Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q1 2003 Earnings Presentation
16 slides from Jp Morgan Chase &'s earnings presentation, Apr 18, 2003
Slide 1: First Quarter 2003 Financial Results
First Quarter 2003 Financial Results April 16, 2003
Slide 2: Highlights: 1Q03
Highlights: 1Q03 Rebound of Investment Bank with positive operating leverage Strong trading Improving credit Market share gains in Equities and M&A Continued exceptional strength in mortgage Record applications, wide spreads, low rates Loss at JPMP Cautious outlook
Slide 3: Earnings Per Share
Earnings Per Share 1Q03 Operating $0.36 $0.57 Reported (0.20) 0.48 $0.69 4Q02 1Q02 O/(U) Operating 92% 21% Reported NM 44% 4Q02 1Q02
Slide 4: 1Q Operating Results
1Q Operating Results ($ in millions) Earnings Revenue 12% 12% Expenses 1% 9% Credit Costs (11%) 12% Drivers 4Q02 1Q02 O/(U) Earnings 1Q02 4Q02 1Q03 Operating Earnings 1150 730 1400 Earnings EPS $0.57 $0.36 $0.69 ROE 11% 7% 13%
Slide 5: 1Q Operating Revenue
1Q Operating Revenue 1Q03 4Q02 1Q02 Investment Bank $4,012 $701 $405 Investment Mgmt & Private Bkg 652 (11) (121) Chase Financial Services 3,737 359 646 Treasury & Securities Svcs 966 4 (2) JPMP (290) (195) 31 Other (214) 80 (15) Total Firm $8,863 $938 $944 O/(U) ($ in millions)
Slide 6: 1Q Operating Expense Variance
1Q Operating Expense Variance ($ in millions) Compensation $3,098 20% 14% Non-compensation 2,272 (4%) --- Severance & related costs 171* (66%) 61% Total Expenses $5,541 1% 9% 1Q03 4Q02 1Q02 O/(U) Compensation mostly revenue driven increase in incentives; also impacted by accounting for stock-based c
Slide 7: Risk Migration Trends - Commercial Exposure
Investment Grade Non-Investment Grade 12/31/2001 326 98 12/31/2002 331 82 3/31/2003 333 73 Investment Grade All Other Telecom Cable Merchant Energy Emerging Markets 12/31/2001 9.8 2.142 0.141 0.093 0 12/31/2002 8.4 2.3 2.2 2.2 1.2 3/31/2003 7.5 2.3 2.2 1.4 0.9 Risk Migration Trends - Commercial Expo
Slide 8: Nonperforming Assets and Credit Costs
Nonperforming Assets $4.4 $(0.4) $0.1 Commercial & Residual $0.3 $(0.2) $(0.1) Consumer 0.9 --- 0.2 Total Credit Costs $1.2 $(0.2) $0.1 Nonperforming Assets and Credit Costs ($ in billions) Stabilization of commercial credit costs Consumer credit costs driven by higher loan volumes 1Q03 4Q02 1Q02 O/
Slide 9: Capital
Tier 1 Ratio 3/31/2002 0.086 12/31/2002 0.082 3/31/2003 0.084 Assets $713 $759 $755 RWA $449 $456 $460 Capital ($ in billions) *estimated Tier 1 Capital Ratio Dividend payout of 50% Tight control of balance sheet Potential VIE consolidation in 3Q Changes in internal capital allocation
Slide 10: Investment Bank
Investment Bank ($ in millions, operating basis) Revenue rebounds with operating leverage Positive commercial credit trend 1Q03 4Q02 1Q02 O/(U) Revenue $4,012 21% 11% Expense 2,256 (1%) 8% Credit Costs 246 (50%) (13%) Earnings 932 158% 22% ROE 20% 8% 16% Overhead 56% 69% 58% Fixed Income Capital Mkt
Slide 11: Investment Bank League Table Summary
Rank U.S. Equity and Equity Related 1 15% Global Syndicated Loans 1 16% U.S. Investment Grade Bonds 2 15% Global Announced M&A 3 19% Investment Bank League Table Summary %Share Source: Thomson Financial First Quarter 2003
Slide 12: Chase Financial Services
Chase Financial Services ($ in millions, operating basis) Very strong quarter driven by Home Finance 1Q03 4Q02 1Q02 O/(U) Revenue $3,737 11% 21% Expense 1,748 2% 13% Credit Costs 878 --- 21% Earnings 704 42% 39% ROE 28% 19% 20% Overhead 47% 51% 50% Revenue of $3,737 (?21% vs. 1Q) CFS 0.306 CCS 0.395
Slide 13: JPMP Private Equity Losses
JPMP Private Equity Losses 1Q03 4Q02 1Q02 Direct: Realized Cash Gains (Net) $ 46 $144 $126 Writedowns/Write-offs (176) (225) (185) MTM (6) 108 (177) Total Direct (136) 27 (236) Funds (Net) (94) (80) (19) Total Private Equity Losses ($230) ($53) ($255) ($ in millions) Limited/delayed exit opportuniti
Slide 14: 1Q Operating Earnings by Business
1Q Operating Earnings by Business 1Q02 4Q02 1Q03 Investment Bank 764 361 932 ROE 16% 8% 20% ($ in millions) 1Q02 4Q02 1Q03 Investment Bank 508 496 704 ROE 20% 19% 28% 1Q02 4Q02 1Q03 TSS 143 136 147 ROE 20% 18% 19% 1Q02 4Q02 1Q03 TSS 129 43 65 ROE 8% 3% 4% ROTE* 27% 9% 14% * Return on Tangible Equity
Slide 15: Summary
Summary Low client activity in investment banking Improving commercial credit, but remains at cyclical highs Delayed gain realization at JPMP Consumer lending profits at peak - - will eventually decline Rebound of the Investment Bank, continued exceptional strength in mortgage, loss at JPMP 1Q03 Res
Slide 16: This presentation contains statements that are forward-looking within the meaning of the Private Securities
This presentation contains statements that are forward-looking 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. These