Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Investor Day (February 2017)
69 slides from Jp Morgan Chase &'s investor day presentation, Feb 28, 2017
Slide 1: Consumer & Community Banking
CONSUMER & COMMUNITY BANKING Gordon Smith, Chief Executive Officer Consumer & Community Banking February 28, 2017
Slide 2: Agenda
Agenda Page Consumer & Community Banking 1 Payments 13 Mortgage Banking 24 Banking 37 Appendix 57 CONSUMER & COMMUNITY BANKING
Slide 3: We remain focused on a consistent set of strategic priorities
We remain focused on a consistent set of strategic priorities Deepen relationships with our customers, simplify and improve customer experience Lead payments innovation by delivering solutions that address merchant and consumer needs Increase digital engagement by delivering differentiated exp
Slide 4: Performance targets
Performance targets Consumer & Community Banking targets 2016 Investor Day Medium-term Medium-term 2015 2016 guidance (+/-) guidance (+/-) Business Net charge-off rate 0.66% 0.61% 0.60% 0.70% Banking Mortgage Net charge-off rate1 0.18% 0.10% 0.10% 0.15% Banking Net charge-off rate 2.51% 2.63% 3-3.25
Slide 5: Strong momentum across key business drivers
We have continued strong momentum across key business drivers, driven by consistent investment strategy Key business drivers ($B, except ratios and where otherwise noted) 2016 YoY ∆ Consumer & Households1 (mm) 60.0 4% Community Banking Active mobile customers (mm) 26.5 16% Average deposits $461 11%
Slide 6: Strong growth in deposits and core loans
We continue to see strong growth in deposits and core loans Consumer & Community Banking avg. deposits ($B) Consumer & Community Banking avg. loans1 ($B) Card Mortgage Banking 3 CAGR Auto Business Banking/Other 2 +9% Non-core loans (all LOBs) Total: +10% 2012 – 2016 Core: +20% CAGR Total: $457 +3% $
Slide 7: Business drivers have supported revenue growth, with offsets in Card investments and deposit margin compression
Business drivers have supported revenue growth, with offsets in Card investments and deposit margin compression CCB revenue ($B) $0.6 $0.6 $1.8 ($0.9) $44.9 ($0.7) $43.8 ($0.4) CONSUMER & COMMUNITY BANKING 2015 NII (excl. deposit NIR¹ Auto lease New Card Card co-brand Deposit margin 2016 Revenue mar
Slide 8: Invested heavily in technology and marketing with strong returns
We have invested heavily in technology and marketing – and we are seeing strong returns Technology investments Cumulative spend Select investments Results (2015 and 2016) Branch operating model ~$550mm pre-tax benefit in current annual run-rate ~$200mm pre-tax benefit in current annual run-rate
Slide 9: Growing digitally-engaged customer base delivers strong performance metrics
Our growing digitally-engaged customer base delivers strong performance metrics Consumer Bank households – impact of digitally-engaged households1 Digitally-engaged population is growing Retention rates are higher (FY16) % of households who are digitally-engaged Attrition2 (11ppt) +18ppt 4Q12 4Q16 A
Slide 10: Growth across key business drivers while unit costs decreased
CCB has experienced strong growth across key business drivers, outpacing operational volumes, while unit costs significantly decreased Strong momentum across key business drivers1… Average deposit Card Average core Merchant Card growth sales volumes2 loan growth processing volume new accounts2 9% 9%
Slide 11: Substantially reduced expense while continuing to invest
We have substantially reduced expense, while continuing to prudently invest CCB expense ($B) Overall progress since 2014 CCB structural expense5 $25.6 $25.0 $1.0 $0.7 ~$2.4B ($2.4) CCB overhead ratio6 ~225 bps CONSUMER & COMMUNITY BANKING 2014 Structural Auto lease Incremental 2016 CCB headcount3 ex
Slide 12: Structural expense reduction initiatives substantially complete
Our structural expense reduction initiatives are substantially complete, but work to eliminate waste will always continue Structural expense initiatives overview Structural savings Select initiatives Accomplishments since 2014 (2016 exit vs. 2014) Process streamlining Mortgage transformation1 ~$1.
