Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Investor Day (February 2019)
64 slides from Jp Morgan Chase &'s investor day presentation, Feb 26, 2019
Slide 1: Consumer & Community Banking
CONSUMER & ~ COMMUNITY BANKING February 26, 2019 FIRM OVERVIEW CORPORATE & INVESTMENT BANK “a PD CONSUMER & COMMUNITY BANKING ™ a ASSET & WEALTH MANAGEMENT a Sea COMMERCIAL BANKING , JPMORGAN CHASE & CO,
Slide 2: Agenda
Agenda Page 1 Overview 1 2 Consumer Banking 10 3 Home Lending 17 4 Card 27 5 Closing remarks 42 6 Notes 43
Slide 3: We remain focused on a consistent set of strategic priorities
We remain focused on a consistent set of strategic priorities Deliver One Chase experiences that provide choice, security, ease, personalization, and integrated payments Create interoperability between physical and digital channels to provide seamless omni-channel experiences for our customers
Slide 4: We have made significant progress against our commitments
We have made significant progress against our commitments We have committed to… …and have delivered on those promises Relationships with ~50% of U.S. households – of which 25% have a multi-LOB relationship Deliver One Chase experiences to grow share from a position of strength ~2x retail deposit
Slide 5: Performance targets
Performance targets Consumer & Community Banking targets 2019 2017 2018 outlook Business Banking Net charge-off rate 0.57% 0.49% Home Lending Net charge-off / (recovery) rate1 0.03% (0.02%) Medium-term: Modestly higher on mix Net charge-off rate 2.95% 3.10% Card Services Net revenue rate 10.57% 11.2
Slide 6: Continuous investment is driving strong momentum across key business drivers
Continuous investment is driving strong momentum across key business drivers Key business drivers ($B, except ratios and where otherwise noted) 2018 YoY ∆ Households (mm) 61.7 1% Small businesses (mm) 4.2 5% Consumer & Active digital customers1 (mm) 49.3 5% Community Banking Active mobile customers2
Slide 7: Volume-driven growth and rate benefit drove strong top-line results for the year
Volume-driven growth and rate benefit drove strong top-line results for the year CCB revenue ($B) $1.9 $0.4 $52.1 $3.3 $46.5 2017 Volume-driven Interest rate impact¹ Other² 2018 revenue growth Note: Numbers may not sum due to rounding 1 Includes Home Lending production revenue margin compression due
Slide 8: We improved our operating leverage while continuing to invest and grow
We improved our operating leverage while continuing to invest and grow 2017 2018 2019 Revenue $46.5B $52.1B Flat for 2020 and 2021 Expense $26.1B $27.8B ~$29B ex-auto lease growth Overhead ratio 56% 53% Headcount1 ~140K ~135K 1 Includes employees and contractors. 2017 excludes Commercial Card headco
Slide 9: Our investments made it easier for customers to self-serve and enabled operational efficiencies
Our investments made it easier for customers to self-serve and enabled operational efficiencies and workforce transformation, which have lowered costs Reduction in cost to serve1 per CCB household Efficiency examples Customer behavior >80% of transactions completed (~15%) shift through self-service
Slide 10: We have a portfolio of investments that will fuel long-term results
We have a portfolio of investments that will fuel long-term results Technology investments in 2018 are expected to generate: Increasing efficiency >$1B in annual run-rate savings1 ROI2 of >2x Created differentiated experiences (e.g., QuickPay with Zelle®, Digital Account Opening, Credit Jour
Slide 11: The power of our digital platform
The power of our digital platform Our digital platform is embedded in our customers’ daily lives… …creating an ecosystem that drives engagement3 Net Promoter Score4 10 points 49mm Active digital customers1 Customers are more satisfied… Monthly digital logins per customer2 All other households Digita
Slide 12: Agenda
Agenda Page 1 Overview 1 2 Consumer Banking 10 3 Home Lending 17 4 Card 27 5 Closing remarks 42 6 Notes 43
Slide 13: We have made significant progress against our priorities
We have made significant progress against our priorities Acquire and Grew Consumer Banking deposit & investment balances by $215B since 20141 deepen relationships Acquired 2.5mm net new households since 20142 Increase 75% of new customers are mobile-active after 6 months3 engagement 22mm mob
Slide 14: We continue to grow our business at an industry-leading pace
