Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Investor Day (February 2016)
35 slides from Jp Morgan Chase &'s investor day presentation, Feb 23, 2016
Slide 1: Corporate & Investment Bank
CORPORATE & INVESTMENT BANK Daniel Pinto, Chief Executive Officer Corporate & Investment Bank February 23, 2016
Slide 2: Topics for discussion
Topics for discussion Best-in-class returns in 2015 2015 Financial Strong revenue growth despite headwinds performance & benchmarking Market leading positions across most products Made progress in 2015 on expense reduction target Update on 5 areas Technology and innovation 2016 Business
Slide 3: No significant change to overall CIB strategy
No significant change to overall CIB strategy Leverage our scale, completeness, and global network to facilitate an integrated client coverage model, leading to best-in-class ROEs Relentlessly optimize business mix while investing in core growth opportunities Continue to adapt to evolving indu
Slide 4: Agenda
Agenda Page Financial performance 3 2016 Business Updates 9 Financial Targets 26 CORPORATE & INVESTMENT BANK
Slide 5: Our performance in 2015 was influenced by a challenging external environment and internal headwinds
Our performance in 2015 was influenced by a challenging external environment and internal headwinds External Internal Slowing growth globally Business simplification Geopolitics Regulatory and control China and other EMs environment HEADWINDS Collapse in commodity prices Multiple const
Slide 6: Summary update from priorities set last year
Summary update from priorities set last year What we said in 2015… Progress so far… Optimize business mix across multiple Reduced GSIB score to help bring overall Firm down to capital constraints 3.5% bucket – without significant client or revenue impact Continue to embed cost of multiple bindin
Slide 7: In 2015, we delivered great results and continued to outperform the competition
In 2015, we delivered great results and continued to outperform the competition Net revenues and O/H1,2 ($B) Net income1,2 ($B) ROE1,2 (%) and capital ($B) O/H ratio Capital 66% 60% 57% 61% 59% $47B $47.5B $56.5B $61B $62B $10.1 $34.2 $8.8 $9.2 18% $33.0 $32.7 $33.2 $8.6 17% $30.4 $6.9 14% 14% 13% 2
Slide 8: We are consistently gaining market share across most product areas
We are consistently gaining market share across most product areas JPM Market CIB revenue and growth details Global IB Fees1,2 – JPM: 16.5% share, +120bps YoY Fixed Income Markets rev.1 – JPM: 17.8% share, +170bps YoY JPM #1 JPM #1 JPM #1 JPM #1 0.0% 12.0% 3.1% 5.6% (11.2)% (18.1)% (35.6)% (5.7)% JP
Slide 9: We continue to have market-leading positions in most products
We continue to have market-leading positions in most products Top 3 2nd Tier 3rd Tier Competitive ranking in 17 product areas JPM Total leadership positions1,2 20101 2014 2015 excludes TS & SS Total leadership positions 11 16 16 B AN K I N G 2 Bond underwriting 1 1 1 15 Loan syndication 1 1 1 14 ECM
Slide 10: ROE walk forward
ROE walk forward CIB normalized ROE walk – FY 2014 to 2015 1.2% (0.2%) 0.2% (0.2%) 14% 13% Legal 1.8% expense Legal 2.9% expense + 70 bps Tax credit - 50 bps Reserve build + 90 bps Revenue growth - 10 bps Run-off portfolio + 40 bps Expense initiatives 12.2% 10.1% FINANCIAL PERFORMANCE 2014 Actual Ne
Slide 11: Agenda
Agenda Page Financial Performance 3 2016 Business updates 9 Financial Targets 26 CORPORATE & INVESTMENT BANK
Slide 12: Our businesses continue to optimize their use of resources, innovate, and embrace market structure evolution
Our businesses continue to optimize their use of resources, innovate, and embrace market structure evolution Topics covered in this section 2 3 Custody and Fund Treasury Services Services 12 Technology & Innovation Global Investment Markets Banking 2016 BUSINESS UPDATES 4 5 9
Slide 13: We continue to invest aggressively in a comprehensive technology strategy
1. Technology & Innovation 1 We continue to invest aggressively in a comprehensive technology strategy Multi-year strategy to simplify architecture, build scalable platforms, and create a flexible environment for rapid prototyping and deployment of technology to drive sustained improvements in clien
Slide 14: This is having a significant impact on all our businesses and our operating model
1. Technology & Innovation 1 This is having a significant impact on all our businesses and our operating model Self-service multi-channel tools for research, analytics and reporting Flexible integration and reporting via APIs1 Client experience Continuous improvement in onboarding turnaround t
Slide 15: We have a balanced approach to exploring and adopting emerging technologies
1. Technology & Innovation 1 We have a balanced approach to exploring and adopting emerging technologies Development approach Strategic Co- Internal Start-up Rapid Strategic Select areas investment in development teams at Residency prototyping vendors Mature of innovation start-ups with partners sca
Slide 16: Transaction banking is a large market with attractive underlying growth prospects
2. Treasury Services 2 Transaction banking is a large market with attractive underlying growth prospects FY2015 Global TS revenue ($B) $6.31 Non-CIB $2.7 All other Top 9 banks 78% 22% CIB banks $3.6 Peer JPM Peer Peer Peer Peer Peer Peer Peer 1 2 3 4 5 6 7 8 Source: Coalition, internal JPM analysis
Slide 17: Treasury Services has a broad and difficult-to-replicate platform
2. Treasury Services 2 Treasury Services has a broad and difficult-to-replicate platform that serves clients across the entire Firm Business model TS cross-border revenue ~80% of global Fortune 500, 13% Client franchise world’s top 25 banks Servicing ~14,000 clients across the CIB 2012 2015 and the
Slide 18: We are investing across our Corporate and Financial Institution franchises
2. Treasury Services 2 We are investing across our Corporate and Financial Institution franchises to capture the growing global wallet Strategic drivers Treasury Services roadmap Continue growing business with existing clients Further penetrate strong of the CIB and CB firm relationships Overtim
