Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Goldman Sachs U.S. Financial Services Conference 2011
45 slides from Jp Morgan Chase &'s conference presentation, Dec 8, 2011
Slide 1: Jamie Dimon, Chairman and Chief Executive Officer
Exhibit 99.1 Jamie Dimon, Chairman and Chief Executive Officer December 7, 2011 Goldman Sachs U.S. Financial Services Conference
Slide 2: Industry landscape
Industry landscape There are several issues affecting banks…. …but there are still significant growth opportunities Regulatory changes other than capital If you view the business from the point of Durbin Amendment view of the customer, i.e., consumers, Middle Market, investors and corporations Deriv
Slide 3: We start with a good hand
incremental pretax income of $500mm - $1B We start with a good hand Excellent client Excellent client-facing franchises that continue to grow and strengthen facing franchises Unparalleled client relationships in 120+ countries Strong products and technology Each standalone business has a top 1, 2 or
Slide 4: Agenda
Agenda Quick overview of some growth opportunities Key investor topics Branch build European exposures Chase Private Client ## Firmwide expense management Business Banking Credit – Wholesale and Retail Retail branch cross-sell Mortgage related ## issues Card products – Private label securitizations
Slide 5: Opportunities for growth
Opportunities for growth Branch build Opportunities Chase Private Client we will review Business Banking Retail branch cross-sell Card products Commercial Banking expansion and cross-sell Asset Management client advisors Global Corporate Bank Investment Bank emerging markets expansion Opportunities
Slide 6: Update on growth initiatives: branch build
Update on growth initiatives Intend to build 175 +/- branches in 2012 (down from 300+/- mentioned at Investor Day) Branches are a primary reason customers select a bank 95%+ of checking accounts are opened in a branch Branches are invaluable to Branches to the the overall overall franchise franchise
Slide 7: Update on the economics of the retail banking model
Update on growth initiatives Update on the economics of the retail banking model Durbin Amendment will reduce Consumer and Business Banking’s annualized revenue by $1B in 2012 Some changes to products and services have already been made to mitigate the impact of Durbin Changed banker and branch mana
Slide 8: Chase Private Client (CPC)
Update on growth initiatives Chase Private Client (CPC) Recent progress # of CPC locations Opened 250+ CPC locations in 2011 Expansion into New York, Chicago, South 750+ Florida, Los Angeles and San Francisco 400 private client bankers and 130 private client advisors 250+ Progress to date 139 On tra
Slide 9: Business Banking
Update on growth initiatives Business Banking Business Banking loan originations ($ in billions) Expansion markets (hWaMu footprint - $ in billions) 2 Verified income Stated income Deposit balances ADB Lending balances ADB $1.5 $1.0 $1.3 $1.2 $1.1 $9.3 $5.9 $7.3 $4.2 $4.7 $5.7 $5.4 $2.3 1 2008 2009
Slide 10: Retail branch cross-sell
Update on growth initiatives Retail branch cross-sell Retail bank household cross-sell – as of 3Q11 We are best-in-class in our ability to cross sell 14-16 Cross-sell for Combined Chase has improved to 7.4 products and services per household in 3Q11 vs. 6.5 in 1Q10 8.4 7.8 7.4 6.8 Sales force has in
Slide 11: Card products
Update on growth initiatives Card products We invested heavily in new products and services through the cycle and shifted our portfolio mix towards more rewards-engaged customers with a lower risk profile Our business continues to gain momentum 1 2 Sales volume has increased from $285B in 2008 to $3
Slide 12: Commercial Banking expansion
Update on growth initiatives Commercial Banking expansion 1 Expansion markets 1 Opportunity 1 Progress Long-term CB pretax income opportunity of $650-800mm More than 300 in-market dedicated resources Firmwide Continue to add between 175-200 new clients a year Over $2.2B in loans as of 3Q11; more tha
Slide 13: Commercial Banking cross-sell
Update on growth initiatives Commercial Banking cross-sell 1 3 Non-lending revenue – CB reported ($ in billions) Product revenue % of Total revenue 3 Treasury Services IB & Other Treasury Services IB & Other Lending $3.3 100% $3.0 $3.1 $3.1 23% 18% $2.7 35% 35% 35% 29% 28% $2.5 80% $2.3 10% 17% 6% 9
Slide 14: AM – client advisors
Update on growth initiatives AM – client advisors Talent Private Banking – Client advisors (#) Global Investment Management – Sales headcount (#) 2,864 802 2,696 741 2,310 676 638 2,164 647 1,868 2007 2008 2009 2010 3Q11 2007 2008 2009 2010 3Q11 Client facing headcount growth has continued in 2011,
Slide 15: Global Corporate Bank (GCB)
