Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q4 2006 Earnings Presentation
21 slides from Jp Morgan Chase &'s earnings presentation, Jan 17, 2007
Slide 1: Financial Results Fourth Quarter 2006
J A N U A R Y 1 7, 2 0 0 7 FINANCIAL RESULTS Fourth Quarter 2006
Slide 2: Agenda
Agenda FY 2006 and 4Q06 Results 2007 Outlook 2
Slide 3: FY 2006 Managed Results
FY 2006 Managed Results1 $ in millions FY 2006 FY 2005 $ U/(O) O/(U) % 1 Revenue (FTE) $64,551 $58,364 $6,187 11% 1 Credit Costs 5,480 7,259 (1,779) (25%) 2,3 Expense 38,281 38,426 (145) --- Income from Continuing Ops. $13,649 $8,254 $5,395 65% EPS - Continuing Ops. $3.82 $2.32 $1.50 65% 4 Income fr
Slide 4: 4Q06 Managed Results
4Q06 Managed Results1 $ in millions $ O/(U) O/(U) % 4Q06 3Q06 4Q05 3Q06 4Q05 1 Revenue (FTE) $16,895 $666 $2,136 4% 14% 1 Credit Costs 1,727 308 (559) 22% (24%) 2,3 Expense 9,746 95 1,316 1% 16% Income from Continuing Ops. $3,906 $674 $1,264 21% 48% EPS - Continuing Ops. $1.09 $0.19 $0.35 21% 47% 4
Slide 5: 4Q06 Significant Items – Continuing Operations
4Q06 Significant Items – Continuing Operations $ in millions Per Share Pre-tax After-tax After-tax Line of Business Tax audit resolutions --- $359 $0.10 Corporate Material litigation insurance recoveries $137 $85 $0.02 Corporate RFS portfolio repositioning ($215) ($133) ($0.04) RFS/Regional Banking
Slide 6: Investment Bank
Investment Bank $ in millions Net income of $1.0bn on record revenue of $4.7bn $ O/(U) 4Q06 3Q06 4Q05 ROE of 19% Revenue $4,721 $48 $1,526 Record IB fees of $1.6bn up 36% YoY driven by Investment Banking Fees 1,580 161 419 record debt underwriting and advisory and strong equity underwriting fe
Slide 7: Retail Financial Services
Retail Financial Services $ in millions Net income of $718mm down 11% YoY and 4% QoQ $ O/(U) Regional Banking results include net losses on portfolio repositioning of ($215)mm in current 4Q06 3Q06 4Q05 quarter and ($120)mm in prior year Revenue $3,728 $173 $134 Regional Banking current quarter
Slide 8: Regional Banking
Regional Banking Net income of $619mm reflecting portfolio $ in millions repositioning, BNY acquisition and insurance $ O/(U) divestiture 4Q06 3Q06 4Q05 Average deposits ex. BNY up 7% YoY and 1% QoQ with continued shift to narrower-spread Revenue $2,907 ($55) $105 deposits Credit Costs 165 112 7
Slide 9: Mortgage Banking & Auto Finance
Mortgage Banking & Auto Finance Mortgage Banking ($ in millions) Auto Finance ($ in millions) $ O/(U) $ O/(U) 4Q06 3Q06 4Q05 4Q06 3Q06 4Q05 Revenue $410 $212 ($14) Revenue $411 $16 $43 Production 215 18 81 Credit Costs 97 36 26 Net Mortgage Servicing 195 194 (95) Expense 207 13 27 Expense 354 20 29
Slide 10: Card Services (Managed)
Card Services (Managed) $ in millions Net income of $719mm up 138% YoY ROO of 3.04% $ O/(U) Prior year included ($650)mm pre-tax impact 4Q06 3Q06 4Q05 related to new bankruptcy legislation Revenue $3,750 $104 $29 Avg outstandings of $147bn up 6% YoY and 4% Credit Costs 1,281 11 (955) QoQ dri
Slide 11: Commercial Banking
Commercial Banking $ in millions Net income of $256mm $ O/(U) Overhead ratio of 48% 4Q06 3Q06 4Q05 Results reflect BNY acquisition on October 1 Revenue $1,018 $85 $102 Loans and liability balances up 15% YoY driven by Middle Market 661 44 53 organic growth and BNY Mid-Corporate Banking 198 3
Slide 12: Treasury & Securities Services
Treasury & Securities Services $ in millions Net income of $256mm up 1% YoY $ O/(U) Pre-tax margin of 26% 4Q06 3Q06 4Q05 Liability balances up 19% YoY; Assets under Revenue $1,537 $38 $101 custody up 30% YoY Treasury Services 700 3 13 Worldwide Securities Svcs 837 35 88 Revenue up 7% YoY dri
Slide 13: Asset Management
Asset Management $ in millions Record net income of $407mm up 19% YoY driven by increased AUM and higher $ O/(U) performance fees, partially offset by higher 4Q06 3Q06 4Q05 performance-based compensation and the absence of a prior-year tax credit Revenue $1,947 $311 $436 Credit Costs 14 42 24 Pr
Slide 14: Corporate
Corporate Total Corporate ($ in millions) Treasury ($ in millions) $ O/(U) $ O/(U) 4Q06 3Q06 4Q05 4Q06 3Q06 4Q05 Net Income $1,161 $1,130 $1,110 Net Income ($11) ($81) $564 1 Net Income ex. Disc. Ops 541 575 546 Net Interest Income 96 (53) 487 Private Equity 136 41 15 Securities Gains/(Losses) 7 (17
Slide 15: Capital Strength
Capital Strength $ in billions 4Q06 3Q06 4Q05 Tangible Common Equity1 $63.3 $63.1 $55.3 Common Shareholders' Equity less Goodwill $70.6 $70.2 $63.5 Tier 1 Capital2 $81.1 $79.8 $72.5 Risk Weighted Assets2 $935.3 $926.5 $850.6 Tier 1 Capital Ratio2 8.7% 8.6% 8.5% Total Capital Ratio2 12.3% 12.1% 12.0%
Slide 16: Agenda
Agenda FY 2006 and 4Q06 Results 2007 Outlook 16
Slide 17: 2007 Outlook
2007 Outlook Investment Bank Strong IB fee pipeline entering 2007 Credit costs trend to more normal levels Modest increase in expense (ex. incentive compensation) reflecting continued investments in growth areas Retail Financial Services Net interest income up slightly from 4Q run-rate with
Slide 18: 2007 Outlook
2007 Outlook Commercial Banking Expect continued business growth with some competitive and rate pressures Credit costs trend to more normal levels Treasury & Securities Services Expect improvement in pre-tax margin Continued revenue growth Modest expense growth from 2006 level Asset Manage
Slide 19: 2007 Outlook
2007 Outlook Corporate Private Equity: $1.3bn in gains and $627mm in net income in 2006 Results will be market-driven and volatile Treasury and Other Corporate: Expect combined net loss to be ($50)mm – ($100)mm per quarter in 2007 Merger savings and costs: Expect to achieve final 7% of
Slide 20: Notes on non-GAAP financial measures
Notes on non-GAAP financial measures This presentation includes non-GAAP financial measures. 1. TCE as used on slides 3 and 4 for purposes of a return on tangible common equity and presented as Tangible Common Equity on slide 15 (line 1) is defined as common stockholders’ equity less identifiable in
Slide 21: 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