Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Investor Day (February 2017)
55 slides from Jp Morgan Chase &'s investor day presentation, Feb 28, 2017
Slide 1: Firm Overview
FIRM OVERVIEW Marianne Lake, Chief Financial Officer February 28, 2017
Slide 2: Strong fundamentals and execution
Strong fundamentals and execution JPMorgan Chase overview 1 Four leading client franchises – together delivering significant value Building exceptional client Client focus and long-term approach – consistently investing and franchises innovating 2 Strong foundation – capital, liquidity, balanc
Slide 3: 2016 results – strong financial performance on an absolute basis
2016 results – strong financial performance on an absolute basis… JPMorgan Chase overview Diversification supporting revenue, despite low rates and macro Revenue1 volatility $99B Net interest income of $47B and noninterest revenue of $52B Adjusted $56.1B 1% decrease in the adjusted overhead ra
Slide 4: … and on a relative basis – JPM continues to be a leader
… and on a relative basis – JPM continues to be a leader JPMorgan Chase overview 2016 Net 10-year FY2016 Managed revenue1 ($B) Income FY2016 Overhead ratio1,2 FY2016 EPS YoY growth CAGR JPM $99 $25 JPM 56% JPM 3% 4% WFC $90 $22 WFC 59% WFC (3)% 5% BAC $85 $18 BAC 65% BAC 15% (11)% C $71 $15 C 58% C
Slide 5: Sustained tangible book value growth
Sustained tangible book value growth JPMorgan Chase overview Tangible book value per share (“TBVPS”)1,2 5-year average value creation 9% 3.4% +/- 1.3% 7.6% 7% YoY growth 8% $51.44 TCE Repurchases Dividends Multiple 3Y CAGR Expansion / $48.13 (Contraction) 9% $44.60 5Y CAGR $40.72 $38.68 $33.62 $30.1
Slide 6: Our operating model is centered around our clients
Our operating model is centered around our clients JPMorgan Chase overview Operating model Client segmentation Wholesale Individuals Stable performance Deepening client relationships Middle Market Corporate Banking Client Banking $20-500mm $500mm-2B revenue revenue Optimization against Share Busines
Slide 7: Disciplined resource allocation and granular performance measurement
Disciplined resource allocation and granular performance measurement JPMorgan Chase overview Sub-LOB pro-forma ROE (2016 NIAC1, 2017 equity) and shareholder value add dollars2 40% Legend Color LOB CCB 30% CIB CB AWM Bubble size – SVA $ 20% Empty bubble – neg SVA Balance sheet growth 3 10% - (10%) (2
Slide 8: Benefits of a diversified platform on returns and in stress
Benefits of a diversified platform on returns and in stress JPMorgan Chase overview 2016 ROA1 2016 Return on RWA1 5-year avg. 5-year avg. WFC 116 bps 137 bps JPM 166 bps 150 bps JPM 100 bps 91 bps WFC 163 bps 163 bps GS 84 bps 82 bps MS 156 bps 87 bps C 82 bps 66 bps GS 129 bps 139 bps BAC 82 bps 50
Slide 9: Agenda
Agenda 1 Building exceptional client franchises 2 Operating with fortress principles 3 Capital and liquidity Maximizing long-term shareholder value Operating leverage and financial simulation Leading to ~15% 11%+ 55%+/- 55-75% FIRM OVERVIEW ROTCE CET1 ratio Overhead ratio Net payout ratio 8
Slide 10: Leading client franchises
1 Leading client franchises Building exceptional client franchises Client franchises built over the long-term 2006 2015 2016 Relationships with ~50% of U.S. households 1 3.6% 7.9% 8.3% Industry leading deposit growth12 Deposits market share # of top 50 Chase markets where we are #1 ( top 3) 11 (
Slide 11: Proven best-in-class long-term performance
1 Proven best-in-class long-term performance Building exceptional client franchises EOP core loans1: 5-year CAGR2 Deposits: 5-year CAGR3 9% ~7% Total EOP Retail 8% excluding 10% non-op 6% 7% 8% 5% reduction4 6% 6% 5% 4% 4% 5% 3% 4% 4% 1% 2% 5 JPM WFC BAC USB C PNC JPM WFC PNC USB BAC C 2016 YoY grow
Slide 12: Proven best-in-class long-term performance (cont'd)
1 Proven best-in-class long-term performance (cont’d) Building exceptional client franchises J.D. Power customer satisfaction score: 2011–20161 Credit card sales: 5-year CAGR2 15% Chase Chase IndustryAverage Industry Average BigBanks Big Banks RegionalBanks Regional Banks MidsizeBanks Midsize Banks
Slide 13: Agenda
Agenda 1 Building exceptional client franchises 2 Operating with fortress principles 3 Capital and liquidity Maximizing long-term shareholder value Operating leverage and financial simulation Leading to ~15% 11%+ 55%+/- 55-75% FIRM OVERVIEW ROTCE CET1 ratio Overhead ratio Net payout ratio 12