Update on growth initiatives Global Corporate Bank (GCB) ~3,500 clients – mostly pre-existing relationships and large international clients Continuing to add bankers; on track for 2011 target with ~260 bankers 2011 banker coverage – 78% international Overall 3Q11YTD international revenue growth of 1
Slide 16: GCB priority countries and branch builds
Update on growth initiatives GCB priority countries and branch builds Russia Turkey Qatar Harbin, China Panama City Saudi Arabia Suzhou, China Ghana (1Q12) Colombia Legend Sri Lanka (4Q11) Kenya (1Q12) Nigeria Sufficient capabilities based on client requirements Major additional investments 2011- 20
Slide 17: Agenda
Agenda Growth initiatives Industry regulatory issues Key investor topics 4Q11 outlook and future comments Appendix 16
Slide 18: The industry and markets transformed significantly before Dodd Frank and Basel
The industry and markets transformed significantly before Dodd Frank and Basel requirements – this should be recognized in policy making Post-crisis landscape – Industry is stronger for it More capital Increased focus on risk by Boards of Directors, Risk Industry Committees and regulators Less lever
Slide 19: There has been significant regulation, much of which we have supported
Regulatory topics reviewed in the presentation There has been significant regulation, much of which we have supported… Regulation commentary Support Concerns/comments Support more capital – up to 10-11% Basel I capital Basel III requirement G-SIB methodology and magnitude are an issue Calibration, a
Slide 20: Oversight needs to be simple, transparent, coordinated and consistent
…but this is not the optimal way to run a robust financial system – oversight needs to be simple, transparent, coordinated and consistent Dotted line indicates authority to request information, but no examination authority. This chart assumes these activities are conducted in a systemically importan
Slide 21: Global Systemically Important Bank (G-SIB) capital surcharge
Global Systemically Important Bank (G-SIB) capital surcharge Overview of proposed methodology “G-SIBiness” is measured relative to 73 other banks, making it difficult to determine where a bank scores under the metrics Criteria (each 20% of score) Metric description (% weight) Issues with methodology
Slide 22: Regulation…Things to be careful about…
Regulation…Things to be careful about… Volcker Rule Regulation skewed against U.S. banks Complex and compliance heavy Dodd Frank Potential limits on liquidity to clients Volcker Rule – only impacts U.S. Could reduce ALM activity Extraterritoriality of margin rules Collins Amendment eliminates tax-ef
Slide 23: Agenda
Agenda Growth initiatives Industry regulatory issues Key investor topics 4Q11 outlook and future comments Appendix 22
Slide 24: European exposure
European exposure Our Euro 5 net exposure – Risk view As of November 17, 2011 ($ in billions) Exposure¹ Securities & Trading Derivative Portfolio Net Lending AFS Trading Total Collateral Hedging exposure Spain $3.6 $2.6 $4.7 $10.9 ($2.5) ($0.7) $7.7 Sovereign - 2.3 (0.3) 2.0 - (0.3) 1.7 Non-Sovereig
Slide 25: Firmwide expense has been trending higher
Firmwide expense has been trending higher Comp. Marketing Professional & outside services Firmwide noninterest expense, excluding Tech. & comms. Occupancy Other expense Investment Bank compensation, Corporate Managed basis firmwide overhead ratio litigation expense, and foreclosure-related 60 70% ma
Slide 26: Credit – Wholesale and Retail
Credit – Wholesale and Retail Net charge-off (%) Through-the-cycle 3Q11 YTD expectations Investment Bank (0.09)% 0.70% Commercial Banking 0.12% 0.50% Credit Card (ex. WaMu and ComCard)1 5.28% 4.50% Home Equity (ex. PCI) 3.01% 0.25% Prime Mortgage (excl. Option ARMs) 1.20% 0.10% $ in billions LLR - W
Slide 27: Private label securitization – Litigation will be a long and tough process for plaintiffs
Private label securitization – Litigation will be a long and tough process for plaintiffs 1 2 Original balances in litigation for Chase (excl. WaMu) of $54.9B Claims made for both securities litigation and repurchase Substantial impediments to repurchase claims: Quorum requirements Trustees generall
Slide 28: Investment Bank – Thoughts on future
Investment Bank – Thoughts on future 1 World Economic Forum Report in collaboration with McKinsey and Company 27
Slide 29: Demystifying the markets
Demystifying the markets Primary and secondary volumes continue to rise; trading spreads are decreasing Primary issuance Secondary trading Trading spreads & commissions Gross U.S. long-term debt issuance Avg. daily volumes – debt ($ in trillions) instruments ($ in trillions) 6.7 0.9 2.1 0.3 1996 199
Slide 30: J.P. Morgan IB Markets: A world-class franchise
