Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q1 2008 Earnings Presentation
21 slides from Jp Morgan Chase &'s earnings presentation, Apr 16, 2008
Slide 1: Financial Results 1Q08
APRIL 16, 2008 FINANCIAL RESULTS 1Q08
Slide 2: 1Q08 Financial highlights
1Q08 Financial highlights Earnings of $2.4B on revenue of $17.9B EPS of $0.68 down 49% from record 1Q07 earnings Tier 1 capital remained strong at $89.6B, or 8.3% (estimated) Credit reserves further strengthened by $2.5B firmwide, of which $1.1B is related to home equity portfolio Investme
Slide 3: 1Q08 Managed Results
1Q08 Managed Results1 $ $ in in millions millions $ O/(U) O/(U) % 1Q08 4Q07 1Q07 4Q07 1Q07 Revenue (FTE)1 $17,898 ($377) ($1,843) (2)% (9)% Credit Costs1 5,105 1,944 3,504 61% 219% Expense2 8,931 (1,789) (1,697) (17)% (16)% Reported Net Income $2,373 ($598) ($2,414) (20)% (50)% Reported EPS $0.68 ($
Slide 4: Investment Bank
Investment Bank $ $ in in millions millions Net loss of $87mm on revenue of $3.0B, down 52% YoY $ O/(U) IB fees of $1.2B down 30% YoY, driven primarily by a decline in debt underwriting fees 1Q08 4Q07 1Q07 Ranked #1 for total Global Investment Banking Fees3; market share grew from 7.2%3 in 200
Slide 5: Leveraged Lending
Leveraged Lending Net additional markdown of $1.1B for the quarter on the remaining funded and unfunded commitments of $22.5B $22.5B of funded and unfunded commitments with gross markdowns in excess of 11% at 3/31/2008 $26.4B of funded and unfunded commitments at 12/31/2007 ($2.3B) closed, d
Slide 6: Other Investment Bank Risk Topics
Other Investment Bank Risk Topics Mortgage Related Prime / Alt-A exposure of $12.8B - markdowns of $1.1B Prime - securities of $5.6B, mostly AAA-rated and $1.5B of first lien mortgages Alt-A - securities of $3.5B, mostly AAA-rated and $2.2B of first lien mortgages Subprime exposure of $1.9B
Slide 7: Retail Financial Services - Drivers
Retail Financial Services - Drivers Key Key Statistics¹ Statistics¹ ($ ($ in in billions) billions) 1Q08 4Q07 1Q07 Average deposits up 4% YoY Regional Banking Branch production statistics YoY: Average Deposits $214.3 $208.5 $206.5 Checking accounts up 9% Checking Accts (mm) 11.1 10.8 10.2 Cr
Slide 8: Retail Financial Services
Retail Financial Services $ $ in in millions millions $ O/(U) Net loss of $227mm driven by increased credit 1Q08 4Q07 1Q07 costs Net Interest Income $3,011 $306 $394 Revenue of $4.7B grew 15% YoY Noninterest Revenue 1,691 (419) 202 Credit costs in 1Q08 include a $1.7B addition to Total Revenue
Slide 9: Home Equity
Home Equity JPM 30-day JPM 30-day delinquency delinquency trend trend Key Key statistics statistics 1Q08 4Q07 1Q07 2.25% EOP owned portfolio ($B) $95.0 $94.8 $87.7 2.00% $447 $248 $68 Net charge-offs ($mm) 1.75% Net charge-off rate 1.89% 1.05% 0.32% 1.50% 1.25% 1.00% Sep- Dec- Mar- Jun- Sep- Dec- Ma
Slide 10: Subprime Mortgage
Subprime Mortgage JPM 30-day JPM 30-day delinquency delinquency trend trend Subprime Subprime mortgage mortgage key key statistics statistics 1Q08 4Q07 1Q07 18% Subprime 15% EOP owned portfolio ($B)1 $15.8 $15.5 $9.0 12% EOP held-for-sale ($B) - - $3.7 9% Net charge-offs ($mm) $149 $71 $20 6% Net ch
Slide 11: Prime Mortgage
Prime Mortgage JPM JPM 30-day 30-day delinquency delinquency trend trend Prime Prime mortgage mortgage portfolio portfolio key key statistics statistics Prime 1Q08 4Q07 1Q07 3.50% EOP balances in Corporate ($B) $41.1 $36.9 $26.5 3.00% EOP balances in RFS ($B) 4.0 3.6 7.4 2.50% Total $45.1 $40.5 $33.
