Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Goldman Sachs U.S. Financial Services Conference 2012
30 slides from Jp Morgan Chase &'s conference presentation, Dec 4, 2012
Slide 1: Goldman Sachs U.S. Financial Services Conference
December 4, 2012 Doug Braunstein, Chief Financial Officer Goldman Sachs U.S. Financial Services Conference
Slide 2: Agenda
I. JPMorgan Chase overview Performance summary II. NIR, NII and NIM NIR NII and NIM drivers – Loans NII and NIM drivers – Deposits NII and NIM drivers – Investment portfolio and duration III. Consumer & Community Banking and Corporate & Investment Bank new disclosure IV. Outlook V. Appendi
Slide 3: Performance summary
CB 11% TSS 7% AM 7% IB 28% CBB 14% Card 17% MB 16% CIB CCB CB 7% IB 27% AM 9% TSS 8% CBB 17% MB 14% Card 18% CCB 3Q11 YTD 3Q12 YTD $ O/(U) Revenue (FTE) 1 $77,569 $75,512 ($2,057) Credit Costs 5,390 2,729 (2,661) Expense 48,371 48,682 311 Reported net income $15,248 $15,592 $344 Net income applicabl
Slide 4: Book value per share: growing our fortress balance sheet
$33.45 $36.59 $36.15 $39.88 $43.04 $46.59 $50.17 $18.88 $21.96 $22.52 $27.09 $30.18 $33.69 $37.53 2006 2007 2008 2009 2010 2011 3Q12 Book value per share: growing our fortress balance sheet JPMorgan Chase overview Shares outstanding (EOP) 3.7B 3.9B 3.9B 3.8B 3.4B 3.5B 1 Actual change 2 Excludes liti
Slide 5: Building market leading franchises
Building market leading franchises JPMorgan Chase overview 1 Last twelve months 2 Averages in 3Q12 LTM column are 3Q12 YTD averages 3 Source: Inside Mortgage Finance, 4Q06 and 3Q12, respectively 4 Based on disclosures by peers and internal estimates as of 3Q12; GPCC stands for General Purpose Credit
Slide 6: Franchise leadership
90% of the customers surveyed are satisfied with their relationship with Chase7 More than four out of five of our clients consider Chase to be their lead or primary bank7 Key metrics Franchise leadership JPMorgan Chase overview 1 Based on number of loans 2 Based on Inside Mortgage Finance as of
Slide 7: Agenda
Agenda Page 6 NIR, NII and NIM 6 CCB and CIB new disclosure 17 Outlook 24 Appendix 26 G O L D M A N S A C H S U . S . F I N A N C I A L S E R V I C E S C O N F E R E N C E JPMorgan Chase overview 2
Slide 8: Revenue composition: Balanced sources of revenue
Lending and deposit related - other 6% IB fees 10% Principal transactions 10% Asset mgmt fees - AM 13% Asset mgmt fees - other 13% Securities gains 4% Other 13% Mortgage fees 14% Credit card 11% Lending and deposit related - CCB 6% Revenue composition: Balanced sources of revenue NIR, NII and NIM No
Slide 9: Net interest income trend and core net interest margin
Core net interest margin1,2 NIR, NII and NIM 1 See note 1 on slide 28 2 See note 4 on slide 28 3 The core and market-based NII presented for 2009 represent the quarterly average for 2009 (total for 2009 divided by 4); the yield for all periods represent the annualized yield Both Firmwide and Core
Slide 10: Firmwide NII drivers and Core NIM drivers
Firmwide NII drivers NII and NIM drivers Core NIM drivers1,2 (%) 3.54% 2.92% (0.16)% (0.17)% 0.08% (0.46)% 0.09% 1Q11 Run-off Core Customer deposits Treasury and CIO investment portfolio Financing and other 3Q12 $10,190 $9,790 ($821) $348 $209 ($378) $242 1Q11 Run-off Core Customer deposits Treasury
Slide 11: Balance sheet: Yield and mix trends – Run-off portfolios
Balance sheet: Yield and mix trends NII and NIM drivers – Run-off Portfolios Loans 2011 2012 2013 2014 MB 2 $173 $152 $130 $112 Card & Other 3 22 15 12 10 Total average loans $196 $167 $142 $122 Total run-off portfolios Net interest income $6.3 $5.2 $4.1 $3.4 Noninterest expense 2.0 1.8 1.5 1.3 NCOs
Slide 12: Loan growth analysis
Loan growth analysis NII and NIM drivers – Loans Total loans increased 5% since 1Q11 driven by core loan growth of 17% across all businesses, including Wholesale loan growth of 28% CB achieved ninth consecutive quarter of increased loan balances; Middle Market loans up 27% since 1Q11 TSS trade
Slide 13: Balance sheet: Yield and mix trends – Loans
5.62% 4.98% (0.17)% (0.47)% 1Q11 Run-off Core 3Q12 Balance sheet: Yield and mix trends NII and NIM drivers – Loans Components of decline in loan yields Mix and rate both contribute to loan yield decline Core loan growth is a positive contributor to NII Continued price pressure modestly affecting
Slide 14: Deposit growth
CBB CBB Other1 Other1 TSS TSS CB CB AM AM 1Q11 3Q12 Deposit growth NII and NIM drivers – Deposits Avg. deposits by line of business ($B) 27% 32% 12% Avg. interest-bearing vs. noninterest-bearing deposits ($B) 0.50% 0.43% 34% 1Q11 3Q12 Interest-bearing deposits Noninterest-bearing deposits $930 $1,09
