Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Investor Day (February 2016)
56 slides from Jp Morgan Chase &'s investor day presentation, Feb 23, 2016
Slide 1: Consumer & Community Banking
CONSUMER & COMMUNITY BANKING Gordon Smith, Chief Executive Officer Consumer & Community Banking February 23, 2016
Slide 2: Agenda
Agenda Page Consumer & Community Banking 1 Payments 20 Credit Card 29 Mortgage Banking 36 Consumer Banking 43 Appendix 51 CONSUMER & COMMUNITY BANKING 1
Slide 3: We remain focused on a consistent set of strategic priorities
CCB Payments Credit Card Mortgage Banking Consumer Banking We remain focused on a consistent set of strategic priorities Deepen relationships with our customers, simplify and improve customer experience Execute expense reduction initiatives and rationalize cost structure Maintain strong contro
Slide 4: Performance targets
CCB Payments Credit Card Mortgage Banking Consumer Banking Performance targets Consumer & Community Banking targets 2015 Investor Day Medium Medium term term guidance 2014 2015 guidance (+/-) (+/-) Card net charge-off rate1 2.75% 2.51% 2.50% 3.00% Card Services revenue margin 12.03% 12.33% 11.25% 12
Slide 5: We have continued momentum across key business drivers
CCB Payments Credit Card Mortgage Banking Consumer Banking We have continued momentum across key business drivers Key business drivers $ in billions, except ratios and where otherwise noted, all balances are average 2015 YoY ∆ Consumer & Households (mm) 57.8 1% Community Banking Active mobile users
Slide 6: We continue to improve our customer experience
CCB Payments Credit Card Mortgage Banking Consumer Banking We continue to improve our customer experience J.D. Power U.S. retail banking satisfaction1,2 Mortgage originations net promoter score3 J.D. Power overall satisfaction index 820 +38 800 780 760 2010 2015 J.D. Power U.S. credit card satisfact
Slide 7: We see strong growth in deposits and core loans
CCB Payments Credit Card Mortgage Banking Consumer Banking We see strong growth in deposits and core loans Consumer & Community Banking average deposits ($B) Consumer & Community Banking average loans1 ($B) Card Mortgage Banking 3 Auto 2 Business Banking/Other CAGR Non-core loans (all LOBs) +9% Tota
Slide 8: We have built high-quality lending portfolios that will be resilient through-the-cycle
CCB Payments Credit Card We have built high-quality lending portfolios that will be resilient through-the- Mortgage Banking Consumer Banking cycle Credit Card1 Auto Finance2 Mortgage Banking3 Balance transfers ($B) % of originations with LTV >120% % of originations retained with LTV >80% (72%) 18% 2
Slide 9: Credit losses are at low levels, but we rigorously monitor for signs of stress
CCB Payments Credit Card Mortgage Banking Consumer Banking Credit losses are at low levels, but we rigorously monitor for signs of stress Credit Card net charge-offs Net charge-offs ($mm) Net charge-off rate (%)1 $1,500 6.0% $1,000 4.0% $500 2.0% $0 2 3 0.0% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1
Slide 10: We have reduced expense by ~$4B and headcount by ~43K since 2012
CCB Payments Credit Card Mortgage Banking Consumer Banking We have reduced expense by ~$4B and headcount by ~43K since 2012 CCB expense ($B) CCB headcount (K)1 ($3.9) (42.7) $28.8 $27.8 178.7 $25.6 160.3 $24.9 148.2 136.0 CONSUMER & COMMUNITY BANKING 2012 2013 2014 2015 2012 2013 2014 2015 1 Include
Slide 11: Our expense reduction initiatives are on track and we are making additional investments
CCB Payments Credit Card Our expense reduction initiatives are on track and we are making additional Mortgage Banking Consumer Banking investments in opportunities that will generate strong returns CCB expense ($B) On track to reduce structural expenses by $2.7B $0.7 ($2.7) $1.0 Marketing Mort
Slide 12: Mortgage Banking transformation
CCB Payments Credit Card Mortgage Banking Consumer Banking Mortgage Banking transformation Mortgage Banking headcount (K)1 Mortgage Banking transformation progress (25) Continue to right-size the business Improve quality of servicing portfolio by actively managing down default inventory Contin
Slide 13: Branch transaction migration
CCB Payments Credit Card Mortgage Banking Consumer Banking Branch transaction migration We are making it easier for customers to self-serve Annual teller transactions (mm)2 ~(100) Enabling more ATM and mobile transactions New mobile and online functionality launched in 2015 ~90% of all teller
Slide 14: Customer preference for our digital assets enables us to lower cost to serve
CCB Payments Credit Card Mortgage Banking Consumer Banking Customer preference for our digital assets enables us to lower cost to serve Consumer Bank primary bank customers – impact of digitally-centric behavior1 Digitally-centric is growing Retention rates are higher Cost to serve is lower % of pri