Slide 12: Card Services (Managed)
Card Services (Managed) $ $ in in millions millions Net income of $609mm down by $156mm, $ O/(U) or 20% YoY; decline in results driven by increase in credit costs 1Q08 4Q07 1Q07 Credit costs up by $441mm, or 36% YoY due Revenue $3,904 ($67) $224 to a higher level of charge-offs and an Credit Cos
Slide 13: Commercial Banking
Commercial Banking $ $ in in millions millions $ O/(U) Net income of $292mm down 4% YoY 1Q08 4Q07 1Q07 driven by an increase in the provision for credit losses, largely offset by Revenue $1,067 ($17) $64 higher net revenue Middle Market Banking 706 11 45 Mid-Corporate Banking 207 (32) (5) Averag
Slide 14: Treasury & Securities Services
Treasury & Securities Services $ $ in in millions millions $ O/(U) Net income of $403mm up 53% YoY Pretax margin of 34% 1Q08 4Q07 1Q07 Liability balances up 21% YoY Revenue $1,913 ($17) $387 Treasury Services 813 (11) 124 Assets under custody up 7% YoY Worldwide Securities Svcs 1,100 (6) 263
Slide 15: Asset Management
Asset Management $ in $ in millions millions $ O/(U) Net income of $356mm down 16% YoY and 32% QoQ Pretax margin of 30% 1Q08 4Q07 1Q07 Revenue of $1.9B flat YoY as the benefit from higher Revenue $1,901 ($488) ($3) AUM and deposit and loan growth was offset by Private Bank 655 (58) 95 lower pe
Slide 16: Corporate/Private Equity
Corporate/Private Equity $ $ in in millions millions $ O/(U) Private Equity 1Q08 4Q07 1Q07 Private Equity gains of $189mm in 1Q08 Private Equity $57 ($299) ($641) EOP Private Equity portfolio of $6.6B Represents 8.3% of common equity less Corporate ex. Visa 15 108 44 goodwill Visa 955 955 955
Slide 17: Capital Management / Fortress Balance Sheet
Capital Management / Fortress Balance Sheet $ $ in in billions billions 1Q08 4Q07 1Q07 1 Tangible Common Equity $74.0 $71.9 $65.7 Common Shareholders' Equity less Goodwill $79.9 $78.0 $72.6 2 Tier 1 Capital $89.6 $88.7 $82.5 2 Risk Weighted Assets $1,075.9 $1,051.9 $972.8 2 Tier 1 Capital Ratio 8.3%
Slide 18: Bear Stearns Transaction Update
Bear Stearns Transaction Update Expect closing by June 30, 2008 Increase in capital at closing of approximately $5B +/- Estimated adjustments to book value include: — Bear Stearns results through closing — Cost of de-leveraging / de-risking the balance sheet — Purchase accounting, restructurin
Slide 19: Bear Stearns Merger Integration Update
Bear Stearns Merger Integration Update Firmwide Merger Integration Office established Each business area and function represented Execution Day 1 Integration Plan / Milestones established 90% complete with acquisition suite selection Named new IB Management Team for the combined firm Aim
Slide 20: 2008 Outlook
2008 Outlook Investment Investment Bank Bank CB CB Good market share but lower IB fees Good underlying growth Reduced trading expectations for Strong reserves but credit normalizing foreseeable future Strong credit reserves; credit losses are idiosyncratic TSS TSS Good underlying growth,
Slide 21: Notes on non-GAAP financial measures and forward-looking statements
Notes on non-GAAP financial measures and forward-looking statements This presentation includes non-GAAP financial measures. 1. TCE as used on slide 2 for purposes of a return on tangible common equity and presented as Tangible Common Equity on slide 16 (line 1) is defined as common stockholders’ equ