Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q4 2008 Earnings Presentation
25 slides from Jp Morgan Chase &'s earnings presentation, Jan 16, 2009
Slide 1: January 15, 2009 Financial Results 4Q08
JANUARY 15, 2009 FINANCIAL RESULTS 4Q08
Slide 2: FY08 Managed Results
FY08 Managed Results1 $ $ in millions in millions $ O/(U) O/(U) % FY2008 FY2007 FY2007 Results excl. Merger-related items1 Revenue (FTE)2 $73,402 ($1,410) (2)% Credit Costs2 22,647 13,403 145% Expense3 42,915 1,212 3% Merger-related items (after-tax) (211) (211) NM Reported Net Income $5,605 ($9,760
Slide 3: 4Q08 Managed Results
4Q08 Managed Results 1 $ $ in millions in millions $ O/(U) O/(U) % 4Q08 3Q08 4Q07 3Q08 4Q07 Results excl. Merger-related items1 Revenue (FTE)2 $19,322 $3,237 $1,047 20% 6% Credit Costs2 8,583 3,899 5,422 83% 172% Expense3 11,007 27 287 — 3% Merger-related items (after-tax) 1,064 1,799 1,064 NM NM Re
Slide 4: 4Q08 Significant Items
4Q08 Significant Items $ $ in billions (excluding EPS) in billions (excluding EPS) Net Income EPS LOB Increase to credit reserves ($2.5) ($0.66) Firm Net markdowns on leveraged lending & mortgage exposure1 (1.8) (0.49) IB Merger-related items 1.1 0.28 Corporate MSR risk management results 0.9 0.23 R
Slide 5: Investment Bank
Investment Bank $ $ in millions in millions $ O/(U) 4Q08 3Q08 4Q07 Revenue ($302) ($4,337) ($3,474) Investment Banking Fees 1,373 (220) (284) Fixed Income Markets (1,671) (2,486) (2,286) Equity Markets (94) (1,744) (672) Credit Portfolio 90 113 (232) Credit Costs 765 531 565 Expense 2,741 (1,075) (2
Slide 6: IB League Tables and Awards
IB League Tables and Awards League Table Results League Table Results Thomson Volumes1 2008 2007 Rank Share Rank Share Global M&A Announced2 #2 26.5% #4 26.8% Global Debt, Equity & Equity-related #1 9.7% #2 7.6% US Debt, Equity & Equity-related #1 15.5% #2 10.0% Global Equity & Equity-related3 #1 11
Slide 7: Leveraged Lending Markdowns
Leveraged Lending Markdowns of $1.8B, net of hedges, on remaining legacy commitments 12.6B of legacy commitments with gross markdowns of $5.7B, or 45%; market value at 12/31/08 of $6.9B 12.9B of legacy commitments at 9/30/08 ($0.3B) reduction, or 2% of exposure 12.6B of legacy commitments at 12/31/0
Slide 8: IB Key Risk Exposures
IB Key Risk Exposures Mortgage-related $ $ in billions in billions Exposure as of Exposure Exposure as of 9/30/2008 reduction 12/31/2008 Prime $2.3 ($0.5) $1.8 Alt-A 5.8 ($1.5) 4.3 Subprime 1.2 (0.3) 0.9 Subtotal Residential $9.3 ($2.3) $7.0 Commercial 9.3 (1.6) 7.7 Mortgage Exposure $18.6 ($3.9) $1
Slide 9: LOB Results Include WaMu Operating Results
LOB Results Include WaMu Operating Results Segment Disclosures Enhanced as Shown Below Retail Financial Services Retail Financial Services Card Services Card Services Commercial Bank Commercial Bank Segments Regional Banking Mortgage Banking Auto Finance Consumer and Mortgage Auto Business Banking p
Slide 10: Retail Financial Services—Drivers
Retail Financial Services—Drivers Retail Banking — Retail Banking — $ $ in billions in billions 4Q08 3Q08 4Q07 Key Statistics1 Average Deposits $339.8 $210.1 $208.4 Deposit Margin 2.94% 3.06% 2.67% Checking Accts (mm) 24.5 24.5 10.8 # of Branches 5,474 5,423 3,152 # of ATMs 14,568 14,389 9,186 Inves
Slide 11: Retail Financial Services
Retail Financial Services $ $ in millions in millions $ O/(U) 4Q08 3Q08 4Q07 Retail Financial Services Net Income $624 $560 ($107) ROE1,2 10% 1% 18% EOP Equity ($B)1 $25 $25 $16 Retail Banking Net Interest Income $2,687 $931 $1,140 Noninterest Revenue $1,834 $745 $836 Total Revenue $4,521 $1,676 $1,
Slide 12: WaMu Impact on Consumer Lending Credit Statistics
WaMu Impact on Consumer Lending Credit Statistics 4Q08 — 4Q08 — $ $ in billions in billions Allowance for Average Loan Losses Balances Charge-off (ex. HFS) Charge-offs Rate ($) Coverage (%) Consumer Lending Portfolio Chase $204.9 $1.5 2.98% $7.4 3.62 WaMu (noncredit impaired) 57.6 0 0 0.9 1.58 Total
Slide 13: Home Equity