We continue to grow our business at an industry-leading pace, winning with both new and existing customers We are growing at an industry-leading pace… …by winning with both new and existing customers Four year deposit growth1 Share of new primary bank 2014 – 2018 CAGR relationships in 2017 and 20182
Slide 15: Our investments in digital platforms and functionality have made it easier for customers to self-serve
Our investments in digital platforms and functionality have made it easier for customers to self-serve #1 largest active mobile banking customer base among U.S. banks1 #1 fastest-growing mobile banking customer base among U.S. banks1 Everyday digital activities enabled by Chase Manage your Split a b
Slide 16: Our physical network has been critical to achieving industry-leading deposit growth
Our physical network has been critical to achieving industry-leading deposit growth As we strengthen our self-service capabilities, customers are transacting at the teller line less often… …but still highly value a physical presence Average teller transactions per customer1 Convenient branch locatio
Slide 17: We are innovating across our channels and throughout the customer lifecycle
We are innovating across our channels and throughout the customer lifecycle Open Manage Deepen Digital Account Opening reduced First retail U.S. bank to send external Increasing engagement and banker time to open an account to 3 – 5 transfers within 15 seconds via the productivity through new
Slide 18: We are effectively expanding our physical network to attractive new markets
We are effectively expanding our physical network to attractive new markets Drivers of effective market expansion Delivering Chase to more of the U.S. Attractive markets: Large, fast-growing expansion markets, including three of the top 10 markets, which alone U.S. customers in-footprint2 represen
Slide 19: We are well-positioned for long-term financial success and industry outperformance
We are well-positioned for long-term financial success and industry outperformance Acquire and Expand our physical footprint to cover 93% of the U.S. population by the end of 2022 (up from 69% before deepen market expansion), allowing us to reach 80mm more U.S. consumers1 relationships Continue
Slide 20: Agenda
Agenda Page 1 Overview 1 2 Consumer Banking 10 3 Home Lending 17 4 Card 27 5 Closing remarks 42 6 Notes 43
Slide 21: We continue to build a high-quality, customer-focused Home Lending business
We continue to build a high-quality, customer-focused Home Lending business ✓ We are taking a disciplined approach to growth Maintain excellent Strong portfolio credit quality (average FICO 756, average CLTV 57%)1 origination credit quality Loan balances optimized for liquidity and capital ✓ Our
Slide 22: The home lending industry is in a state of transition
The home lending industry is in a state of transition Profitability remains challenged across the industry as origination volume continues to decrease, spreads compress, and production costs rise Primary2 / Secondary3 mortgage rate spread and Mortgage origination market1 ($B) industry Retail product
Slide 23: We are being intentional in our positioning across production, servicing, and our portfolio
We are being intentional in our positioning across production, servicing, and our portfolio Key business drivers ($B, except ratios where otherwise noted) 2017 2018 YoY Δ Total mortgage origination volume $98 $79 (19%) Home Lending Consumer origination volume $40 $38 (5%) Production Correspondent or
Slide 24: We have successfully rebalanced our loan portfolio
We have successfully rebalanced our loan portfolio Home Lending average loan balances ($B) 2014 – 2018 CAGR Core Non-core $232 $242 Total: +7% $53 Non-core1: We have recalibrated our $183 (17%) $81 portfolio from ~40% to ~80% core between 2014 and 2018 $114 We will continue to manage our $188 Co
Slide 25: Portfolio credit quality continues to improve and is extremely strong
Portfolio credit quality continues to improve and is extremely strong… % of Home Lending portfolio with FICO < 700 Home Lending1 30+ delinquency rate Home Lending net charge-off / (recovery) rate2 and CLTV > 80%3 3.0% (52) bps (~90%) 0.50% 2.0% Reflects the impact of Hurricanes Irma and Harvey 1.0%
Slide 26: We continue to de-risk our servicing business
…and we continue to de-risk our servicing business, which will protect us in a downturn 30+ delinquency rate2 for Chase 2014 – 2018 Chase servicing book activity servicing book vs. industry3 (%) Servicing cost per unit ($)4 “Coming In” Dec. 2014 through Dec. 2018 Industry 3 Chase Units 30+ delinquen