Slide 13: Next wave of expense reduction strategies
We are focused on executing the next wave of expense reduction strategies Expense reduction strategies Focus areas Planned strategies ■ Increase data sharing with partners to reduce fraud Operations integration ■ Reduce the cost of metal and plastic cards ■ Modernize teller staffing tools Branch tra
Slide 14: Expect to achieve a ~50% overhead ratio in the medium-term
We expect to achieve a ~50% overhead ratio in the medium-term CCB overhead ratio 55% ~2.5% ~1% ~50% (~5%) (~2.5%) (~1%) CONSUMER & COMMUNITY BANKING 2016 Revenue growth Growth in Incremental Efficiencies Interest rate Target overhead ratio (excl. interest auto lease investments impact overhead ratio
Slide 15: Agenda
Agenda Page Consumer & Community Banking 1 Payments 13 Mortgage Banking 24 Banking 37 Appendix 57 CONSUMER & COMMUNITY BANKING
Slide 16: Payments has seen strong metric growth
Payments has seen strong metric growth driven by investments in the business Key business drivers ($B, except ratios and where otherwise noted) 2015 2016 YoY ∆ Card average loans $126 $131 4% Card end of period loans $131 $142 8% Credit card sales volume1 $496 $545 10% Debit & credit card sales volu
Slide 17: Strong performance has resulted in leading market positions
Our strong business performance has resulted in leading market positions General purpose credit card EOP outstandings General purpose credit card sales market share1 market share1 Chase C AXP 2 BAC DFS COF Other Chase C AXP 2 BAC DFS COF Other YoY ∆ YoY ∆ 21.6% 22.3% ▲69 bps 38.8% 38.2% ▼ 61 bps 11.
Slide 18: Card and payments strategy balances core growth with future investment
Our overall card and payments strategy balances a focus on core business growth with future investment Payments strategy Consumer to Integrated Merchant Business Person-to-Person Experience Deliver superior consumer Build simplified, real-time Core acquiring and value by launching new and pers
Slide 19: New product launches and marketing generated strong customer engagement
New product launches and a broad investment in marketing have generated strong customer engagement and return on our investment Acquisition vintage in-year performance Total portfolio performance Vintage in-year sales Average sales per account ~2x +7% CAGR 2012 2016 2012 2016 Vintage in-year outstan
Slide 20: New Sapphire Reserve customers have attractive characteristics
The new Sapphire Reserve customers we are acquiring have attractive characteristics Early adopter profile of Sapphire Reserve customers as of December 2016 Average income1 >$180K Average Deposit & Investment wallet >$800K Average FICO score >785 Lift in On Chase spend2 >50% 1 Reflects self-reported
Slide 21: Chase Card has modest exposure to FICO <660
Chase Card has modest exposure to FICO <660, and is lowest in the 640 – 720 range Chase vs. competitors FICO (640 – 720) portfolio Chase vs. competitors – FICO <660 portfolio mix1 mix2 36% 36% 34% 30% 25% 25% 24% 18% 17% 18% 16% 15% 15% 15% 38% 14% 14% 34% 12% 30% 31% 28% 29% 6% 0% 1Q15 2Q15 3Q15 4Q
Slide 22: Increased efficiencies within our acquisition channels
Increased efficiencies within our acquisition channels Acquisitions are moving to lower cost channels Increased mobile acquisitions % of total digital credit card applications sourced 2016 new credit card accounts by channel1 from mobile devices2 +28ppt Other 2% Direct mail 8% Branch 13% Digital 77%
Slide 23: Investments in Payments extend into P2P with Chase QuickPay
Our investments in Payments extend into P2P, an important emerging segment, and we continue to enhance and grow our P2P offering with Chase QuickPay We are well positioned to succeed in P2P Active mobile CBB households1 Chase QuickPay user households2 15mm 4mm 90 day active as of 90 day active as of
Slide 24: Chase Pay, our proprietary digital solution