Home Equity Noncredit impaired loans 30-day Delinquency Trend 30-day Delinquency Trend Key Statistics Key Statistics 4Q08 3Q082 4Q07 3.25% Heritage JPM Combined noncredit impaired Noncredit Impaired1 3.00% EOP owned portfolio ($B) $114.3 $114.5 $94.8 2.75% 2.50% Net charge-offs ($mm) $770 $663 $248
Slide 14: Prime Mortgage
Prime Mortgage Noncredit impaired loans 30-day Delinquency Trend 30-day Delinquency Trend Key Statistics Key Statistics 7.00% Heritage JPM Combined noncredit impaired 4Q08 3Q083 4Q07 Noncredit Impaired1 6.00% EOP balances ($B)2 $65.2 $65.6 $34.0 5.00% Net charge-offs ($mm) $195 $177 $17 4.00% Net ch
Slide 15: Subprime Mortgage
Subprime Mortgage Noncredit impaired loans 30-day Delinquency Trend 30-day Delinquency Trend Key Statistics Key Statistics 4Q08 3Q082 4Q07 Heritage JPM Combined noncredit impaired 28.00% Noncredit Impaired1 EOP owned portfolio ($B) $15.3 $16.2 $15.5 24.00% Net charge-offs ($mm) $319 $273 $71 20.00%
Slide 16: WaMu Portfolio Update: Home Lending Loss Sensitivities
WaMu Portfolio Update Home Lending Loss Sensitivities — Home Lending Loss Sensitivities — $ $ billions billions Per Prior Presentation Base Estimate Deeper Recession Market Outlook U.S. Peak to trough HPI1 (25)% (28)% (31)% Remaining Life Losses from December 31, 20072 $36.0 $42.0 Remaining Life Los
Slide 17: Card Services (Managed)
Card Services (Managed) $ $ in millions in millions $ O/(U) 4Q08 3Q08 4Q07 Revenue $4,908 $1,021 $937 Credit Costs 3,966 1,737 2,178 Expense 1,489 295 266 Net Income ($371) ($663) ($980) Key Statistics Incl. WaMu ($B)1 ROO (pretax) (1.16)% 1.17% 2.51% ROE2 (10)% 8% 17% EOP Equity ($B) $15.0 $15.0 $1
Slide 18: Commercial Banking
Commercial Banking $ $ in millions in millions $ O/(U) 4Q08 3Q08 4Q07 Revenue $1,479 $354 $395 Middle Market Banking 796 67 101 Commercial Term Lending 243 243 243 Mid-Corporate Banking 243 7 4 Real Estate Banking 131 40 29 Other 66 (3) 18 Credit Costs 190 64 85 Expense 499 13 (5) Net Income $480 $1
Slide 19: Treasury & Securities Services
Treasury & Securities Services $ $ in millions in millions $ O/(U) 4Q08 3Q08 4Q07 Revenue $2,249 $296 $319 Treasury Services 993 96 169 Worldwide Securities Svcs 1,256 200 150 Expense 1,339 — 117 Net Income $533 $127 $111 Key Statistics1 Avg Liability Balances ($B)2 $336.3 $260.0 $250.6 Assets under
Slide 20: Asset Management
Asset Management $ $ in millions in millions $ O/(U) 4Q08 3Q08 4Q07 Revenue $1,658 ($303) ($731) Private Bank 630 (1) (20) Private Wealth Management 330 (22) (15) Institutional 327 (159) (427) Retail 265 (134) (375) Bear Stearns Brokerage 106 13 106 Credit Costs 32 12 33 Expense 1,213 (149) (346) Ne
Slide 21: Corporate/Private Equity
Corporate/Private Equity Corporate/Private Equity Net Income — Corporate/Private Equity Net Income — $ $ in millions in millions $ O/(U) 4Q08 3Q08 4Q07 Private Equity ($682) ($518) ($1,038) Corporate 1,163 2,044 1,235 Merger-related items 1,064 1,799 1,078 Net Income1 $1,545 $3,325 $1,275 1 Includes
Slide 22: Capital Management
Capital Management $ $ in billions in billions 4Q08 3Q08 4Q07 Tier 1 Capital1 $136 $112 $89 Tangible Common Equity2 $81 $86 $72 Risk Weighted Assets1 $1,259 $1,261 $1,052 Tangible Assets $2,121 $2,200 $1,511 Tier 1 Capital Ratio1 10.8% 8.9% 8.4% Total Capital Ratio1 14.7% 12.6% 12.6% Tier 1 Leverage
Slide 23: Outlook
Outlook Investment Bank Investment Bank Continued lower earnings is a reasonable expectation Uncertain environment, risks still remain Higher credit costs expected Retail Financial Services Retail Financial Services Expect home lending quarterly losses (incl. WaMu) over the next several quarters of:
Slide 24: Key Investor Topics
Key Investor Topics WaMu Integration Update Bear Stearns Integration Update Recent Lending Activity The Way Forward Credit card practices
Slide 25: 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 shown on slides 1 and 2, which is used for purposes of calculating return on tangible common equity and presented as Tangible Common Equity on slide 21 (line 2), is d