Slide 14: Fortress balance sheet
2 Fortress balance sheet Operating with fortress principles EOP assets ($B), except where noted Wholesale ∆ Consumer ~$2.6T $139 $2.5T $2.35T Cash Cash1 $29 $390 $361 YoY Avg loan Securities growth (%) Securities ($2) $289 10% $291 Secured Non-core (17)% Secured Financing Financing $15 $326 AWM 5% $
Slide 15: Credit – net charge-offs
2 Credit – net charge-offs Operating with fortress principles NCO rates at cyclical lows ($B) Commentary 2016 Medium-term Expect 2017 and medium-term NCO Investor Day 1 Actual 2017 guidance NCOs +/- NCOs NCOs NCOs +/- rates to remain relatively flat across businesses with the exception of Card Mor
Slide 16: Credit – reserves
2 Credit – reserves Operating with fortress principles 2016 Credit reserves ($B) Firmwide $14.9 Consumer Wholesale $9.3 $5.6 A B Consumer ex-PCI PCI1 Wholesale ex-energy2 Energy2 $6.9 $2.3 $4.1 $1.5 Commentary 2017 Outlook A PCI1 Consumer Potential for further modest reserve release Expect re
Slide 17: Credit – Commercial Real Estate and Auto
2 Credit – Commercial Real Estate (“CRE”) and Auto Operating with fortress principles CRE credit exposure1 growth ($B) Commentary CAGR Multifamily Other Multifamily $80B Multifamily 16% 98% secured; 82% IG3 Other 13% $1402 Largest and fastest growing part of the portfolio 15% CAGR $121 Predo
Slide 18: Agenda
Agenda 1 Building exceptional client franchises 2 Operating with fortress principles 3 Capital and liquidity Maximizing long-term shareholder value Operating leverage and financial simulation Leading to ~15% 11%+ 55%+/- 55-75% FIRM OVERVIEW ROTCE CET1 ratio Overhead ratio Net payout ratio 17
Slide 19: Continue to operate from a position of strength
3 Continue to operate from a position of strength Maximizing long-term shareholder value 2015 2016 10.2% CET11,2 11.6% +60bps 12.2% Firm 6.5% 6.5% SLR2 Total assets $2.4T $2.5T RWA1,2 $1.5T $1.5T Std. / Adv. GSIB3 3.5% 3.5% TLAC $20B +/- <$10B Ext.4 LTD shortfall LCR and >100% >100% NSFR N
Slide 20: Capital allocation
3 Capital allocation Maximizing long-term shareholder value – capital Capital allocation ($B) Average retained equity1 Medium-term ROTCE target 2016 2017 (+/-) Consumer & Community Banking $51.0 $51.0 20% Corporate & Investment Bank 64.0 70.0 14% Commercial Banking 16.0 20.0 15% Asset & Wealth Manag
Slide 21: Capital management framework
3 Capital management framework Maximizing long-term shareholder value – capital Approach to capital management Management 11%+ buffer 11% CET1 <11% 10-11% Distributions Capital Stress Capital Baseline Conservation Procyclicality distributions Buffer 5 & growth Buffer JPM specific GSIB GSIB CCAR stre
Slide 22: Medium-term capital and payout simulation
3 Medium-term capital and payout simulation Maximizing long-term shareholder value – capital Illustrative fully phased-in Firm CET1 and payout trajectories1 Key takeaways 80-120% 12.2%2 CET1 ratio at 2016 year-end ~12.5% 12.2%2 65% Aim to remain within 11-12.5% corridor in the medium-term 11.0%
Slide 23: Significant resources to address liquidity needs
3 Significant resources to address liquidity needs Maximizing long-term shareholder value – liquidity Liquidity 2015 2016 LCR >100% >100% HQLA $496B $524B NSFR >100% >100% ~$50B increase in liquidity year-over-year Firm addressed deficiencies identified by the regulatory agencies in Firm’s 2015
Slide 24: Banking industry resilience
3 Banking industry resilience Maximizing long-term shareholder value – loss absorbing capacity Loss absorbing resources (EOP, $B) JPM Industry4 $2,192 $381 ~11x 33-bank ~2x 33-bank $1,749 industry 2016 $279 industry CCAR losses3 2016 CCAR All All losses3 Other1 Other1 ~2x ~2x TCE TCE 2007² 2016 2007
Slide 25: Opportunity for evolution of the regulatory environment
3 Opportunity for evolution of the regulatory environment Maximizing long-term shareholder value – adapting to the environment Principles for responsible regulation Coherence of rules – coordinated across regulatory agencies Globally harmonized – fair across jurisdictions Simplified, more risk-based
Slide 26: Agenda
Agenda 1 Building exceptional client franchises 2 Operating with fortress principles 3 Capital and liquidity Maximizing long-term shareholder value Operating leverage and financial simulation Leading to ~15% 11%+ 55%+/- 55-75% FIRM OVERVIEW ROTCE CET1 ratio Overhead ratio Net payout ratio 25
Slide 27: Deposit re-pricing: current cycle vs. 2004 cycle
