Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q1 2005 Earnings Presentation
27 slides from Jp Morgan Chase &'s earnings presentation, Apr 20, 2005
Slide 1: Financial Results First Quarter 2005
A P R I L 2 0, 2 0 0 5 FINANCIAL RESULTS First Quarter 2005
Slide 2: First Quarter 2005 Earnings
First Quarter 2005 Earnings Most businesses show good momentum over the last year IB revenues near record levels of 1Q04 with strength in trading and IB fees Expense management and merger saves evident in results Wholesale and consumer credit quality are strong WorldCom litigation settled
Slide 3: 1Q05 Earnings – GAAP Comparison
1Q05 Earnings – GAAP Comparison Heritage JPMC ($ in millions, except per share) 1Q05 4Q04 1Q04 Reported Net Income $2,264 $1,666 $1,930 Non-Operating Charges (after-tax) 648 650 --- Operating Earnings $2,912 $2,316 $1,930 Reported EPS $0.63 $0.46 $0.92 Operating EPS $0.81 $0.64 $0.92 Non-Operating C
Slide 4: 1Q05 LOB Operating Earnings – GAAP Comparison
1Q05 LOB Operating Earnings – GAAP Comparison $ O/(U) Heritage JPMC ($ in millions) 1Q05 4Q04 1Q04 Investment Bank $1,325 $665 $308 Retail Financial Services 988 213 782 Card Services 522 7 360 Commercial Banking 243 (11) 169 Treasury & Securities Services 245 100 147 Asset & Wealth Management 276 1
Slide 5: Proforma Discussion
Proforma Discussion The proforma combined historical lines of business information presents the business segments of the company as if these segments had existed as of the earliest date indicated. For further information regarding the proforma combined historical financial information, including rec
Slide 6: 1Q05 Significant Items
1Q05 Significant Items Per ($ in millions) Pre-tax After-Tax Share Business Segment Private equity gains $789 $505 $0.14 Corporate Reduction in wholesale allowance 377 243 0.07 Primarily Investment Bank MSR risk management results 106 67 0.02 Retail Financial Services Treasury securities losses (918
Slide 7: 1Q05 Proforma Operating Performance Comparison
1Q05 Proforma Operating Performance Comparison $ O/(U) ($ in millions) 1Q05 4Q04 1Q04 Revenue (FTE)1 $14,740 $591 ($516) Credit Costs1 1,344 (299) (133) Expenses 8,892 29 (220) Earnings $2,912 $596 ($115) EPS $0.81 $0.17 ($0.03) Quarterly Results2 1Q05 4Q04 1Q04 Return on Equity 11% 9% 12% Return on
Slide 8: 1Q05 Operating Expenses
1Q05 Operating Expenses Revenues up 4% QoQ with expenses flat at $8,892mm — Higher compensation expenses — Lower noncompensation expenses — $150mm incremental/$380mm total merger saves 2Q05 expenses — Performance-based compensation — $60mm incremental/$440mm total merger saves — $70mm estimated
Slide 9: LOB Operating Earnings – Proforma Comparison
LOB Operating Earnings – Proforma Comparison $ O/(U) % O/(U) ($ in millions) 1Q05 4Q04 1Q04 4Q04 1Q04 Investment Bank $1,325 $665 ($26) 101% (2%) Retail Financial Services 988 213 2441 27% 33%1 Card Services 522 7 186 1% 55% Commercial Banking 243 (11) (46) (4%) (16%) Treasury & Securities Services
Slide 10: Investment Bank – Proforma Comparison
Investment Bank – Proforma Comparison $O/(U) Strong revenue performance – up 31% ($ in millions) 1Q05 4Q04 1Q04 QoQ, near record levels of 1Q04 Revenues $4,180 $979 ($27) IB fees up 33% YoY; sequentially down Investment Bkg. 985 (95) 242 from strong 4Q Fixed Income Mkts 2,289 759 (41) Fixed In
Slide 11: Retail Financial Services – Proforma Comparison
Retail Financial Services – Proforma Comparison $ O/(U) ($ in millions) 1Q05 4Q04 1Q041 Revenues $3,847 $302 $167 Earnings up 43%1 YoY and 27% QoQ driven by Consumer & Small Business Credit Costs 94 16 (103) Banking and Home Finance Expenses 2,162 (53) (217) Earnings $988 $213 $297 Strong credit
Slide 12: Consumer & Small Business – Proforma Comparison
Consumer & Small Business – Proforma Comparison $ O/(U) ($ in millions) 1Q05 4Q04 1Q04 Business drivers trending well, with good growth in deposits and new accounts as Revenues $2,157 $52 $150 well as increases in credit card and Credit Costs 36 (3) (21) investment sales - Good progress in legacy
Slide 13: Home Finance – Proforma Comparison
Home Finance – Proforma Comparison $O/(U) ($ in millions) 1Q05 4Q04 1Q04 Home Finance Earnings $442 $203 $148 Prime Production & Svcg (PP&S): Prime Production & Servicing Production revenue $228 $32 $21 - Strong secondary marketing results Servicing: offset drop in prime mortgage Mtg Svcg Rev, net
