Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q2 2012 Earnings Presentation
28 slides from Jp Morgan Chase &'s earnings presentation, Jul 13, 2012
Slide 1: Financial Results 2Q12
FINANCIAL RESULTS 2Q12 July 13, 2012
Slide 2: 2Q12 Financial highlights
2Q12 Financial highlights 2Q12 net income of $5.0B; EPS of $1.21; revenue of $22.9B1 First quarter restated2 1H12 NI of $9.9B; EPS of $2.41; revenue of $49.6B – Not impacted by 1Q12 restatement Balance sheet and capital ratios as of 2Q12 not impacted either Solid underlying business performance 2Q12
Slide 3: 2Q12 Financial results
2Q12 Financial results1 $mm, excluding EPS $ O/(U) 2Q12 1Q122 2Q11 Revenue (FTE)1 $22,892 ($3,865) ($4,518) Credit costs 214 (512) (1,596) Expense 14,966 (3,379) (1,876) Reported net income $4,960 $36 ($471) Net income applicable to common stock $4,634 $57 ($433) Reported EPS $1.21 $0.02 ($0.06) 3 R
Slide 4: Investment Bank
Investment Bank1 $mm Net income of $1.9B on revenue of $6.8B $ O/(U) DVA gain of $755mm 2Q12 1Q12 2Q11 ROE of 19%, 15% excl. DVA Revenue $6,766 ($555) ($548) Investment banking fees 1,245 (130) (677) IB fees of $1.2B, down 35% YoY on lower Fixed income markets 3,734 (930) (546) industry volumes Equi
Slide 5: Retail Financial Services
Retail Financial Services1 $mm Net income of $2.3B, compared with $383mm in the prior year $ O/(U) 2Q12 1Q12 2Q11 Revenue of $7.9B, up 11% YoY Net interest income $3,901 ($24) ($126) Noninterest revenue 4,034 310 919 Credit cost benefit of $555mm Revenue $7,935 $286 $793 Expense 4,726 (283) (545) re
Slide 6: Consumer & Business Banking
Retail Financial Services Consumer & Business Banking $mm Financial performance $ O/(U) Consumer & Business Banking net income of 2Q12 1Q12 2Q11 $946mm, down 14% YoY Net interest income $2,680 $5 ($26) Noninterest revenue 1,646 61 (243) Net revenue of $4.3B, down 6% YoY, driven by Revenue $4,326 $66
Slide 7: Mortgage Production and Servicing
Retail Financial Services Mortgage Production and Servicing $mm Financial performance $ O/(U) Mortgage Production and Servicing net income of 2Q12 1Q12 2Q11 $604mm, compared with a net loss of $649mm in Production Production-related revenue excl. repurchase losses $1,561 ($58) $595 the prior year Pr
Slide 8: Real Estate Portfolios
Retail Financial Services Real Estate Portfolios $mm Real Estate Portfolios net income of $ O/(U) $717mm, compared with a net loss 2Q12 1Q12 2Q11 of $66mm in the prior year Revenue $1,040 ($41) ($177) Expense 412 (7) 41 Total net revenue of $1.0B, down Pre-provision profit $628 ($34) ($218) 15% YoY
Slide 9: Card Services & Auto
Card Services & Auto1 $mm Card Services & Auto $ O/(U) Net income of $1.0B, down 7% YoY 2Q12 1Q12 2Q11 Net income, excluding the reduction to the allowance for Revenue $4,525 ($189) ($236) loan losses, up 18%5,6 YoY Credit costs 734 (4) (210) Revenue of $4.5B, down 5% YoY and 4% QoQ Expense 2,096 67
Slide 10: Coverage ratios remain strong and consistent
Coverage ratios remain strong and consistent REP and Card Services credit data ($mm) O/(U) 2Q12 1Q12 2Q11 2Q11 RFS Real Estate Portfolio (NCI): Net charge-offs ($) $696 $808 $954 ($258) NCO rate (%) 2.21% 2.49% 2.67% (46)bps Allowance for loan losses ($) $6,468 $7,718 $9,718 ($3,250) LLR / annualize
Slide 11: Commercial Banking
Commercial Banking1 $mm Net income of $673mm, up 11% YoY $ O/(U) Record revenue of $1.7B, up 4% YoY 2Q12 1Q12 2Q11 Revenue $1,691 $34 $64 Record EOP loan balances up 17% YoY and 4% Middle Market Banking 833 8 44 QoQ; record Middle Market loans up 18% YoY Corporate Client Banking 343 6 4 8th consecut
Slide 12: Treasury & Securities Services
Treasury & Securities Services1 $mm Net income of $463mm, up 39% YoY and 32% $ O/(U) QoQ 2Q12 1Q12 2Q11 Pretax margin of 34% Revenue $2,152 $138 $220 Treasury Services 1,074 22 144 Revenue of $2.2B, up 11% YoY and 7% QoQ Worldwide Securities Services 1,078 116 76 TS revenue of $1.1B, up 15% YoY Expe
Slide 13: Asset Management
Asset Management1 $mm Net income of $391mm, down 11% YoY and up $ O/(U) 1% QoQ 2Q12 1Q12 2Q11 Revenue $2,364 ($6) ($173) Revenue of $2.4B, down 7% YoY Private Banking 1,341 62 52 Institutional 537 (20) (157) Assets under management of $1.3T, flat YoY Retail 486 (48) (68) Credit costs $34 $15 $22 QoQ
Slide 14: Corporate/Private Equity