Slide 27: Despite a challenging market, we are committed to delivering for our customers
Despite a challenging market, we are committed to delivering for our customers % of Chase mortgage customers who subsequently Of existing Chase deposit customers Home Lending Net Promoter Score1 opened other products2, by mortgage satisfaction level3 who opened a mortgage: All other 4 ~2x Top 2 box
Slide 28: We are deepening relationships with our core Home Lending customers
We are deepening relationships with our core Home Lending customers, and building on our existing momentum… We are focused on deepening relationships with our core Home Lending Growth to-date with our primary bank customers customers through targeted objectives to meet their unique needs has been st
Slide 29: Simplifying the digital mortgage process with differentiated experiences
…by simplifying the digital mortgage process and providing differentiated experiences for Chase customers … and have a foundation of differentiated solutions We offer a digitally-enabled fulfillment process through Chase MyHome1 … to deliver to Chase customers Transparent Customers can keep track of
Slide 30: We continue to build a high-quality, customer-focused Home Lending business
We continue to build a high-quality, customer-focused Home Lending business Maintain excellent origination credit quality ✓ We are taking a disciplined approach to growth Improve quality of servicing portfolio and de-risk the Our portfolio de-risking positions us well through the credit cycle, and w
Slide 31: Agenda
Agenda Page 1 Overview 1 2 Consumer Banking 10 3 Home Lending 17 4 Card 27 5 Closing remarks 42 6 Notes 43
Slide 32: We are executing on a clear strategy
We are executing on a clear strategy Build scale with great products Invest in Deliver and marketing product valuable launches and customer- partner centric Engage our customers to drive renewals High offerings quality profitability and lower attrition growth Deepen relationships across the Increase
Slide 33: Our sustained investment has created tremendous scale
Scale Our sustained investment in products and customer acquisition has created tremendous scale We launched several compelling, new products… We are operating from a position of strength in credit card spend (22% share)2 and Freedom Unlimited ® Sapphire Reserve ® Ink Business #1 outstandings (17% s
Slide 34: This scale enables strong top-line account, sales, outstandings, and revenue growth
Scale This scale enables strong top-line account, sales, outstandings, and revenue growth Active accounts Sales volume1 EOP outstandings Revenue 6% CAGR 2% CAGR 10% CAGR 5% CAGR 2014 2018 2014 2018 2014 2018 2014 2018 Select examples of growth drivers New products and Investment in Proactive line Pr
Slide 35: Importantly, our scale has also created cost efficiencies
Scale Importantly, our scale has also created cost efficiencies Increased operating leverage Improved operating efficiency Overhead ratio Contact cost per statement1 (1ppt) (1ppt) (10%) 2014 2018 2019E 2014 2018 Improved marketing efficiency Reduced fraud losses Credit card sales generated per dolla
Slide 36: Our experience has shown the value of engaging our large customer base
Engage Our experience has shown the value of engaging our large customer base Ultimate Rewards® redeemers have higher sales and revenue, with lower attrition1,2 Annual sales Annual revenue 12-month attrition 2.0x 4.0x 4.2x 1.4x 2.2x 1.6x None One Multiple None One Multiple None One Multiple Multi-re
Slide 37: We have three fundamental levers to drive engagement
Engage We have three fundamental levers to drive engagement Engagement Innovative products Loyalty Experiences Bringing best-in-class products Moving beyond points to strengthen Building everyday customer experiences to our customers customer loyalty Scale 32
Slide 38: My Chase Plan will make borrowing easier for our customers
Engage SM My Chase Plan will make borrowing easier for our customers For planned purchases with a payment plan at a reasonable cost Opportunity: outstandings held off-us ~$250B by existing customers1 1 Total outstanding balances on non-Chase cards by existing Chase consumer card customers; as of Dec
Slide 39: My Chase Loan will enable our customers to better use their existing line
Engage SM My Chase Loan will enable our customers to better use their existing line to borrow For larger purchases, including non-cardable spend, with equal payments at a competitive rate Opportunity: outstandings held off-us ~$250B by existing customers1 1 Total outstanding balances on non-Chase ca
