Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q4 2007 Earnings Presentation
24 slides from Jp Morgan Chase &'s earnings presentation, Jan 17, 2008
Slide 1: Financial Results 4Q07
FINANCIAL RESULTS FINANCIAL RESULTS 4Q07
Slide 2: FY 2007 & 4Q07 Results
F Y 2 0 0 7 & 4 Q 0 7 R E S U L T S F Y 2 0 0 7 & 4 Q 0 7 R E S U L T S FINANCIAL RESULTS
Slide 3: 2007 Full year and 4Q07 financial highlights
FINANCIAL RESULTS 2007 Full year financial highlightszx . Record earnings of $15.4B on record revenue of $74.8B . Record EPS of $4.38 up 15% from 2006 on continuing operations . Return on tangible common equity1 of 23% . Total credit reserve increased by $2.3B to $10.1B . Wholesale credit reserve st
Slide 4: FY 2007 Managed Results
FY 2007 Managed Results1 FINANCIAL RESULTS $ in millions FY 2007 FY 2006 FY 2006 FY 2006 Revenue (FTE)1 $74,812 $65,113 $9,699 15% Credit Costs1 9,244 5,480 3,764 69% Expense2 41,703 38,843 2,860 7% Income from Continuing Ops. 15,365 13,649 1,716 13% EPS — Continuing Ops. $4.38 $3.82 $0.56 15% Incom
Slide 5: 4Q07 Managed Results
4Q07 Managed Results1 FINANCIAL RESULTS $ in millions 4Q07 3Q07 4Q06 3Q07 4Q06 Revenue (FTE)1 $18,275 $1,298 $1,241 8% 7% Credit Costs1 3,161 798 1,434 34% 83% Expense2 10,720 1,393 835 15% 8% Income from Continuing Ops. 2,971 (402) (935) (12)% (24)% EPS — Continuing Ops. $0.86 ($0.11) ($0.23) (11)%
Slide 6: Investment Bank
Investment Bank FINANCIAL RESULTS 4Q07 3Q07 4Q06 Revenue $3,172 $226 ($1,688) Investment Banking Fees 1,657 327 77 Fixed Income Markets 615 (72) (1,446) Equity Markets 578 41 (380) Credit Portfolio 322 (70) 61 Credit Costs 200 (27) 137 Expense 3,011 633 (194) Net Income $124 ($172) ($885) Key Statis
Slide 7: 2007 IB fee and market share performance
2007 IB fee and market share performance . Record IB fees of $6.6B, up 19% YoY . #1 in Dealogic fees . #2 in reported fees* Major 2007 Awards Best Overall Investment Bank Five bankers named to 2007 Rainmaker List Best Equity Capital Markets — Global Best Debt House-Western Europe Investment Bank of
Slide 8: Leveraged Lending
Leveraged Lending . Modest gain net of hedges for the quarter . Comprised of significant realized gains on sale of funded exposure partially offset by additional marks taken on the remaining funded and unfunded commitmentszx . $26.4B of funded and unfunded commitments with gross markdowns in excess
Slide 9: Other Investment Bank Risk Topics: Subprime
FINANCIAL RESULTS Other Investment Bank Risk Topics Subprime and subprime CDO-relatedzx . Markdowns net of hedges of $1.3B . Remaining exposure actively risk-managed . Total subprime and subprime CDO exposure is hedged by approximately $2B of hedges and short positions End of period subprime and sub
Slide 10: Other Investment Bank Risk Topics: CDO, CMBS, Alt-A
FINANCIAL RESULTS Other Investment Bank Risk Topics CDO warehouse and unsold positionszx . $5.5B of CDO warehouse and unsold positions; 92% corporate credit underlying, negligible subprimezx . Of the $5.5B above, approximately half carries significant funded first-loss protection CMBSzx . $15.5B tot
Slide 11: Retail Financial Services - Drivers
Retail Financial Services -Drivers Key Statistics 1 ($ in billions) 4Q07 3Q07 4Q06 Regional Banking Average Deposits Checking Accts (mm) # of Branches # of ATMs Investment Sales ($mm) Home Equity Originations Avg Home Equity Loans Owned Avg Mortgage Loans Owned2,3 Mortgage Banking Mortgage Loan Orig
Slide 12: Retail Financial Services
Retail Financial Services FINANCIAL RESULTS $ in millions 4Q07 3Q07 4Q06 $ O/(U) Net Interest Income $752 $2,705 $24 $125 Lending & Deposit Related Fees 496 4 66 Asset Mgmt, Admin, & Commissions 332 (4) 39 Mortgage Fees & Related Income 888 659 777 All Other Income 394 (69) 80 Noninterest Revenue 2,