Chase Pay, our proprietary digital solution, expands the capabilities of our successful core business with an innovative product Pay securely Track purchases Order/pay ahead1 Key Features Keep cards updated Easy digital checkout Automatic savings Key Partners LevelUp PAYMENTS 1 Order/pay ahead is no
Slide 25: Commerce Solutions surpassed $1 trillion in processing volume
Commerce Solutions surpassed $1 trillion in processing volume Commerce Solutions total processing volume ($B) New company relationships by referral source1 +13% CAGR External <45% Internal >55% Deal closure rate by relationship1 $1,063 +20ppt $655 Prospects Existing JPM 2012 2016 clients PAYMENTS 1
Slide 26: Significant progress in 2016; go-forward strategy remains consistent
We made significant progress in 2016, and our go-forward strategy remains consistent What we’ve accomplished Where we’re headed 1 #1 position in both credit card sales and Deliver overall financial returns outstandings market share1 Surpassed $1T in merchant processing volume 2 Successfully la
Slide 27: Agenda
Agenda Page Consumer & Community Banking 1 Payments 13 Mortgage Banking 24 Banking 37 Appendix 57 CONSUMER & COMMUNITY BANKING
Slide 28: Strategy of building a higher quality, less volatile mortgage business
We continue to execute against our strategy of building a higher quality and less volatile mortgage business Progress Improved J.D. Power originations and servicing rankings Deliver a great customer experience Expanded affordable lending programs Maximize our share of Increased our share of ju
Slide 29: Underlying performance of the business is strong
The underlying performance of the business is strong Key business drivers ($B, except ratios and where otherwise noted) 2015 2016 YoY Δ Total mortgage origination volume $106 $104 (3%) Mortgage Consumer origination volume $36 $44 23% Production Correspondent origination volume $70 $59 (16%) Home equ
Slide 30: Improvement in customer satisfaction measurements
We have seen improvement in internal and external measurements of customer satisfaction Annual Net Promoter Score1 J.D. Power Mortgage surveys2 Chase rank Originations Servicing 2010 12 13 2015 7 10 2016 5 6 ’15 – ’16 change +2 +4 2012 2013 2014 2015 2016 MORTGAGE BANKING 1 Net Promoter Score = % pr
Slide 31: Focused on high-quality originations
We are focused on high-quality originations… Total originations market share Chase originations market share by product type2 1 Top 5 banks by originations All Other 2011 2016 46% 75% 12% 9% 54% 25% 3% 2% 2011 2016 Government Jumbo Mortgage companies and small banks have gained We have shifted o
Slide 32: Strong core loan growth
…and continue to see strong core loan growth Mortgage Banking average loan balances ($B) 2011 – 2016 CAGR $232 Total: +1% $225 $205 $204 $189 Non-core: $183 $81 (14%) $96 Non-core1 $174 $152 $132 $114 $151 Core: +24% $108 $69 Core2 $51 $53 $57 2011 2012 2013 2014 2015 2016 % of MORTGAGE BANKING orig
Slide 33: Strong credit performance
We continue to maintain strong credit performance Mortgage Banking1 30+ delinquency rate (%) Mortgage Banking net charge-off rate2 trend 5.0% (227) bps 2.37% 4.0% 3.0% 2.0% 0.85% 1.0% 0.37% 0.18% 0.10% MORTGAGE BANKING 0.0% 3 4Q12 4Q13 4Q14 4Q15 4Q16 FY12 FY13 FY14 FY15 FY16 1 Excludes PCI loans and
Slide 34: Actively managing the servicing book
We are actively managing our servicing book by bringing in high-quality new originations while reducing our volume of low-quality units 2014 – 2016 Chase servicing book activity 30+ delinquency rate1 for Chase servicing book “Coming In” Dec 2014 through Dec 2016 Units 30+ delinquency rate New origin
Slide 35: Default inventory continues to decline, lowering servicing expense
Our default inventory continues to decline, driving lower overall servicing expense Servicing cost per unit1 Servicing expense2 ($B) (25 – 30x) >$3.0 $4.7 Non-Performing Performing Foreclosure inventory (K) $3.0 (85%) $2.3 $2.0 312 $1.7 167 93 73 47 MORTGAGE BANKING 3 FY12 FY13 FY14 FY15 FY16 FY12 F
Slide 36: Home equity interest-only recast risk