Corporate/Private Equity1 Net income/(loss) ($mm) Private Equity $ O/(U) Private Equity net revenue of $410mm 2Q12 1Q12 2 2Q11 Private Equity portfolio of $8.0B (5.5% of Private Equity $197 $63 ($247) stockholders’ equity less goodwill) Treasury and CIO New (2,078) (1,851) (2,748) Treasury and CIO O
Slide 15: Treasury and CIO financial performance
Treasury and CIO financial performance Corporate/PE financial highlights – Existing and new disclosure1 Pre-restatement $mm 2009 2010 2011 1Q12 2 2Q12 1Q12 Reported Adjustment Total net revenue Private Equity $18 $1,239 $836 $254 $410 3 Treasury and CIO New 7,462 6,642 3,196 (233) (3,434) $427 ($660
Slide 16: Fortress balance sheet
Fortress balance sheet $B, except where noted 2Q12 1Q12 2Q11 Basel I Tier 1 common capital1,2 $130 $128 $121 Basel III Tier 1 common capital2,3 132 − − Basel I Risk-weighted assets1 1,269 1,235 1,199 Basel III Risk-weighted assets2,3 1,664 − − Total assets 2,290 2,320 2,247 Basel I Tier 1 common rat
Slide 17: Outlook
Outlook Retail Financial Services Corporate / Private Equity Consumer & Business Banking Expect Treasury and CIO net loss of approximately Deposit spread compression, given low interest rates, $200mm near term will negatively impact net income by $400mm+/-, but May vary by +/- $200mm this may be off
Slide 18: Core net interest margin
Core net interest margin1 Net interest income trend Core NII Market-based NII Core NIM Market-based NIM JPM NIM 3.91% 3.85% 3.66% 3.66% 3.51% 3.54% 3.33% 3.19% 3.00% 3.14% 3.10% 3.42% 3.32% 3.06% 3.01% 2.88% 2.89% 2.72% 2.66% 2.70% 2.61% 2.47% 1.92% 1.77% 1.47% 1.42% 1.42% 1.43% 1.45% 1.42% 1.35% 1.
Slide 19: Peripheral European exposure
Peripheral European exposure1 As of June 30, 2012 ($B) Securities and trading AFS Derivative Portfolio Net Lending securities Trading collateral hedging exposure Spain $3.5 $0.7 $2.6 ($2.9) ($0.4) $3.5 Sovereign 0.0 0.4 0.1 0.0 (0.1) 0.4 Non-sovereign 3.5 0.3 2.5 (2.9) (0.3) 3.1 Italy $2.9 $0.1 $7.6
Slide 20: Agenda
Agenda Page Appendix 19 Financial results Treasury and CIO overview FINANCIAL RESULTS 19
Slide 21: Impact of recent NPR
Impact of recent NPR Appendix – Financial results Estimated RWA impact of final B2.5 rules and recent NPR ($B) Basel I Basel III Tier 1 common (T1C) $130 T1C $131 2Q12 T1C Ratio (pre-final 2.5 rules and RWA 1,269 RWA 1,584 NPR) 1 T1C ratio 10.3% T1C ratio 8.3% Estimated Impact of 2 2 RWA impact ~+21
Slide 22: Consumer credit – Delinquency trends
Consumer credit – Delinquency trends1 Appendix – Financial results Home Equity delinquency trend ($mm) Prime Mortgage delinquency trend ($mm) $3,000 30 – 149 day delinquencies 150+ day delinquencies $3,900 30 – 149 day delinquencies 150+ day delinquencies $2,000 $2,600 $1,000 $1,300 $0 $0 Sep-08 Feb
Slide 23: Coverage ratios remain strong
Coverage ratios remain strong Appendix – Financial results $mm 6.00% Loan loss reserve/Total loans1 Loan loss reserve Nonperforming loans Loan loss reserve/NPLs1 600% 5.00% 500% 35,836 4.00% 34,161 400% 32,266 29,750 3.00% 300% 28,520 2.00% 28,350 200% 16,179 27,609 25,871 15,503 23,791 1.00% 14,841
Slide 24: IB League Tables – YTD June 30, 2012
IB League Tables – YTD June 30, 2012 Appendix – Financial results League table results For the 6 months ended 6/30/12, JPM ranked: 6 months ended 6/30/12FY11 #1 in Global IB fees Rank Share Rank Share Based on fees: #1 in Global Debt, Equity & Equity-related Global IB fees 1 1 7.6% 1 8.0% #1 in Glob
Slide 25: JPMorgan balance sheet
JPMorgan balance sheet Appendix – Treasury and CIO overview JPMorgan balance sheet – June 30, 2012 $2,290B $2,290B Total Treasury Treasury deployment1 199 and CIO deployment 323 VIEs, CPs, repos, trading $522B CIO AFS securities liabilities, LT debt and other 982 Treasury and CIO other assets3 62 li
Slide 26: FTP process – An example
FTP process – An example Appendix – Treasury and CIO overview An example CBB originates a $100K 5-year deposit in June1 Interest rate, duration and liquidity parameters associated with the $100K 5-year deposit are delivered to Treasury Treasury transfers LT interest rate and duration risks to CIO CI
Slide 27: Notes on non-GAAP financial measures
Notes 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 definition of managed basis starts wit
Slide 28: 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