Slide 15: Paperless adoption
CCB Payments Credit Card Mortgage Banking Consumer Banking Paperless adoption Driving paperless adoption Paper statements (mm) (136) Paper statement delivery costs ~$0.50, while electronic statement delivery costs ~$0.011 To drive paperless adoption, we are focused on: 2012 2015 Simplifying th
Slide 16: Travel & Entertainment, vendor rationalization and real estate strategy
CCB Payments Credit Card Mortgage Banking Consumer Banking Travel & Entertainment, vendor rationalization and real estate strategy Travel & Entertainment spend Number of vendors Non-branch buildings (33%) (20%) (127) ~200 at YE2015; target achieved 1 year early CONSUMER & COMMUNITY BANKING 2013 2015
Slide 17: Servicing unit costs
CCB Payments Credit Card Mortgage Banking Consumer Banking Servicing unit costs Call center cost per checking account1 Operating cost per active credit card2 (20%) (12%) 2012 2015 2012 2015 Collections cost per average delinquent credit card account2 Merchant processing cost per transaction3 (18%) (
Slide 18: We are accelerating our investment in marketing
CCB Payments Credit Card We are accelerating our investment in marketing to take advantage of attractive Mortgage Banking Consumer Banking market opportunities $100mm investment ROE > 20% generates on average… ~400K new accounts Credit Card marketing ~$3B annual spend ~$600mm outstandings Co
Slide 19: The new Chase.com delivers a simplified and personalized experience
CCB Payments Credit Card The new Chase.com delivers a simplified and personalized experience for our Mortgage Banking Consumer Banking customers Menu and alerts Centralized account view Personalized images CONSUMER & COMMUNITY BANKING Chase.com enhancements Significant simplification including sin
Slide 20: We continue to enhance our industry-leading mobile app
CCB Payments Credit Card Mortgage Banking Consumer Banking We continue to enhance our industry-leading mobile app1 Chase Mobile® app Mobile banking preferences and enhancements Mobile users have ~80% more logins per week on average than online users ~60% of consumers rate mobile banking as an im
Slide 21: Agenda
Agenda Page Consumer & Community Banking 1 Payments 20 Credit Card 29 Mortgage Banking 36 Consumer Banking 43 Appendix 51 CONSUMER & COMMUNITY BANKING 20
Slide 22: Strategic decisions and investments have led to a world-class payments franchise
CCB Payments Credit Card We have made strategic decisions and investments over the past 8 years that Mortgage Banking Consumer Banking have led to the creation of a world-class payments franchise Merchants 2013: 2008: Chase announces 10 2014: Chase dissolves year Visa deal and First merchants go JV
Slide 23: Our payments strategy is designed to address consumer and merchant pain points
CCB Payments Credit Card Our payments strategy is designed to address consumer and merchant pain Mortgage Banking Consumer Banking points and needs Payments strategy Integrated Merchant Digital Payments – Digital Payments – Experience Consumer to Person to Person Business ChaseNet closed loop En
Slide 24: We bring scale to each component of the payments ecosystem
CCB Payments Credit Card Mortgage Banking Consumer Banking We bring scale to each component of the payments ecosystem Chase leads the industry in combined debit and Chase’s scale across merchants and consumers is credit volume unmatched 2014 debit and credit purchase volume1 Consumer reach Note: For
Slide 25: ChaseNet, our proprietary network, continues to expand
CCB Payments Credit Card Mortgage Banking Consumer Banking ChaseNet, our proprietary network, continues to expand Commerce Solutions total processing volume ChaseNet volumes +32% +$26B $949B ~$50B 2007 (First Data + 2012 2015 2015 2015 Dec. run-rate 2016 outlook Chase JV) ChaseNet’s unique value pro
Slide 26: Chase Pay, our proprietary digital payment solution
CCB Payments Credit Card Chase Pay, our proprietary digital payment solution, connects merchants and Mortgage Banking Consumer Banking consumers and drives value for both Merchants Consumers Lower cost of payment Simple checkout Enable loyalty programs Loyalty rewards Fraud liability prote
Slide 27: MCX's digital wallet pilot in Columbus, Ohio
CCB Payments Credit Card MCX’s digital wallet pilot in Columbus, Ohio is providing customer learnings Mortgage Banking Consumer Banking related to digital wallet usage across merchant verticals MCX merchants in CurrentC pilot PAYMENTS 26
Slide 28: Payments agreement with Starbucks will drive Chase Pay adoption
