforma Comparison $ O/(U) % O/(U) ($ in millions) 2Q05 1Q05 2Q04 1Q05 2Q04 Investment Bank $606 ($719) ($410) (54%) (40%) Retail Financial Services 980 (8) 421 (1%) 4%1 Card Services 542 20 133 4% 33% Commercial Banking 174 (69) (60) (28%) (26%) Treasury & Securities Servi
Slide 8: Investment Bank – Proforma Comparison
Investment Bank – Proforma Comparison $O/(U) n Earnings down 40% YoY and 54% QoQ due to ($ in millions) 2Q05 1Q05 2Q04 weak trading results Revenues $2,750 ($1,430) ($647) n IB fees remain strong Investment Bkg. 965 (20) 28 n Fixed income markets decline driven by weaker Fixed Income Mkts 1,418 (871
Slide 9: Retail Financial Services – Business Drivers
Retail Financial Services – Business Drivers Consumer & Small Business Bkg. 2Q05 1Q05 2Q04 n Good momentum in growth initiatives Checking Accts (MM) 8.6 8.4 7.9 -Significant progress in legacy Chase branches # of Branches 2,539 2,517 2,435 -104 net new branches YoY -475 personal bankers added YoY #
Slide 10: Retail Financial Services – Proforma Comparison
Retail Financial Services – Proforma Comparison $ O/(U) ($ in millions) 2Q05 1Q05 2Q041 n Core earnings up 10%1 YoY driven by Revenues $3,799 ($48) ($74) continued momentum in Consumer & Small Business Banking and favorable Credit Costs 94 -- (81) MSR risk management performance Expenses 2,126 (36)
Slide 11: Card Services – Proforma Comparison (Managed)
Card Services – Proforma Comparison (Managed) $O/(U) ($ in millions) 2Q05 1Q05 2Q04 n ROO of 2.56%, up 49bps YoY; earnings Revenues $3,886 $107 $110 up 33% YoY despite litigation charge Credit Costs 1,641 5 (116) n Revenues increased 3% YoY driven by Expenses 1,383 70 17 higher loan balances and hig
Slide 12: Commercial Banking – Proforma Comparison
Commercial Banking – Proforma Comparison $O/(U) n Earnings down 26% YoY driven by an ($ in millions) 2Q05 1Q05 2Q04 increase in provision for credit losses Revenues $900 $50 $34 Middle Market 594 22 32 n Revenue growth of 4% YoY and 6% QoQ primarily driven by increased liability Corporate Banking 13
Slide 13: Treasury & Securities Services – Proforma Comparison
Treasury & Securities Services – Proforma Comparison $O/(U) ($ in millions) 2Q05 1Q05 2Q04 n Revenues up 16% YoY due to spread widening, balance growth, new business Revenues $1,588 $106 $220 volume and the impact of the Vastera Treasury Services 682 64 98 acquisition, partially offset by lower Inve
Slide 14: Asset & Wealth Management – Proforma Comparison
Asset & Wealth Management – Proforma Comparison $O/(U) n Earnings up 49% YoY due to net asset ($ in millions) 2Q05 1Q05 2Q04 inflows, higher deposit and loan Revenues $1,343 ($18) $158 balances and market appreciation Credit Costs (20) (13) (15) n Earnings up 3% QoQ due to net asset inflows, lower c
Slide 15: Corporate – Proforma Comparison
Corporate – Proforma Comparison $O/(U) ($ in millions) 2Q05 1Q05 2Q04 Earnings by Unit n Private equity gains reflect the Private Equity $122 ($315) ($28) realization of two large Treasury (323) 505 (287) investments Ongoing Treasury (327) (43) (325) Securities Gains/(Losses) 4 548 38 Other Corporat
Slide 16: Merger Milestones
Merger Milestones Completed – 2005 YTD Upcoming ü 1/05 – Technology insourcing n Chase card conversion (31mm ü 1/05 – Merger of payroll & benefit accounts) systems n Launch of corporate internet sites ü 2/05 – Merger of mutual funds (6mm customers) ü 4/05 – Trade finance n Texas market integration (
Slide 17: Outlook
Outlook n Investment Bank - IB fee pipeline: continues to be strong - Trading: expect better environment than 2Q - Credit portfolio: lower gains from loan workouts and loan sales - Credit: returning to normal over time - Comp/Rev. ratio: based on current market conditions n Retail Financial Services
Slide 18: Disclaimer
Disclaimer This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. Actu
Slide 19: Appendix
APPENDIX JPMorganChase & 19
Slide 20: 2Q05 Operating Results – Heritage JPMC Comparison
2Q05 Operating Results1 – Heritage JPMC Comparison JPMorgan Chase ($mm) Investment Bank ($mm) 2Q04 O/(U) Heritage JPMC 2Q04 O/(U) Heritage JPMC 2Q05 $ % 2Q05 $ % Revenue $13,900 $4,724 51% Revenue $2,750 ($189) (6%) Credit Costs 1,517 828 120% Credit Costs (343) (215) (168%) Expenses 8,748 3,035 53%
Slide 21: 2Q05 Operating Results – Heritage JPMC Comparison
2Q05 Operating Results1 – Heritage JPMC Comparison Commercial Banking ($mm) Treasury & Securities Services ($mm) 2Q04 O/(U) Heritage JPMC 2Q04 O/(U) Heritage JPMC 2Q05 $ % 2Q05 $ % Revenue $900 $566 169% Revenue $1,588 $495 45% Credit Costs 142 123 NM Credit Costs 2 (1) (33%) Expenses 473 270 133% E