Demystifying the markets J.P. Morgan IB Markets: A world-class franchise JPM IB Markets revenue ($B) and ranking Commentary Fixed Income revenue nearly doubled since Fixed Income (incl. Commodities) Equities 2005 2 22 Flight to quality – 9% market share to ~15% 20 4 Franchise expansion (Bear, Sempra
Slide 31: A diverse revenue base
Demystifying the markets A diverse revenue base IB Markets revenues: Typical quarter (%) 100% 100% 100% Description Treasuries, agencies, interest rate swaps, futures, options Rates Municipal debt instruments and derivatives Securitized Mortgage and asset backed securities Products Fixed Flow 70% Em
Slide 32: Sales & Trading at JPM
Demystifying the markets Sales & Trading at JPM ~16,000 investor clients Investor clients ~10,000 financials ~ 6,000 corporates 2,500+ sales professionals Sales and Trading Sales professionals build & maintain client relationships Matches our products to their needs Provide the link between clients,
Slide 33: Typical trades (high volume, flow driven business)
Demystifying the markets Typical trades (high volume, flow driven business) Major trading products Quantity per quarter Volumes (# of trades) FX Spot 4,000,000 High Credit Derivatives (e.g., Index Credit Derivative) 200,000 High Emerging Market Trading (Rates, FX, Credit) 175,000 High Financing 100,
Slide 34: Over 90% of the Global Fortune 500 use derivatives
Demystifying the markets Over 90% of the Global Fortune 500 use derivatives Derivatives usage by Global Fortune 500 Derivatives usage in top 10 countries (% of companies)¹ 100% 100% 100% 100% 100% 100% 97% 92% 87% 64 39 34 14 14 13 36 140 62% 13 Use Don't use derivatives derivatives 94% 6% 18 Japan
Slide 35: Basel III – RWA and capital estimates
Basel III – RWA and capital estimates Capital ($ in billions) RWA ($ in trillions) 1 $129 $120 $119 $1.5 $1.4 $1.2 Basel I 3Q11 Basel III 3Q11 Basel III 4Q12 Basel I 3Q11 Basel III 3Q11 Basel III 4Q12 Tier 1 Common Ratio Adjustments to RWA from 3Q11 Basel I to Basel III 9.9% 7.7% 9.2% (+$330B): Mark
Slide 36: Common equity and performance targets
Common equity and performance targets Common equity and target ROEs ($ in billions) Through-the- Current Basel III Common equity 4 cycle target Tier 1 Common 1/1/2011 1/1/2012 ROE Target Investment Bank $40.0 $40.0 17% +/- 9.5% +/- Retail Financial Services 25.0 26.5 30% +/- 8.5% +/- Mortgage Bankin
Slide 37: Comments on capital
Comments on capital Federal Reserve Severe stress scenario Comprehensive Unemployment of 13% Capital Analysis Home price decline of 20% from current level and Review Severe global market shock, including specific European stresses Results under the Fed stress scenario will be evaluated relative to a
Slide 38: Agenda
Agenda Growth initiatives Industry regulatory issues Key investor topics 4Q11 outlook and future comments Appendix 37
Slide 39: 4Q11 outlook and future comments
4Q11 outlook and future comments Investment Bank Corporate / Private Equity Total revenue (excl. DVA) essentially flat Private Equity Expect modest loss this quarter Retail Financial Services Corporate Corporate net income slightly better than the zero Mortgage Banking (excl. Real Estate Portfolios)
Slide 40: Tremendously focused on strategy to navigate the environment in 2012
Tremendously focused on strategy to skillfully navigate through the environment in 2012, including regulation Excellent client-facing franchises that continue to grow and strengthen Excellent client facing Unparalleled client relationships in 120+ countries franchises Strong products and technology
Slide 41: Agenda
Agenda Growth initiatives Industry regulatory issues Key investor topics 4Q11 outlook and future comments Appendix 40
Slide 42: JPMorgan Chase overview
JPMorgan Chase overview Performance summary $ in millions, excluding EPS $O/(U) 3Q10YTD 3Q11YTD 3Q10YTD 1 Revenue (FTE) $78,120 $77,569 ($551) Credit Costs 13,596 5,390 (8,206) Expense 45,153 48,371 3,218 Reported Net Income $12,539 $15,248 $2,709 Net Income Applicable to Common Stock $11,353 $14,14
Slide 43: Consumer credit — delinquency trends
Consumer credit — delinquency trends (Excl. purchased credit-impaired loans and WaMu and Commercial Card portfolios) Home Equity delinquency trend ($ in millions) Prime Mortgage delinquency trend ($ in millions) $4,000 $6,500 30 – 150 day delinquencies 30 – 150 day delinquencies 150+ day delinquenci
Slide 44: Notes on non-GAAP & other financial measures
Notes on non-GAAP & other financial measures Notes on non-GAAP financial measures 1. In addition to analyzing the Firm’s results on a reported basis, management reviews the Firm’s results and the results of the lines of business on a “managed” basis, which is a non-GAAP financial measure. The Firm’s
Slide 45: Forward-looking statements
Forward-looking statements 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 & Co.’s management and are subject to significant risks a
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