CCB Payments Credit Card We have signed a payments agreement with Starbucks which will drive Chase Mortgage Banking Consumer Banking Pay adoption Starbucks has high frequency, habitual customer spend to help drive Chase Pay adoption Chase Pay mobile app can be used at more than 7,500 company opera
Slide 29: Launching a P2P solution with six partner banks
CCB Payments Credit Card In conjunction with six partner banks, we are launching a P2P solution with real- Mortgage Banking Consumer Banking time funds availability Banks have majority share of the ~$200B online and mobile P2P market1 New bank P2P solution U.S. online and mobile P2P market1 Secure
Slide 30: Agenda
Agenda Page Consumer & Community Banking 1 Payments 20 Credit Card 29 Mortgage Banking 36 Consumer Banking 43 Appendix 51 CONSUMER & COMMUNITY BANKING 29
Slide 31: At the foundation of our payments platform is a strong credit card issuing business
CCB Payments Credit Card At the foundation of our payments platform is a strong credit card issuing Mortgage Banking Consumer Banking business Our unique assets Scale 21% of credit card sales market share1 Distribution Wide branch network and strong partnerships Products Broad range of offerin
Slide 32: Our industry-leading card issuing business continues to experience robust growth
CCB Payments Credit Card Our industry-leading card issuing business continues to experience robust Mortgage Banking Consumer Banking growth 2015 credit card sales volume ($B) Chase credit card sales volume ($B)4 CAGR Estimated impact of Costco +9% moving from Amex to Citi in $572 2016 $496 $263 $247
Slide 33: Renewal of key co-brand partnerships will reduce revenue margin
CCB Payments Credit Card Successful renewal of key co-brand partnerships will reduce revenue margin to Mortgage Banking Consumer Banking 11.25%+/- in the medium term We renewed much of our co-brand business1 Co-brand acquisitions continue to grow 1 2015 co-brand sales volume Co-brand new accounts +3
Slide 34: We have a strong branded card business
CCB Payments Credit Card We have a strong branded card business and are continuing to enhance our Mortgage Banking Consumer Banking value propositions to remain competitive Chase-branded in-year sales by vintage Our branded products fill key positions in our overall portfolio Consumer branded produc
Slide 35: Diverse acquisition channels and driving digital engagement
CCB Payments Credit Card We are leveraging diverse acquisition channels and driving digital engagement Mortgage Banking Consumer Banking with our customers Acquisitions are moving to lower cost channels Increased digital acquisitions across devices Distribution of 2015 new credit card accounts by ch
Slide 36: We have grown core outstandings by 11% since 2012
CCB Payments Credit Card Mortgage Banking Consumer Banking We have grown core outstandings by 11% since 2012 Credit card EOP outstandings ($B) In-year outstandings by vintage2 +61% $131 $128 $6 Non-core1 $15 $125 Core $113 2012 2015 2012 2015 1 Non-core loans include runoff portfolios, discontinued
Slide 37: Agenda
Agenda Page Consumer & Community Banking 1 Payments 20 Credit Card 29 Mortgage Banking 36 Consumer Banking 43 Appendix 51 CONSUMER & COMMUNITY BANKING 36
Slide 38: We continue to build a higher quality and less volatile mortgage business
CCB Payments Credit Card Mortgage Banking Consumer Banking We continue to build a higher quality and less volatile mortgage business 2014 / 2015 Investor Day plans Progress Deliver a great Simplify our product set and Reduced our product set from 37 to 15 customer experience invest in new technol
Slide 39: Housing market fundamentals continue to improve
CCB Payments Credit Card Mortgage Banking Consumer Banking Housing market fundamentals continue to improve Number of underwater homes in the U.S. (mm) Home price index (HPI) – peak to November 2015 0% Trough to (66%) current: 36% Chase's decrease in (10%) underwater homes over Peak to trough: the sa
Slide 40: We have repositioned our Mortgage business to focus on high-quality new originations
CCB Payments Credit Card We have repositioned our Mortgage business to focus on high-quality new Mortgage Banking Consumer Banking originations Chase LTV distribution of originations1 11% 90%+ 30% 5% 80% - 90% 9% 84% <80% 61% 2013 2015 Total mortgage $166B $106B originations MORTGAGE BANKING 1 Based
Slide 41: We are seeing strong core loan growth
CCB Payments Credit Card Mortgage Banking Consumer Banking We are seeing strong core loan growth Mortgage Banking average loan balances ($B) $252 2010 – 2015 CAGR $225 $205 $204 Total: (4%) $189 $183 Non-core: Non-core1 $202 $96 (14%) $174 $152 $132 $114 $108 Core: +17% Core2 $69 $50 $51 $53 $57 201
Slide 42: Repositioning the servicing book via high-quality originations and sales
