Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q2 2012 Earnings Presentation
15 slides from Jp Morgan Chase &'s earnings presentation, Jul 13, 2012
Slide 1: Executive Comments
July 13, 2012 E X E C U T I V E C O M M E N T S
Slide 2: Agenda
Agenda Agenda Presentation Start time I. Executive Comments − Jamie Dimon 7:30AM A. Overview B. Significant items in the quarter C. Update on synthetic credit portfolio D. Overview of Treasury and CIO E. Capital planning F. Wrap up II. Financial results − Doug Braunstein 7:45AM III. CIO Task Force U
Slide 3: Overview
Overview Solid underlying business performance – Why we are here Significantly reduced total synthetic credit risk in CIO Substantially all remaining synthetic credit positions transferred to the IB IB has the expertise, capacity, trading platforms and market franchise to effectively trade a
Slide 4: 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 results inclu
Slide 5: Synthetic credit portfolio risk update
Synthetic credit portfolio risk update Risk down substantially from peak Note: June 30 & July 9 data represent Residual Synthetic Credit Portfolio only (excluding AFS Hedge Portfolio); the combination of the Residual Synthetic Credit Portfolio and AFS Hedge Portfolio would result in lower net notion
Slide 6: Synthetic credit portfolio risk update
Synthetic credit portfolio risk update Significant risk reduction has allowed us to transfer substantially all remaining synthetic credit positions to the IB CIO synthetic credit group closed down The IB has the expertise, capacity, trading platforms and market franchise to effectively trade a
Slide 7: Deposits, loans and investment need of Treasury and CIO
JPM has $1.1T in deposits and $0.7T in loans Excess deposits of $423B, plus equity of $144B1 & other net assets of $45B create $522B investment need2 – $199B Treasury deployment – Cash and deposits at Central Banks, government reverse repos, etc. – $323B CIO AFS portfolio – Average rating of AA+
Slide 8: Cash, investment and duration management for Treasury and CIO
Cash, investment and duration management for Treasury and CIO 1 Data only includes Treasury and CIO; other lines of business comprise ~$6B in AFS 2 Certain US Gov’t and Agency products may not be externally rated, but are included in the AA+ categorization 3 Unrated/locally rated securities of ~$10B
Slide 9: Capital projections
2Q12 Actual 3Q122,3 4Q122,3 20132,3 20142,3 Net income (analyst estimates; $mm)2 $4,960 $4,323 $4,551 ~$21,000 ~$22,000 RWA (JPM current estimates) $1,664 ~$1,600 ~$1,575 ~$1,475 ~$1,450 Estimated T1C ($) 132 136 139 155 172 Estimated T1C (%) 7.9% 8.5% 8.8% ~10.5% ~12.0% 9.0% $22 $42 9.5% $15 $34 B3
Slide 10: Capital actions update
Capital actions update Update Based upon our capital position, balance sheet and earnings power, we could resume our buyback now But after discussion with Federal Reserve, the Board has determined not to buyback stock until The Board completes its CIO review We submit new capital plan, to re
Slide 11: Conservative principles of balance sheet management
Conservative principles of balance sheet management Fortress balance sheet Strong reserves Balance sheet / liquidity Conservative portfolio and interest rate risk management Increased B1 T1C ratio from 7.2% in 1Q07 to 10.3% as of 2Q121; 7.9% B32 Even during the crisis, ratio never dropped below
Slide 12: Strong and diversified business model – Source of strength
Strong and diversified business model – Source of strength Diversified business model drove solid 2Q earnings despite CIO losses $5.0B of net income in 2Q12; $9.9B in 1H12 $1.21 EPS in 2Q12; $2.41 in 1H12 2011 net income of $19B – Highest among U.S. banks for the year Continue to believe t
Slide 13: Earnings generation has the ability to sustain growth through difficult times
Earnings generation has the ability to sustain growth through difficult times Comments Ability to grow in difficult times is a sign of strength, not weakness Ability to grow driven by Diversified business model – Source of strength Constant investing Building market-leading franchises Co
Slide 14: Wrap up
Wrap up We are not proud of this moment – Very proud of the company We are not making light of this error but we believe this is an isolated event Capital is for known and unknown events Lessons learned – Will make us a better Company We can never say we won’t make mistakes – Hopefully the
Slide 15: Notes on non-GAAP financial 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 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 with the