3 Deposit re-pricing: current cycle vs. 2004 cycle Maximizing long-term shareholder value Deposit repricing (2004 cycle vs. current cycle)1 4.0% Deposit mix shift change 19% Noninterest-bearing 3.5% 30% deposits 47% 3.0% Interest-bearing 61% (excl. time) deposits Current cycle: >50% deposit reprice
Slide 28: NII – well positioned for rising rates
3 NII – well positioned for rising rates Maximizing long-term shareholder value – operating leverage NII simulation under implied rates ($B) $12 Fed Dot: $12B 3.5% Spot IOER paths Fed Dot1 3.0% Implied: ~$11B $10 2.5% Implied2 2.0% Long End $9B Rate Impact 1.5% $8 $8B 1.0% Rates Incremental NII 0.5%
Slide 29: Noninterest revenue growth over time
3 Noninterest revenue growth over time Maximizing long-term shareholder value – operating leverage NIR walk1 ($B) 1Q17 Outlook Investment Banking – IB revenue in 1Q17 in-line with 4Q16, >($6) >($6) dependent on timing of deals closing $50.5 ~$7 $51.7 Markets – total revenue in 1Q17 to increase m
Slide 30: Adjusted expense – creating capacity to self-fund investments and growth
3 Adjusted expense – creating capacity to self-fund investments and growth Maximizing long-term shareholder value – operating leverage Adjusted expense1 ($B) All Other Client facing compensation 2 Investments (marketing and technology) Regulatory-related & other $58.4 ~ $58 ~ $5 $6.2 ~$9B total acro
Slide 31: Earnings simulation
Earnings simulation Maximizing long-term shareholder value Simulation assumptions $7B after-tax NII uplift including impact of rates and growth High single digit core loan growth Assumes Markets and Mortgage revenue flat NIR CAGR of ~4% excluding Markets and Mortgage Expense includes conti
Slide 32: Conclusion
Conclusion 1 Four leading client franchises – together delivering significant value Building exceptional client Client focus and long-term approach – consistently investing and franchises innovating 2 Strong foundation – capital, liquidity, balance sheet, risk discipline Operating with Bette
Slide 33: Agenda
Agenda Page Appendix – Fixed Income 32 Notes 37 FIRM OVERVIEW
Slide 34: Overview of funding sources
Overview of funding sources Managing to an optimized funding mix Liabilities and stockholders’ equity at 12/31/16 ($B) $2,491 $2,352 $2,352 $757 $722 Deposits – CIB, CB & AWM Capital markets liabilities: $527 Total Deposits – CCB Total Deposits Other 5 Deposits $1,375 borrowed $1,280 funds Trading l
Slide 35: Holding Company unsecured long-term debt
JPMorgan Chase & Co. (Holding Company) unsecured long-term debt Optimizing portfolio with efficient callable structures Holding Company unsecured long-term debt Holding Company unsecured long-term debt maturity profile ($B) outstanding1 ($B) Senior debt Sub debt 2 TLAC eligible TLAC callable notes N
Slide 36: Holding Company unsecured benchmark long-term debt and preferred equity
Holding Company unsecured benchmark long-term debt1 and preferred equity Diversified portfolio across products, currencies & tenors Issuance by security type 2014-2016 ($B) Preferred equity Sub debt 2 Senior debt $41 $41 $37 $37 $9 $6 $28 $28 $5 $3 $1 $27 $28 $27 2014 2015 2016 Unsecured debt issued
Slide 37: Composition and calibration of TLAC
Composition and calibration of TLAC Modest and manageable external long-term debt shortfall Commentary TLAC Requirements Currently compliant with external TLAC requirement Key Metrics ($B) (at 12/31/2016) External TLAC External long-term debt External long-term debt (“LTD”) requirement remains t
Slide 38: Current capital position
Current capital position Basel III advanced fully phased-in capital ratios and components at 12/31/16 ($B) Total tier 2 capital $19 Pfd equity 15.2% $26 14.0% $26 12.2% $4 Pfd equity $15 Qualifying $45 $2 LTD and Goodwill allowance Other CET1 other for credit $254 and capital adj. qualifying losses
Slide 39: Agenda
Agenda Page Appendix – Fixed Income 32 Notes 37 FIRM OVERVIEW
Slide 40: Notes on non-GAAP financial measures and key performance measures
Notes on non-GAAP financial measures and key performance 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, including the overhead ratio and the results of the lines of business, on a “managed” basi
Slide 41: Notes on slide 3
Notes on slide 3: … on a relative basis – JPM continues to be a leader 1. See note 1 on slide 37 2. Managed overhead ratio = total noninterest expense / managed revenue 3. Citigroup (“C”) adjusted for 1 for 10 reverse stock split in 2011 4. ROTCE for firms based on company filings with the U.S. Secu