We are through a significant portion of home equity interest-only recast risk for the legacy Chase book, with performance in line with expectations HELOC portfolio1 balance ($B) Loans with CLTV3 > 80% HELOC balance 30+ day delinquent balance 27% $15.0 $13.1 12% Past recast Future recast Average FICO
Slide 37: Smaller, purchase-driven market with tightening spreads
We anticipate a smaller, purchase-driven market, with tightening primary and secondary spreads Mortgage origination market1 ($B) Primary2 and secondary3 mortgage rates Purchase Refinance Primary Secondary Spread $2,065 4.17% 4.25% 3.85% $1,735 3.65% $1,545 3.19% 3.28% $1,005 $1,300 2.84% $811 $468 2
Slide 38: Piloting a digital mortgage experience
We are piloting a digital mortgage experience to address the needs of an increasingly tech-centric customer base Our mobile-enabled customer portal will be… Transparent – customers always know where they stand in the process Convenient – customers can securely upload documents to the platform Connec
Slide 39: Growth opportunity within our own Chase customer base
We have a tremendous growth opportunity within our own Chase customer base – our performance with CPC1 customers shows the power of a differentiated experience % of Chase customers originating a mortgage with CCB household distribution by homeownership Chase by relationship type, FY2016 ($ basis) 60
Slide 40: Remain focused on executing against our strategy
We remain focused on executing against our strategy What we’ve accomplished Where we’re headed 1 Improved the customer experience Accelerate focus on deepening Chase relationships Enhanced the quality of the servicing portfolio and de-risked the business 2 Transform Chase customer experience by
Slide 41: Agenda
Agenda Page Consumer & Community Banking 1 Payments 13 Mortgage Banking 24 Banking 37 Appendix 57 CONSUMER & COMMUNITY BANKING
Slide 42: Consumer & Business Banking strategic priorities and progress
Consumer & Business Banking strategic priorities and progress Progress Grew Consumer & Business Banking deposits & investments by ~$250B – a 10% CAGR since 2012 Acquire and deepen relationships Acquired ~2.7mm net new consumer checking households and ~235K net new business households since year-
Slide 43: Consumer & Business Banking business drivers
Consumer & Business Banking business drivers Consumer & Business Banking business drivers 2015 2016 YoY Δ Consumer households 23.3 23.9 3% Relationships (mm) Business households1 2.4 2.5 4% CBB revenue $18.0 $18.7 4% Financial metrics ($B) CBB non-interest expense $11.9 $11.8 (1%) CBB overhead ratio
Slide 44: We continue to lead the industry in deposit balance growth
We continue to lead the industry in deposit balance growth Change in deposits vs. industry (2012 – 2016 CAGR)1 9.8% 6.3% Industry avg. growth = 4.0% 2.7% 2.8% Chase National Super Other Banks Regional Note: For footnoted information, refer to appendix BANKING 39
Slide 45: Physical presence in faster growing markets
We have established our physical presence in faster growing markets Industry deposit growth (2012 – 2016 CAGR)1 Chase performance in top 10 Chase markets (2012 – 2016)1 Chase top 10 Chase $ Chase Chase Chase share markets by deposit deposit growth rate of $ deposit deposit growth share vs. industry
Slide 46: Three-quarters of growth has come from customers who use branches
Three-quarters of our growth has come from customers who use our branches Chase Consumer Bank deposit growth attribution Households across generations continue to use the by channel usage segment (2012 – 2016)1 branch2 Other % of households using Avg. visits/quarter3 6% Digitally- the branch (4Q16)
Slide 47: Digital engagement embeds us in customers' daily lives
Digital engagement embeds us in our customers’ daily lives – on average, mobile banking users have 5 mobile log-ins per week Chase leadership positions #1 rated mobile banking app and #1 in active mobile users among large bank peers1 #1 most visited banking portal in the U.S.2 #1 ATM network in the