Slide 40: Chase Offers has seen tremendous engagement
Engage SM Chase Offers has seen tremendous engagement in the first few months SM Chase Offers Providing both customers and merchants with real value 1 Chase connects customers 2 Customers love getting money to merchants who deliver in their pocket and continue to real value through Offers frequently
Slide 41: Credit Journey drives repeat customer engagement
Engage SM Credit Journey drives repeat customer engagement and familiarity with Chase for prospects Credit Journey SM will deliver value for our customers and returns for the franchise Access to your credit score View historical scores and see Receive tailored pre-approved offers and identity protec
Slide 42: Tap to pay makes using your Chase card faster and simpler
Engage Tap to pay makes using your Chase card faster and simpler Chase customers can “tap to pay” using contactless cards Tap to pay has already experienced meaningful adoption Customer adoption of tap to pay vs. digital wallet1 2.4x Digital wallet Tap to pay Tap to pay already exceeding digital wal
Slide 43: Engagement improves our ability to deepen relationships across Chase
Deepen Engagement improves our ability to deepen relationships across Chase Likelihood to adopt a second product1: Spend engagement2 Mobile activity3 Credit JourneySM enrollment4 ~2x ~2x ~1.5x Low engaged High engaged Mobile inactive Mobile active Not enrolled in Credit Enrolled in Credit Journey Jo
Slide 44: Deepened relationships give us unique risk management advantages
Deepen Deepened relationships give us unique risk management advantages Critical components of disciplined underwriting… …drive better risk decisions Approval rate1 Continually improving early warning systems Detection Improved monitoring ~2.5x leveraging expanded data sources Non-card Chase No depo
Slide 45: We are prepared for any economic scenario with strong risk management capabilities
We are prepared for any economic scenario with strong risk management capabilities New risk monitoring capabilities enable surgical pullbacks… …which improved portfolio NCOs with limited impact to growth Data for the Net charge-offs (%) 1 Portfolio Portfolio without pullback example customer Jane 3.
Slide 46: Our clear strategy, risk management, and franchise differentiators will ensure high quality growth
Our clear strategy, risk management, and franchise differentiators will ensure high quality growth We have a clear strategy to scale, engage, and deepen… … and all the ingredients for sustainable success Unmatched scale and distribution Proprietary rewards platform Invest in Deliver Full
Slide 47: Agenda
Agenda Page 1 Overview 1 2 Consumer Banking 10 3 Home Lending 17 4 Card 27 5 Closing remarks 42 6 Notes 43
Slide 48: We remain focused on executing against our strategy
We remain focused on executing against our strategy Drive engagement by introducing innovative lending products, strengthening customer loyalty and Deliver One Chase experiences to creating everyday customer experiences grow from a position of strength Expand branch network to 15 – 20 new market
Slide 49: Agenda
Agenda Page 1 Overview 1 2 Consumer Banking 10 3 Home Lending 17 4 Card 27 5 Closing remarks 42 6 Notes 43
Slide 50: Notes on slide 2 – We have made significant progress against our commitments
Notes on slide 2 – We have made significant progress against our commitments 1. Source: FDIC 2018 Summary of Deposits survey per S&P Global Market Intelligence. Excludes non-retail branch locations and all branches with $500mm+ in deposits within the last two years (excluded branches are assumed to
Slide 51: Notes on slide 7 – Our investments made it easier for customers to self-serve
Notes on slide 7 – Our investments made it easier for customers to self-serve and enabled operational efficiencies and workforce transformation, which have lowered costs 1. Cost to serve defined as total CCB expense less investments, auto lease depreciation, legal losses, and FDIC surcharge. Cost to
Slide 52: Notes on slide 9 – The power of our digital platform
Notes on slide 9 – The power of our digital platform 1. Users of all web and/or mobile platforms who have logged in within the past 90 days 2. Reflects 90-day digital logins among 90-day active users divided by three to estimate average monthly logins. Data reflects December 2016, December 2017, and
Slide 53: Notes on slide 10 – We have made significant progress against our priorities
