Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — 2006 Merrill Lynch Financial Services Conference
21 slides from Jp Morgan Chase &'s conference presentation, Nov 14, 2006
Slide 1: Bill Winters, Co-CEO, Investment Bank - 2006 Merrill Lynch Financial Services Conference
Exhibit 99.1 N O V E M BER 1 4 , 2 0 0 6 Bill Winters Co-CEO, Investment Bank 2006 Merrill Lynch Financial Services Conference
Slide 2: 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
Slide 3: Overview
Overview Great progress YTD 3Q06 Revenue growth with reduced volatility Increased management discipline Improved leverage of Universal Bank model Continued focus on improving results Investments in growth initiatives Preparing for less favorable credit environment Harvest strong fee pipeline 3
Slide 4: Investment Bank YTD 3Q06 performance
Investment Bank YTD 3Q06 performance Financial Results ($ millions) Record YTD 3Q06 revenues of YTD YTD $13.6B up 19% YoY 3Q06 3Q05 O/(U) Record IB fees of $4.0B up 35% Revenue $13,556 $11,418 19% YoY IB Fees 3,957 2,935 35% Record debt and equity Fixed Income Markets 6,400 6,165 4% underwriting Equ
Slide 5: Strong revenue growth across fees and markets
Strong revenue growth across fees and markets Total Investment Bank Revenue ($ billions) CAGR $1.2 ($0.6) $ 14.6 $0.8 $1.6 1.4 (10%) $13.6 0.8 $11.6 $11.4 Credit 4.1 12% 1.0 Portfolio 2.0 4.0 2.9 IB Fees 2.9 1.8 21% 2.4 Equity 1.3 Markets 1.0 Fixed 7.3 9% Income 5.7 6.2 6.4 Markets 2002 - Fixed Equi
Slide 6: Competitive Advantages
Competitive Advantages Client franchise Breadth and quality of relationships across issuers and investors Scale / Leadership positions Scale in credit intermediation and derivatives Leadership and market share gains in IB fees Universal Bank model Strong partnerships across JPMorganChase with contin
Slide 7: Client Franchise - Second highest IB fees in the industry
Client Franchise - Second highest IB fees in the industry YTD 3Q06 Total Investment Banking Fees ($ billions) YoY Growth Goldman Sachs 4.3 57% JPMorgan Chase 4.0 35% Citigroup 3.7 15% Morgan Stanley 3.0 25% UBS 2.9 21% Credit Suisse 2.8 26% Merrill Lynch 2.7 17% Deutsche Bank 2.6 24% Lehman 2.3 11%
Slide 8: Upward momentum in our leadership rankings
Upward momentum in our leadership rankings 4 Key League Table Rankings¹ JPM Wallet Share YTD 3Q06 FY2005 YTD 3Q06³ FY2005 Rank Share Rank Share Equity underwriting 6.1% 5.3% Global League Tables Debt underwriting 6.8% 6.2% Global Announced M&A #3 26% #3 23% M&A 8.5% 7.3% Global Equity and Equity-Rel
Slide 9: Universal Bank model is a key competitive advantage
Universal Bank model is a key competitive advantage IB & TSS JPMorgan IB & CB Strategy: Opportunity to cross-sell Chase Strategy: Delivery of IB products & TSS & IB products capabilities to CB client base Integrated FX solutions, transition Capital markets financing, FX, management, trade financing,
Slide 10: Areas of focus
Areas of focus Improve risk productivity Improving returns on the risk we take Management discipline Expenses, capital efficiency and investment discipline (ROI) Filling in product gaps Continue strategic business expansion in Energy, Securitized products, Emerging Markets and Principal Investments
Slide 11: Increasingly diverse markets revenue base…
Increasingly diverse markets revenue base… FY2004 markets revenue by product YTD 3Q06 markets revenue by product 1 Other Growth Initiatives 1 Other 14% Growth Initiatives 14% 20% 25% Equities 27% Equities 19% Credit, Rates & Credit, Rates & Currency 42% Currency 39% 1 Includes Commodities, Securitiz
Slide 12: …and better balanced globally
…and better balanced globally FY2004 total IB revenue by region YTD 3Q06 total IB revenue by region Latin America Latin America 4% 5% Asia Asia 12% 10% North North America America 54% 45% EMEA 30% EMEA 40% 12
Slide 13: Earnings volatility levels declined YTD 3Q06 with flat VAR
Earningsvolatility levels declined YTD3Q06 with flat VAR Principal Transactions ($ millions) Average Daily Revenue Volatility Index 1 VAR 2 $40 116 100 105 $30 $89 $90 $88 71 $20 $69 $10 $0 3 2003 2004 2005 YTD 3Q06 1 Daily revenue volatility indexed to 100 for 2003 2 Total trading and credit portfo
Slide 14: Loans down from historical highs with growing fee share
Loans down from historical highs with growing fee share Average Loans ($ billions) and IB Fee Market Share 1 Total Loans Average HTM Loans 2 Average HFS Loans Total IB Fees Mkt Share 13.2% 12.8% 12.6% 12.2% 12.4% 11.9% 11.5% $21 $112 $4 $96 $12 $6 $79 $58 $54 $42 $45 2000 2001 2002 2003 2004 2005 YT
Slide 15: Credit risk management
Credit risk management Total IB loans down 30% since 2000 with decline in Held-to- Maturity loans more pronounced Largest industry concentration (Banks and Finance companies) down from 17% in 2003 to 11% as of September 30, 2006 Tightened concentration limits; process to reduce loans above threshold
Slide 16: Hedge fund exposure is well-collateralized
Hedge fund exposure is well-collateralized Hedge Fund Client Profile 10/06 5/05 Total number of fund managers 659 507 Total number of fund counterparties 1,799 1,265 Total Net Asset Value ($ billions) $1,037 $702 MTM Trading Exposures ($ millions) 10/06 5/05 Positive MTM Exposure $2,155 $2,280 Colla
Slide 17: Improving efficiency metrics
Improving efficiency metrics Higher Comp/Revenue driven by market conditions and shift in business mix Strong focus on Noncompensationexpense management Expense ratios Efficiency metrics (YTD 3Q06 vs. FY2005) Comp / Revenue Noncomp / Revenue Revenue / Producer Ratio +11% 67% Support / Producer Ratio
Slide 18: Performance target: How we get there
Performance target: How we get there Performance Target 20% ROE through the cycle Strive to achieve by end of 2007 How We Get There Management Discipline & Business Efficiency New business investments Energy trading and risk management Securitized Products: structuring and investing Principal Invest
Slide 19: Path to achieving performance target
Path to achieving performance target Progress Next steps Incremental Earnings impact¹ Energy Build-out 75% complete Complete European build- $100-160mm YTD 3Q06 client revenues out by end of 2006 50% above FY2005 level Securitized 25% YTD Americas revenue Continue to expand our $100-160mm growth pri
Slide 20: Path to achieving performance target, cont'd
Path to achieving performance target, cont’d Progress Next steps Incremental Earnings Impact¹ Retail Added over two dozen Continue to develop $50-100mm Structured distributors, including cross-product platform Fidelity in the US Products Pension Obtained Department of Continue development of $50-100
Slide 21: JPM is well-positioned to grow in a robust market and perform well relative to peers in a downturn
JPM is well-positioned to grow in a robust market and perform well relative to peers in a downturn Key Takeaways Strong revenue growth across businesses Improved management discipline Well-established risk management framework Outlook Continue to see a robust banking environment & strong fee pipelin
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