CCB Payments Credit Card We are actively repositioning the servicing book via high-quality new originations, Mortgage Banking Consumer Banking acquired servicing and sales of low-quality units 2015 Chase servicing book activity 30+ delinquency rate1 for Chase servicing book “Coming In” in 2015 30+ d
Slide 43: We continue to reduce servicing expense
CCB Payments Credit Card Mortgage Banking Consumer Banking We continue to reduce servicing expense Servicing expense has been declining… …and will continue to trend downward Quarterly trend in servicing expense1 ($mm) ($331) $871 Quality of servicing book continues to improve $662 Servicing cost
Slide 44: Agenda
Agenda Page Consumer & Community Banking 1 Payments 20 Credit Card 29 Mortgage Banking 36 Consumer Banking 43 Appendix 51 CONSUMER & COMMUNITY BANKING 43
Slide 45: Consumer Banking strategic priorities
CCB Payments Credit Card Mortgage Banking Consumer Banking Consumer Banking strategic priorities Strategic priorities Progress Acquire high-quality relationships and become our customers’ primary Grew deposits & investments at 9% CAGR since Acquire and 2010 bank deepen relationships Acquired 3
Slide 46: We lead the industry in balance growth while Chase Private Client deepens relationships
CCB Payments Credit Card We lead the industry in balance growth while Chase Private ClientSM continues Mortgage Banking Consumer Banking to deepen relationships with affluent clients Consumer Banking deposits and investments ($B)1 Chase Private Client net new money ($B)3 CAGR $633 Total: +9% Investm
Slide 47: Deepening relationships with Millennials
CCB Payments Credit Card We are also deepening relationships with Millennials, who make up the majority Mortgage Banking Consumer Banking of our new customers % of Consumer Banking customers using each Checking account acquisitions by age1 channel 4Q153 % of total Millennials (18-35) Non-Millennials
Slide 48: We will continue to optimize the size of our branch network
CCB Payments Credit Card We will continue to optimize the size of our branch network to meet the needs of Mortgage Banking Consumer Banking our customers Network activity Net change in branches 2013 2014 2015 2013 2014 2015 2016F 16 Beginning branch count 5,614 5,630 5,602 (28) 1 New builds 132 71 2
Slide 49: Optimizing our branch network while growing market share faster than the industry
CCB Payments Credit Card We are optimizing our branch network to support evolving customer needs while Mortgage Banking Consumer Banking growing market share faster than the industry Chase deposit share1 2012 deposit share 2015 deposit share Increasing Maintaining Reducing branch count branch count
Slide 50: We have an attractive footprint with strong positioning across the U.S.
CCB Payments Credit Card Mortgage Banking Consumer Banking We have an attractive footprint with strong positioning across the U.S. Chase footprint advantages Chase Chase Top 10 Chase deposit deposit branch markets rank1 rank1 1 New York, NY 1 1 2 Los Angeles, CA 2 1 3 Chicago, IL 1 1 4 Houston, TX 1
Slide 51: Chase Consumer & Community Banking is a strong franchise with leadership positions
CCB Payments Credit Card Chase Consumer & Community Banking is a strong franchise with leadership Mortgage Banking Consumer Banking positions across its businesses Consumer relationships with almost half of U.S. households Powerful customer franchise #1 in primary bank relationships within Chase
Slide 52: Agenda
Agenda Page Consumer & Community Banking 1 Payments 20 Credit Card 29 Mortgage Banking 36 Consumer Banking 43 Appendix 51 CONSUMER & COMMUNITY BANKING 51
Slide 53: Notes on slide 8 – Credit losses
Notes on slide 8 – Credit losses are at low levels, but we rigorously monitor for signs of stress 1. Credit card net charge-off rate excludes held-for-sale loans 2. 2Q12 adjusted net charge-offs for Card Services were $1,254mm or 4.05%; excluding the effect of a change in charge-off policy for troub
Slide 54: Notes on slide 13 – Customer preference for digital assets
Notes on slide 13 – Customer preference for our digital assets enables us to lower cost to serve 1. Primary bank digitally-centric is defined as primary bank households conducting at least three digital transactions (excluding logins, including Chase QuickDeposit, transfers, Bill Pays, wires, etc.)
Slide 55: Notes on slide 50 – Chase Consumer & Community Banking franchise
Notes on slide 50 – Chase Consumer & Community Banking is a strong franchise with leadership positions across all its businesses 1. TNS 3Q15 Retail Banking Monitor; based on total U.S. (~5K surveys per quarter) and Chase footprint (~2.8K surveys per quarter); TNS survey questions used to determine p
Slide 56: Forward-looking statements
Forward-looking statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of JPMorgan Chase & Co.’s management and are subject to significant risks an