Slide 13: Home Equity
Home Equity Key statisticsJPM 30-day delinquency trend 2.00% 4Q07 3Q07 4Q06 $94.8 $93.0 $85.7 EOP owned portfolio ($B) $248 $150 $51 Net charge-offs ($mm) 1.75% 1.05% 0.65% 0.24% Net charge-off rate 1.50% 1.25% 1.00% Sep-Dec-Mar-Jun-Sep-Dec-Mar-Jun-Sep-Dec050506 06060607 070707 Comments on home equi
Slide 14: Card Services (Managed)
Card Services (Managed) $ in millions 4Q07 3Q07 4Q06 $ O/(U) Revenue Credit Costs Expense Net Income Key Statistics ($B)1 Avg Outstandings EOP Outstandings Charge Volume Net Accts Opened (mm) Managed Margin Net Charge-Off Rate 30-Day Delinquency Rate ROO (pretax) ROE FINANCIAL RESULTS 1 Actual numbe
Slide 15: Commercial Banking
Commercial Banking FINANCIAL RESULTS $ in millions 4Q07 3Q07 4Q06 $ O/(U) . Net income of $288mm up 13% YoYzx . Average loans up 14% and liability balances up 22% YoY Revenue $1,084 $75 $66 . Record revenue of $1.1B up 6% YoY, Middle Market 695 15 34 primarily due to higher treasury Mid-Corporate Ba
Slide 16: Treasury & Securities Services
Treasury & Securities Services $ in millions 4Q07 3Q07 4Q06 $ O/(U) Revenue Treasury Services 824 Worldwide Securities Svcs 1,106 $1,930 Expense 1,222 Net Income Key Statistics1 Avg Liability Balances ($B) 2 Assets under Custody ($T) Pretax Margin 35% ROE 56% $250.6 $15.9 TSS Firmwide Revenue $2,636
Slide 17: Asset Management
Asset Management $ in millions 4Q07 3Q07 4Q06 $ O/(U) Revenue Institutional Private Bank Retail Private Client Services Credit Costs Expense Net Income Key Statistics ($B)1 Assets under Management Assets under Supervision $527 Average Loans2 Average Deposits Pretax Margin ROE $2,389 $184 $442754 151
Slide 18: Corporate
Corporate FINANCIAL RESULTS Total Corporate ($ in millions) 4Q07 3Q07 4Q06 $ O/(U) Private Equity $356 ($53) $220 Treasury and Other Corporate (93) (235) (560) Net Income1 $249 ($264) ($912) 4Q06 results included: . Income from discontinued operations related to the sale of select corporate trust bu
Slide 19: Capital Management / Fortress Balance Sheet
Capital Management / Fortress Balance Sheet 4Q07 3Q07 4Q06 $ in billions Tangible Common Equity1 Common Shareholders’ Equity less Goodwill Tier 1 Capital2 Risk Weighted Assets2 Tier 1 Capital Ratio2 Total Capital Ratio2 Leverage Ratio2 TCE/Managed RWA1,2 8.4% 6.8% . Stable or improved capital positi
Slide 20: 4Q07 Summary Assessment
FINANCIAL RESULTS 4Q07 Summary Assessmentzx . Overall Firm — earned $3.0B or $0.86 per share, down 21% from 4Q06 on continuing operationszx . Capital remained strong, with Tier 1 capital of $88.7B or 8.4% (estimated); credit reserves further strengthenedzx . Investment Bank results declined signific
Slide 21: Outlook
2 0 0 8 O U T L O O K 2 0 0 8 O U T L O O K FINANCIAL RESULTS
Slide 22: 2008 Outlook
2008 Outlook Investment Bank Overall FINANCIAL RESULTSzx . Uncertain environment; substantial risks remain . Good progress; continue to build/invest . Comments on normal cyclicality Retail Financial Serviceszx . Home equity reserves contemplate an increase in net charge-off rate to a range of approx
Slide 23: Notes on non-GAAP financial measures
FINANCIAL RESULTS Notes on non-GAAP financial measures This presentation includes non-GAAP financial measures. 1. TCE as used on slides 2, 3 and 4 for purposes of a return on tangible common equity and presented as Tangible Common Equity on slide 19 (line 1) is defined as common stockholders’ equity
Slide 24: Forward-looking statements
Forward-looking statements This presentation contains forward-looking statements 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 unc