Slide 14: Card Services – Proforma Comparison (Managed)
Card Services – Proforma Comparison (Managed) $O/(U) ($ in millions) 1Q05 4Q04 1Q04 ROO of 2.52%, up 81bps YoY Revenues $3,779 ($51) $155 Revenues increased 4% YoY driven by Credit Costs 1,636 (99) (89) higher loan balances, higher charge Expenses 1,313 31 (50) volume and improved spreads Earnin
Slide 15: Commercial Banking – Proforma Comparison
Commercial Banking – Proforma Comparison $O/(U) ($ in millions) 1Q05 4Q04 1Q04 Revenue growth of 2% YoY was driven by 14% growth in Treasury Services Revenues $850 ($35) $17 revenue. QoQ decline of 4% primarily Middle Market 572 1 29 a result of lower IB revenue in Corporate Banking 123 (19) (5) C
Slide 16: Treasury & Securities Services – Proforma Comparison
Treasury & Securities Services – Proforma Comparison $O/(U) Revenues increased 16% YoY and 5% QoQ ($ in millions) 1Q05 4Q04 1Q04 - NII up due to spread widening and Revenues $1,482 $69 $202 balance growth - Fees up due to growth in Custody, Treasury Services 618 (24) 52 Securities Lending, Trade a
Slide 17: Asset & Wealth Management – Proforma Comparison
Asset & Wealth Management – Proforma Comparison $O/(U) ($ in millions) 1Q05 4Q04 1Q04 Earnings up 21% YoY due to net asset inflows, growth in deposits and Revenues $1,361 $51 $148 market appreciation partially offset Credit Costs (7) 14 (16) by increased compensation expense Expenses 934 15 89 E
Slide 18: Corporate – Proforma Comparison
Corporate – Proforma Comparison $O/(U) ($ in millions) 1Q05 4Q04 1Q04 Corporate includes: Revenues (FTE) - Private equity Private Equity Gains $789 $283 $456 - Treasury Treasury Securities Losses (918) (995) (1,144) - Net expenses NII 1 (677) (20) (365) - FTE offsets removed 1 Other Income 48 10 (
Slide 19: Capital
Capital Continue to build fortress balance sheet Capital strength with 3/31/05 Tier 1 estimate of 8.6% − Stock buyback: $1.3bn in 1Q05 19
Slide 20: Merger Milestones
Merger Milestones Completed Completed Upcoming Upcoming 9 3/04 – Financial reporting architecture Roll-out of branding changes 9 6/04 – Branding decision Technology 9 7/04 – Holding company merger - Treasury Services clearing conversions - Card conversions 9 8/04 – Wholesale broker/dealer merger
Slide 21: Outlook – 2Q 2005
Outlook – 2Q 2005 Investment Bank — IB fee pipeline: continues to be strong — Trading: 1Q seasonally strong — Credit Portfolio: lower NII & gains from loan workouts — Credit: returning to normal over time Retail Financial Services — MSR hedging gains/losses: don’t plan for ($106mm Q1) — Portfoli
Slide 22: Disclaimer
Disclaimer 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 uncertainties. Actu
Slide 23: Appendix
APPENDIX JPMorganChase &j 23
Slide 24: Auto & Education Finance – Proforma Comparison
Auto & Education Finance – Proforma Comparison $ O/(U) ($ in millions) 1Q05 4Q04 1Q04 Revenues $324 (40) (58) ($ in millions) Pre-tax After-tax Credit Costs 28 (31) (67) Transfer of auto loans to HFS Markdown ($88) Reduction in allowance 10 Expenses 205 39 45 Total ($78) ($47) Earnings $55 (29) (22)
Slide 25: Fully Taxable Equivalent (FTE) Restatement
Fully Taxable Equivalent (FTE) Restatement Total operating revenue (Noninterest Revenue and Net interest income) for each of the segments and the Firm is presented on a tax- equivalent basis. Accordingly, revenue from tax-exempt securities and investments that receive tax credits are presented in
Slide 26: 1Q05 Operating Results – Heritage JPMC Comparison
1Q05 Operating Results1 – Heritage JPMC Comparison JPMorgan JPMorgan Chase Chase ($mm) ($mm) Investment Investment Bank Bank ($mm) ($mm) 1Q04 O/(U) Heritage JPMC 1Q04 O/(U) Heritage JPMC 1Q05 $ % 1Q05 $ % Revenue $14,740 $5,208 55% Revenue $4,180 $416 11% Credit Costs 1,344 856 175% Credit Costs (36
Slide 27: 1Q05 Operating Results – Heritage JPMC Comparison
1Q05 Operating Results1 – Heritage JPMC Comparison Commercial Commercial Banking Banking ($mm) ($mm) Treasury Treasury & & Securities Securities Services Services ($mm) ($mm) 1Q04 O/(U) Heritage JPMC 1Q04 O/(U) Heritage JPMC 1Q05 $ % 1Q05 $ % Revenue $850 $528 164% Revenue $1,482 $470 46% Credit Cos