Slide 19: Technology will be a transformational driver of competitive differentiation
2. Treasury Services 2 Technology will be a transformational driver of competitive differentiation as the industry and our clients’ needs change Current state Stable platform with high volume processing capacity and market-leading straight-through rates Market-leading controls for sanctions scre
Slide 20: Custody & Fund Services has a strong market position in a large, concentrated and growing industry
3. Custody & Fund Services 3 Our Custody & Fund Services business has a strong market position in a large, concentrated and growing industry Distribution of global CFS revenue and AUC ($T) $28.9 $21.3 $19.9 $14.9 AUC Top 10 $8.8 Others 30% 70% banks $6.4 $6.1 $4.3 $4.0 $2.6 Peer Peer JPM Peer Peer P
Slide 21: Custody & Fund Services is a critical component of the CIB franchise
3. Custody & Fund Services 3 Custody & Fund Services is a critical component of the CIB franchise Strategic importance to the CIB Highly complementary client base ILLUSTRATIVE Core business with $3.5B in revenue Global scale 95% Markets & overlap Servicing the largest and most strategic CFS only Ban
Slide 22: We are investing to meet the evolving needs of our clients and drive future growth
3. Custody & Fund Services 3 We are investing to meet the evolving needs of our clients and drive future growth Evolving client needs Investment focus area Expansion of ETF capabilities Continued investment in our Alts platform Product expansion Comprehensive derivative coverage Starting point
Slide 23: Global Investment Banking: investing in areas of opportunity
4. Global Investment Banking In our Investment Banking business, we are making investments in areas of 4 opportunity while delivering the Firm for our clients Strategic priorities Investment focus areas Completed majority of senior banker hires in targeted key areas to improve Talent strategic dia
Slide 24: We maintain our leadership in Fixed Income and continue to optimize our business
5. Markets – Fixed Income We maintain our leadership in Fixed Income and continue to optimize our 5 business under multiple constraints Strategic priorities Investment focus areas Strengthen our #1 position by closing the few regional and product gaps Leverage scale for Maintain size and focus t
Slide 25: Scale, diversification, and leading positions drive high and resilient ROE for FICC
5. Markets – Fixed Income Scale, diversification, and leading positions drive high and resilient ROE for our 5 FICC franchise Return on equity of Fixed Income Fully loaded ROE Marginal contribution1 Not to Scale Fixed Income 15% Overall Market-leading positions Rates Trading and scale contributing
Slide 26: We strive to adapt to the changing market structure and serve clients in any way they want
5. Markets – Fixed Income We strive to adapt to the changing market structure and serve clients in any 5 way that they want Orders Channels Sales & Trading Execution venues Principal Liquidity / inventory Exchanges Voice Client self- Capital directed Actionable prices Internalization SEFs5 E
Slide 27: Continued investment in client capabilities had tangible successes in 2015
5. Markets – Fixed Income The continued investment in capabilities to serve clients in any way that 5 they want had tangible successes in 2015 Fixed Income client trading volume by trading model Tangible successes in 2015 Current state Expected scenario 2018–2020 FX Electronic average daily volume
Slide 28: Improved Equities rank and market share while undergoing significant transformation
5. Markets – Equities Improved Equities rank and market share while undergoing significant 5 transformation in the business, globally and across products Strategic priorities Investment focus areas Significant market share growth in e-trading leveraging our top tier Close the gap in platform – mor
Slide 29: Agenda
Agenda Page Financial performance 3 2016 Business updates 9 Financial targets 26 CORPORATE & INVESTMENT BANK
Slide 30: Capital optimization allowed us to reduce our estimated GSIB surcharge to 3.5%
Capital optimization allowed us to reduce our estimated GSIB surcharge to 3.5%; we identified additional opportunities to maximize returns by redeployment of resources JPM Method 2 GSIB score based on preliminary estimates US (Method 2) Framework Return-maximizing redeployment of resources in the CI
Slide 31: Additional reductions in GSIB bucket will be challenging
Additional reductions in GSIB bucket will be challenging; actions will be guided by impact on strategy, clients, and bottom line Further GSIB reduction becomes dilutive and other constraints become more binding ILLUSTRATIVE GSIB bucket Select constraints1 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% Advanced Ris
Slide 32: We continue to aggressively pursue identified cost opportunities to achieve our target reduction of $2.8B
We continue to aggressively pursue identified cost opportunities to achieve our target reduction of $2.8B CIB expense trend – 2014 to 2017 ($B) $23.3 Legal $1.5 expense $1.3 $21.4 $0.3 $1.2 ~$1.2 ~$19 2014 Actual Business Other expense 2015 Actual Remaining 2017 simplification initiatives expense re
Slide 33: ROE walk forward
ROE walk forward CIB normalized ROE walk – FY 2015 to target 0.9% (0.6)% 0.3% 0.5% 0.0% ~(1.7%) 14% 13% Legal 1.8% expense - 30 bps Revenue + 70 bps Core revenue + 30 bps Expense - 40 bps Run-off portfolio Revenue ~$34B 12.2% Overhead Ratio 55-60% CET1 12.5% FINANCIAL TARGETS 2015 Actual Revenue Rat
Slide 34: Concluding thoughts
Concluding thoughts Strong results – on all fronts – against targets over multiple years Market leaders in product areas that are important to our clients Embracing change and leveraging technology across all lines of business Leading transactional businesses with significant growth potentia
Slide 35: 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