Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q3 2005 Earnings Presentation
18 slides from Jp Morgan Chase &'s earnings presentation, Oct 19, 2005
Slide 1: Financial Results Third Quarter 2005
O C T O B E R 1 9, 2 0 0 5 FINANCIAL RESULTS Third Quarter 2005
Slide 2: Third Quarter 2005 Earnings
Third Quarter 2005 Earnings n Operating earnings per share of $0.75 n Special provision of $400mm taken for credit losses related to H urricane Katrina n Credit Card and Texas systems conversions successfully completed n $1.1bn of Investment Bank earnings on record revenues n Strong Card Services ea
Slide 3: 3Q05 Earnings Comparison
3Q05 Earnings Comparison ($ in millions, except per share) 3Q05 2Q05 3Q04 Reported Net Income $2,527 $994 $1,418 Non-Operating Charges (after-tax) 137 1,334 741 Operating Earnings $2,664 $2,328 $2,159 Reported EPS $0.71 $0.28 $0.39 Operating EPS $0.75 $0.66 $0.60 Non-Operating Charges (After-Tax) 3Q
Slide 4: 3Q05 Operating Performance Comparison
3Q05 Operating Performance Comparison $ O/(U) % O/(U) ($ in millions) 3Q05 2Q05 3Q04 2Q05 3Q04 Revenue (FTE)1 $15,554 $1,654 $1,975 12% 15% Credit Costs1 2,112 595 348 39% 20% Expenses 9,243 495 618 6% 7% Earnings $2,664 $336 $505 14% 23% EPS $0.75 $0.09 $0.15 14% 25% Quarterly Results 2 3Q05 2Q05 3
Slide 5: 3Q05 Adjusted Revenue
3Q05 Adjusted Revenue $ O/(U) % O/(U) ($ in millions) 3Q05 2Q05 3Q04 2Q05 3Q04 Revenue (FTE) $15,554 $1,654 $1,975 12% 15% MSR risk management (RFS) (38) (204) (191) Sold loan portfolios1 (RFS) (48) (48) (100) Treasury portfolio repositioning2 (Corporate) (43) (61) (323) Adjusted Revenue $15,683 $1,
Slide 6: LOB Operating Earnings Comparison
LOB Operating Earnings Comparison $ O/(U) % O/(U) ($ in millions) 3Q05 2Q05 3Q04 2Q05 3Q04 Investment Bank $1,063 $457 $436 75% 70% Retail Financial Services 656 (324) (166) (33%)1 (20%)1 Card Services 541 (1) 120 --2 29%2 Commercial Banking 301 127 86 73%3 40%3 Treasury & Securities Services 263 34
Slide 7: Impact of Hurricane Katrina
Impact of Hurricane Katrina Estimate of Probable Credit Losses n Special provision based on current ($ in millions) estimates for credit losses Home Finance $140 n Extensive work done to estimate losses, factors considered include: Consumer & Small Business 90 P Areas affected P Level / type of insu
Slide 8: Investment Bank
Investment Bank $O/(U) n Earnings of $1.1bn on record revenues ($ in millions) 3Q05 2Q05 3Q04 Revenues $4,461 $1,711 $1,760 n Continued strength in IB fees − Ranked #2 in IB fees year-to-date3 Investment Bkg. Fees 985 20 74 Fixed Income Mkts 2,431 1,013 1,316 n Record trading with particular strengt
Slide 9: Retail Financial Services – Business Drivers
Retail Financial Services – Business Drivers Consumer & Small Business 3Q05 2Q05 3Q04 Bkg. Checking Accts (MM) 8.8 8.6 8.1 n Continued momentum in growth # of Branches 2,549 2,539 2,467 initiatives YoY # of ATMs 7,136 6,961 6,587 Checking accounts up 8% Avg Total Deposits ($B) $174.2 $174.8 $172.5 -
Slide 10: Retail Financial Services
Retail Financial Services ($ in millions, after-tax) $ O/(U) 3Q05 2Q05 3Q04 $ O/(U) Earnings $656 ($324) ($166) ($ in millions) 3Q05 2Q05 3Q04 Less: Katrina provision 155 155 155 Revenues $3,590 ($209) ($210) Less: MSR risk mgmt results (24) (127) (119) Credit Costs 378 284 139 Less: Auto loans tran
Slide 11: Card Services (Managed)
Card Services (Managed) $O/(U) n Earnings up 29% YoY – earnings up 43% ($ in millions) 3Q05 2Q05 3Q04 excluding Katrina-related provision Revenues $3,980 $94 $209 n ROO of 2.48%, up 43bps YoY and down 8bps QoQ ; ROO of 2.77% excluding Credit Costs 1,833 192 171 Katrina-related provision Expenses 1,2
Slide 12: Commercial Banking
Commercial Banking $O/(U) ($ in millions) 3Q05 2Q05 3Q04 n Earnings up 40% YoY – earnings up 50% excluding Katrina-related provision Revenues $909 $9 $76 Middle Market 592 (2) 41 n Revenues up 9% YoY reflecting strength Corporate Banking 140 2 31 across all reported businesses Real Estate 143 12 20
Slide 13: Treasury & Securities Services
Treasury & Securities Services $O/(U) n Earnings up 174% YoY and 15% QoQ ($ in millions) 3Q05 2Q05 3Q04 Revenues $1,556 ($32) $217 n Revenues up 16% YoY driven by increased Treasury Services 648 (34) 19 product volume, wider deposit spreads, Investor Services 536 (8) 132 balance growth and the impac
Slide 14: Asset & Wealth Management
Asset & Wealth Management $O/(U) n Record earnings of $315mm, up 60% ($ in millions) 3Q05 2Q05 3Q04 YoY and 11% QoQ due to net asset Revenues $1,449 $106 $256 inflows and market appreciation, partially offset by higher Credit Costs (19) 1 (20) compensation expense Expenses 976 59 92 n Net asset infl
Slide 15: Corporate
Corporate $O/(U) ($ in millions) 3Q05 2Q05 3Q04 Earnings by Unit n Private Equity Gains of $313mm Private Equity $141 $19 $81 - Portfolio of $5.9bn at end of 3Q Treasury (300) 23 (151) Other Corporate (316) (31) (186) n Treasury Total ($475) $11 ($256) - Improvement in NII - Securities losses compar
Slide 16: Merger Milestones
Merger Milestones Completed – 2005 YTD Upcoming – 2006/2007 ü 1/05 – Technology insourcing n Tri-state market integration (2006/2007) ü 1/05 – Merger of payroll & benefit systems − Teller & item processing rollout − Retail deposit conversion ü 2/05 – Merger of mutual funds − Wholesale deposit conver
Slide 17: Outlook
Outlook n Investment Bank − Pipeline continues to be strong − Expect more normal trading results n Retail Financial Services − Modest margin compression expected to continue − Credit trending to normal with seasonal uptick in 4Q n Card Services − Modest net interest margin compression expected to co
Slide 18: Disclaimer
Disclaimer 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’s management and are subject to significant risks and uncertainties. Actu