Notes on slide 10 – We have made significant progress against our priorities 1. Represents average deposits and end of period investment balances 2. Includes Consumer Banking households 3. Represents Consumer Banking customers that are 90-day mobile-active six months after account opening. Includes
Slide 54: Notes on slide 11 – We continue to grow our business at an industry-leading pace
Notes on slide 11 – We continue to grow our business at an industry-leading pace, winning with both new and existing customers 1. #1 in absolute deposit dollar balance growth from 2014 to 2018. Source: FDIC 2018 Summary of Deposits survey per S&P Global Market Intelligence. Excludes non-retail branc
Slide 55: Notes on slide 12 – Our investments in digital platforms and functionality
Notes on slide 12 – Our investments in digital platforms and functionality have made it easier for customers to self-serve 1. Based on 4Q18 peer disclosure for JPM's Consumer & Community Banking, BAC's Consumer Banking, WFC's Community Banking and Citi’s North America GCB segments. #1 growth in term
Slide 56: Notes on slide 13 – Our physical network has been critical
Notes on slide 13 – Our physical network has been critical to achieving industry-leading deposit growth 1. Average teller transactions among all Consumer Banking customers. Represents 4Q14 and 4Q18 2. Novantas Customer Knowledge, 2018 U.S. Shopper Study. Prospective switchers (N=4,866). Convenient b
Slide 57: Notes on slide 14 – We are innovating across our channels
Notes on slide 14 – We are innovating across our channels and throughout the customer lifecycle 1. Median existing customer opened account via Digital Account Opening (“DAO”) in ~3 minutes. Median new-to-bank customer opened account via DAO in ~5 minutes. Does not include time to open an account via
Slide 58: Notes on slide 15 – We are effectively expanding our physical network
Notes on slide 15 – We are effectively expanding our physical network to attractive new markets 1. FDIC 2018 Summary of Deposits survey per S&P Global Market Intelligence. Excludes non-retail branch locations and all branches with $500mm+ in deposits within the last two years (excluded branches are
Slide 59: Notes on slide 18 – The home lending industry is in a state of transition
Notes on slide 18 – The home lending industry is in a state of transition 1. Source: Inside Mortgage Finance (“IMF”) 2. Source: Freddie Mac Primary Mortgage Market Survey (“PMMS”). Represents 30-year fixed rate 3. Source: JPMorgan Chase Securitized Products Group (“SPG”) Research. Represents Fannie
Slide 60: Notes on slide 22 – We continue to de-risk our servicing business
Notes on slide 22 – …and we continue to de-risk our servicing business, which will protect us in a downturn 1. 30+ delinquency rate for total "in flows" as of December 2018. Total "out flows" at time of transfer 2. Source: IMF. Includes all loans past due and in foreclosure 3. Industry defined as La
Slide 61: Notes on slide 24 – We are deepening relationships with our core Home Lending customers
Notes on slide 24 – We are deepening relationships with our core Home Lending customers, and building on our existing momentum… 1. Primary relationship based on internal JPMorgan Chase definition 2. Based on JPMorgan Chase internal analysis 3. Represents Chase’s percentage share of targeted customer
Slide 62: Notes on slide 28 – Our sustained investment in products and customer acquisition
Notes on slide 28 – Our sustained investment in products and customer acquisition has created tremendous scale 1. “Credit Card Market: Cobrand Market Share by Issuer,” Phoenix, October 2018. For 1H18, based on number of accounts, total spend, and revolving balance dollars 2. Represents 2018 share of
Slide 63: Notes on slide 30 – Our scale has also created cost efficiencies
Notes on slide 30 – Importantly, our scale has also created cost efficiencies 1. Reflects customer service expense per statement 2. Reflects year 3 sales on domestic acquisitions. Acquisition marketing excludes media 3. Fraud losses exclude disputes 56
Slide 64: Notes on slide 38 – Engagement improves our ability to deepen relationships across Chase
Notes on slide 38 – Engagement improves our ability to deepen relationships across Chase 1. Analysis shows difference in percentage of in-footprint, Chase consumer card-only customers, who opened a deposit relationship after 18 months, as of June 2017 2. Low-spend engagement is defined as annual spe