Slide 42: Notes on slide 9: Leading client franchises
Notes on slide 9: Leading client franchises 1. FDIC 2016 Summary of Deposits survey per SNL Financial. Excludes all branches with $500mm+ in deposits within the last two years (excluded branches are assumed to include a significant level of commercial deposits or are headquarter branches for direct
Slide 43: Notes on slide 10
Notes on slide 10: Proven best-in-class long-term performance Source: Company filings and SNL Financial, unless otherwise noted 1. See note 6 on slide 37 2. Core loans calculated as total end-of-period (“EOP”) loans less total EOP noncore loans; total loan CAGR for USB and PNC; “noncore” defined as
Slide 44: Notes on slide 11
Notes on slide 11: Proven best-in-class long-term performance (cont’d) 1. Source: J.D. Power U.S. Retail Banking Satisfaction Survey; Big Banks defined as top six U.S. banks 2. Represents GPCC spend, which excludes private label and Commercial Card; based on company filings and internal JPMorgan Cha
Slide 45: Notes on slide 13: Fortress balance sheet
Notes on slide 13: Fortress balance sheet 1. Includes cash and due from banks and deposits with banks 2. Includes debt, derivative receivables and equity trading assets 3. Net of allowance for loan losses 4. Includes accrued interest and accounts receivable, premises and equipment, mortgage servicin
Slide 46: Notes on slide 16
Notes on slide 16: Credit – Commercial Real Estate (“CRE”) and Auto 1. Excludes available-for-sale and held-to-maturity commercial mortgage-backed securities positions, Securitized Products Group (“SPG”) trading assets, and exposure secured by real estate to clients outside of the real estate indust
Slide 47: Notes on slide 18
Notes on slide 18: Continue to operate from a position of strength 1. Reflects Basel III Advanced Fully Phased-In measure 2. See note 5 on slide 37 3. Global Systemically Important Banks (“GSIB”) 4. External NOTES 44
Slide 48: Notes on slide 19: Capital allocation
Notes on slide 19: Capital allocation 1. 2017 Allocations changed from common equity to tangible common equity, resulting in LOB equity being more in line with peers 2. Primarily reflects equity held for property, premises and equipment (“PP&E”) and retained operational risk as well as unallocated e
Slide 49: Notes on slide 20: Capital management framework
Notes on slide 20: Capital management framework 1. Represents an illustration of internally-calculated requirements based on confidential, non-public information 2. Stress based on FRB 2015 and 2016 CCAR results and baseline distributions of 75% of analyst estimates 3. JPMorgan Chase estimated fully
Slide 50: Notes on slide 23: Banking industry resilience
Notes on slide 23: Banking industry resilience Source: FR-Y9C, FR-Y9LP, company filings, FRB 2016 DFAST results, SNL Financial 1. All Other includes loan loss reserve, preferred equity and long-term debt 2. JPMorgan Chase includes Washington Mutual and Bear Stearns 3. CCAR pretax losses reported in
Slide 51: Notes on slide 28
Notes on slide 28: Noninterest revenue growth over time 1. See note 1 on slide 37 2. Excludes noninterest revenue (“NIR”) in the Private Equity (“PE”) business ($1B in 2011 and $0.2B in 2016) 3. 2011 has been revised to reflect the adoption of new accounting guidance for investments in affordable ho
Slide 52: Notes on slide 29: Adjusted expense
Notes on slide 29: Adjusted expense – creating capacity to self-fund investments and growth 1. See note 2 on slide 37 2. Includes sales support and other front office support 3. Includes marketing and technology spend, cybersecurity spend, auto lease depreciation and growth initiatives 4. Includes i
Slide 53: Notes on slide 32: Overview of funding sources
Notes on slide 32: Overview of funding sources 1. Accounts payable and other liabilities include federal funds purchased, long-term securities loaned and structured repurchase agreements; and client-driven loan securitizations which are included in “beneficial interests issued by consolidated variab
Slide 54: Notes on slide 33
Notes on slide 33: JPMorgan Chase & Co. (Holding Company) unsecured long- term debt 1. Long-term debt (“LTD”) maturing in <1 year is not TLAC eligible; 50% of the LTD that matures in 1-2 years is TLAC eligible 2. Includes trust preferred securities (“TruPs”) 3. Non-TLAC eligible debt is approximatel
Slide 55: 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