Slide 15: Deposit growth vs. Industry
Deposit growth vs. Industry NII and NIM drivers – Deposits CBB deposit balance growth1 4.0% 5.4% 6.7% 7.3% 8.1% 8.0% 8.7% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Consistent investment and improvement in customer experience driving strong, steady balance growth JPM deposit growth more than double indu
Slide 16: Cash, investment and duration management for Treasury and CIO
Cash, investment and duration management for Treasury and CIO NII and NIM drivers – Investment portfolio and duration AFS portfolio yield has been driven by rates, including the impact on mortgage prepayment and ongoing reinvestment Incremental rate impact expected to be reduced given current le
Slide 17: Earnings-at-risk, duration, and impact on NIM
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Neutral duration Short duration Earnings-at-risk, duration, and impact on NIM NII and NIM drivers – Investment portfolio and duration Example of change in NIM for neutral and short duration1,2,3 1 Proxy balance sheet is comprised of deposits invested
Slide 18: Agenda
Agenda Page 17 CCB and CIB new disclosure 17 NIR, NII and NIM 6 Outlook 24 Appendix 26 G O L D M A N S A C H S U . S . F I N A N C I A L S E R V I C E S C O N F E R E N C E
Slide 19: Consumer & Community Banking
Consumer & Community Banking1 1 See note 1 on page 28; equity based on current equity allocation. Will be updated at Investor Day 2 Actual numbers for all periods, not over/under 3 Based on number of loans 4 Based on Inside Mortgage Finance as of 3Q12 5 Based on disclosures by peers and internal est
Slide 20: Consumer & Business Banking
Consumer & Community Banking Consumer & Business Banking (“CBB”) 1 Actual numbers for all periods, not over/under 2 Includes checking accounts and Chase Liquid® cards beginning in the 2nd quarter of 2012 Consumer & Business Banking net income of $789mm, down 23% YoY Net revenue of $4.3B, down 7%
Slide 21: Mortgage Banking
Consumer & Community Banking Mortgage Banking Record production pretax income of $1.1B, up $594mm YoY, reflecting wider margins and higher volumes Realized repurchase losses of $231mm Reduction of repurchase liability of $218mm Net servicing-related revenue, after MSR asset amortization, of
Slide 22: Card Services
Net income of $954mm, up 12% YoY Net income, excluding the reduction to the allowance for loan losses5, up 48% YoY Revenue of $4.7B, down 1% YoY Credit costs of $1.2B1, down $33mm YoY Expense of $1.9B, down 9% YoY, driven by lower marketing expense 1 Net charge-offs and net charge-off rate
Slide 23: Corporate & Investment Bank
3Q12 2Q12 3Q11 Corporate & Investment Bank revenue $8,360 ($626) $74 Investment banking fees 1,429 184 390 Treasury services 1,064 (10) 95 Lending2 357 (13) 62 Total Banking 2,850 161 547 Fixed income markets 3,726 233 927 Equity markets 1,044 1 (3) Securities services 965 (113) 26 Credit adjustment
Slide 24: Corporate & Investment Bank – Key metrics & leadership positions
Corporate & Investment Bank – Key metrics & leadership positions Corporate & Investment Bank Comments 1 See note 7 on slide 28 2 International electronic funds transfer represents volume over the period and includes non- U.S. dollar Automated Clearing House ("ACH") and clearing volume 3 Represents r
Slide 25: Agenda
Agenda Page 24 Outlook 24 NIR, NII and NIM 6 CCB and CIB new disclosure 17 Appendix 26 G O L D M A N S A C H S U . S . F I N A N C I A L S E R V I C E S C O N F E R E N C E
Slide 26: Outlook
Outlook Expect 2H12 operating expense1 comparable to 1H12 Continued modest pressure on NIM over time Subject to regulatory changes and approvals, we expect to be between 9.0%2 and 9.5%2 +/- Basel III Tier 1 Common Ratio by the end of 2013 Capital allocations to LOBs (to be updated at Investo
Slide 27: Agenda
Agenda Page 26 Appendix 26 NIR, NII and NIM 6 CCB and CIB new disclosure 17 Outlook 24 G O L D M A N S A C H S U . S . F I N A N C I A L S E R V I C E S C O N F E R E N C E
Slide 28: Top Chase Markets
Top 25 Chase Markets 2012 FDIC market share – Top 25 Chase markets 2012 JPM Rank Market Deposits ($B) % Share YoY Δ Share (bps) 2012 2011 New York, NY $94 18.3% 110 1 1 Chicago, IL $33 16.0% 150 1 1 Los Angeles, CA $32 11.4% 127 3 3 Houston, TX $18 17.1% 46 1 1 Dallas-Fort Worth, TX $15 14.4% 54 1 1
Slide 29: 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
Slide 30: 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
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