Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q4 2008 Earnings Presentation
26 slides from Jp Morgan Chase &'s earnings presentation, Jan 15, 2009
Slide 1: Financial Results 4Q08
JANUARY 15, 2009 FINANCIAL RESULTS 4Q08
Slide 2: FY08 Managed Results
FY08 Managed Results1 $ $ in in millions millions $ O/(U) O/(U) % FY2008 FY2007 FY2007 1 Results excl. Merger-related items 2 Revenue (FTE) $73,402 ($1,410) (2)% 2 Credit Costs 22,647 13,403 145% 3 Expense 42,915 1,212 3% Merger-related items (after-tax) (211) (211) NM Reported Net Income $5,605 ($9
Slide 3: 4Q08 Managed Results
4Q08 Managed Results1 $ $ in in millions millions $ O/(U) O/(U) % 4Q08 3Q08 4Q07 3Q08 4Q07 1 Results excl. Merger-related items 2 Revenue (FTE) $19,322 $3,237 $1,047 20% 6% 2 Credit Costs 8,583 3,899 5,422 83% 172% 3 Expense 11,007 27 287 - 3% Merger-related items (after-tax) 1,064 1,799 1,064 NM NM
Slide 4: 4Q08 Significant Items
4Q08 Significant Items $ $ in in billions billions (excluding (excluding EPS) EPS) Net Income EPS LOB Increase to credit reserves ($2.5) ($0.66) Firm 1 Net markdowns on leveraged lending & mortgage exposure (1.8) (0.49) IB Merger-related items 1.1 0.28 Corporate MSR risk management results 0.9 0.23
Slide 5: Investment Bank
Investment Bank $ Net loss of $2.4B includes the following significant items: $ in in millions millions $ O/(U) Significant item ($ in billions) Business line Revenue / Pretax Leveraged lending markdowns FI Mkts. ($1.8) 4Q08 3Q08 4Q07 Mortgage-related markdowns FI Mkts. ($1.1) Credit costs NA ($0.
Slide 6: IB League Tables and Awards
IB League Tables and Awards League League Table Table Results Results Continue to rank #1 in three capital raising league tables for 20081 Thomson Volumes1 Global Debt, Equity & Equity-related 2008 2007 Global Equity & Equity-related Rank Share Rank Share Global Loan Syndications Global M&A
Slide 7: Leveraged Lending
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 commitmen
Slide 8: IB Key Risk Exposures
IB Key Risk Exposures Mortgage-related $ $ in in billions 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: Prior Reporting Segments / Restated Reporting Segments
LOB Results Include WaMu Operating Results Segment Disclosures Enhanced as Shown Below Retail Retail Financial Financial Services Services Card Card Services Services Commercial Bank Commercial Bank Prior Reporting Segments Regional Banking Mortgage Banking Auto Finance Consumer and Mortgage A
Slide 10: Retail Financial Services—Drivers
Retail Financial Services—Drivers Retail Retail Banking Banking -- $ $ in in billions billions Average deposits (excluding the WaMu transaction) up 2% QoQ and YoY, while deposit NII is up 23% due to 4Q08 3Q08 4Q07 widening of deposit margin. WaMu deposits have 1 Key Statistics stabilized with bala
Slide 11: Retail Financial Services
Retail Financial Services $ $ in in millions millions Total RFS net income of $624mm, down 15% YoY, $ O/(U) reflecting a significant increase in credit costs offset 4Q08 3Q08 4Q07 predominantly by positive MSR risk management results and the impact of the WaMu transaction Retail Financial Services
Slide 12: WaMu Impact on Consumer Lending Credit Statistics
WaMu Impact on Consumer Lending Credit Statistics 4Q08 4Q08 -- $ $ in in billions 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% $7.4 3.62 WaMu (noncredit impaired) 57.6 0 0 0.9 1.58 Total
Slide 13: Home Equity
Home Equity Noncredit impaired loans 30-day Delinquency 30-day Delinquency Trend Trend Key Key Statistics Statistics 4Q08 3Q082 4Q07 3.25% Heritage JPM Combined noncredit impaired 1 Noncredit Impaired 3.00% EOP owned portfolio ($B) $114.3 $114.5 $94.8 2.75% 2.50% Net charge-offs ($mm) $770 $663 $248
Slide 14: Prime Mortgage
Prime Mortgage Noncredit impaired loans 30-day 30-day Delinquency Delinquency Trend Trend Key Key Statistics Statistics 7.00% Heritage JPM Combined noncredit impaired 4Q08 3Q083 4Q07 1 Noncredit Impaired 6.00% EOP balances ($B)2 $65.2 $65.6 $34.0 5.00% Net charge-offs ($mm) $195 $177 $17 4.00% Net c
Slide 15: Subprime Mortgage
Subprime Mortgage Noncredit impaired loans 30-day Delinquency 30-day Delinquency Trend Trend Key Key Statistics Statistics 4Q08 3Q082 4Q07 Heritage JPM Combined noncredit impaired 1 28.00% Noncredit Impaired EOP owned portfolio ($B) $15.3 $16.2 $15.5 24.00% Net charge-offs ($mm) $319 $273 $71 20.00%
Slide 16: WaMu Portfolio Update
WaMu Portfolio Update Home Home Lending Lending Loss Loss Sensitivities 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 Loss
Slide 17: Card Services (Managed)
Card Services (Managed) $ $ in in millions millions $ O/(U) Net loss of $371mm down $980mm YoY; decline 4Q08 3Q08 4Q07 in results driven by higher credit costs partially offset by an increase in revenue Revenue $4,908 $1,021 $937 Credit Costs 3,966 1,737 2,178 Credit costs up $2.2B or 122% YoY d
Slide 18: Commercial Banking
Commercial Banking $ $ in in millions millions $ O/(U) Record net income of $480mm up 67% YoY, driven by higher net revenue, which includes the impact of the 4Q08 3Q08 4Q07 WaMu transaction, partially offset by higher credit costs Revenue $1,479 $354 $395 Average loans and liability balances (ex
Slide 19: Treasury & Securities Services
Treasury & Securities Services $ $ in in millions millions $ O/(U) Record net income of $533mm up 26% YoY Pretax margin of 37% 4Q08 3Q08 4Q07 Revenue $2,249 $296 $319 Liability balances up 34% YoY Treasury Services 993 96 169 Assets under custody down 17% YoY Worldwide Securities Svcs 1,256
Slide 20: Asset Management
Asset Management $ $ in in millions millions $ O/(U) Net income of $255mm down 52% YoY, due to lower revenue offset partially by lower noninterest expense 4Q08 3Q08 4Q07 Pretax margin of 25% Revenue $1,658 ($303) ($731) Assets under management of $1.1T, down 5% YoY Private Bank 630 (1) (20)
Slide 21: Corporate/Private Equity
Corporate/Private Equity Corporate/Private Corporate/Private Equity Equity Net Net Income Income -- $ $ in in millions millions $ O/(U) Private Equity 4Q08 3Q08 4Q07 Private Equity losses of $1.1B in 4Q08 Private Equity ($682) ($518) ($1,038) EOP Private Equity portfolio of $6.9B Corporate 1,163
Slide 22: Capital Management
Capital Management $ $ in in billions billions 4Q08 3Q08 4Q07 1 Tier 1 Capital $136 $112 $89 2 Tangible Common Equity $81 $86 $72 1 Risk Weighted Assets $1,259 $1,261 $1,052 Tangible Assets $2,121 $2,200 $1,511 1 Tier 1 Capital Ratio 10.8% 8.9% 8.4% 1 Total Capital Ratio 14.7% 12.6% 12.6% 1 Tier 1 L
Slide 23: Outlook
Outlook Investment Investment Bank Bank Treasury Treasury and and Security Security Services Services Continued lower earnings is a reasonable expectation Net interest income impacted by spreads in low interest Uncertain environment, risks still remain rate environment and liability balance be
Slide 24: Key Investor Topics
Key Investor Topics WaMu Integration Update Bear Stearns Integration Update Recent Lending Activity The Way Forward Credit card practices R E S U L T S F I N A N C I AL 23
Slide 25: Notes on non-GAAP financial measures and forward-looking statements
Notes on non-GAAP financial measures and forward-looking statements This presentation includes non-GAAP financial measures. 1. TCE as shown on slides 1 and 2, which is used for purposes of calculating return on tangible common equity and presented as Tangible Common Equity on slide 21 (line 2), is d
Slide 26: Reconciliation of GAAP to Non-GAAP Results
Reconciliation of GAAP to Non-GAAP Results ($ ($ in in billions) billions) 4Q08 3Q08 4Q07 FY2008 FY2007 REVENUE REPORTED REVENUE $17,226 $14,737 $17,384 $67,252 $71,372 IMPACT OF CREDIT CARD SECURITIZATIONS 1,228 873 619 3,612 2,380 TAX EQUIVALENT ADJUSTMENTS 654 478 272 1,908 1,060 MANAGED REVENUE