Slide 48: Digital engagement contributes to record low attrition
Digital engagement is a contributing factor to our record low attrition Digitally-engaged households are growing rapidly…1 Consumer Bank household attrition rates3 Digitally-engaged households All other households HH growth (2012 – 2016 CAGR) (4ppt) (7%) 11% 4Q12 4Q16 …and exhibit higher Net Promote
Slide 49: Delivering winning experience while reducing structural expenses
While delivering this winning experience, we have also reduced structural expenses Distribution of structural expense reductions Example: branch transformation Annual teller transactions (mm) CBB structural expense reduction (2014 – 2016)1 (~130mm) Business Banking ~10% Paperless ~15% 2014 2016 Bran
Slide 50: Optimizing the branch network as servicing volume decreases
As branch servicing volume decreases, we continue to optimize our network Chase deposit share by market type1 Real estate optionality 2014 deposit share 2016 deposit share 2016 branch network 17% 15% Lease 13% maturity 12% beyond 5 11% years 10% ~25% Flexibility to exit within 5 years ~75% Increasin
Slide 51: A clear, focused strategy
We have a clear, focused strategy What we’ve accomplished Where we’re headed 1 Primary bank for more than 70% of our consumer households1 Enhance financial solutions and advice Leading brand perception in trust and advice 2 Leading physical presence and digital capabilities Continue to evolve
Slide 52: Chase has built a powerful small business franchise
Chase has built a powerful small business franchise Chase for Business assets Online experience #1 most visited banking portal in the U.S.1 Mobile offering #1 rated mobile app for a large bank2 Branches ~5,250 branches and 10K+ specially-trained bankers Deposits #3 primary bank market share3 Busines
Slide 53: JPMC platform offers a unique value proposition to small businesses
The JPMC platform offers a unique value proposition to small businesses Business Banking customers leverage product offerings across the firm ~75% of customers have a Consumer Banking account1 Consumer Banking ~30% of customers use Chase Card Services1 15% of Relationship Managed Treasury Card
Slide 54: Omni-channel capabilities meet the needs of small businesses
Omni-channel capabilities enable Chase to meet the needs of small businesses Small businesses increasingly interact digitally, leading to a decrease in teller transactions # of mobile log-ins per business1 # of teller transactions Blue +31% (19%) 4Q14 4Q16 4Q14 4Q16 Small businesses continue to rely
Slide 55: Strong performance since 2014 led by expansion markets
We have had strong performance since 2014 led by our expansion markets Deposits average daily balance Loan average daily balance Core markets Expansion markets Core markets Expansion markets 2014 – 2016 2014 – 2016 +10% CAGR CAGR CAGR 6% CAGR ▲ 18% ▲ 21% ▲ 8% ▲ 2% 2014 2016 2014 2016 BANKING 50
Slide 56: Fragmented small business market creates opportunity
The small business market is fragmented, creating an opportunity for Chase to consolidate primary bank share and deepen product penetration Small business primary bank market share1 Small business product usage US Bank Credit Unions Industry2 Chase Chase Bank of America Business Wells Fargo Other Ba
Slide 57: Deepening engagement with Relationship Managed customers
Deepening engagement with Relationship Managed customers through multi- product relationships leads to stronger deposit and revenue growth Impact of small businesses choosing Chase for multiple products Business Banking + Business Banking + Chase Card + Chase Card1 Merchant services1 21% higher 43%
Slide 58: We continue to invest for further growth
We continue to invest for further growth Investment initiatives New Chase Business Online integrating Deposit, Payments, Digital platform and Lending Customer onboarding Common application and underwriting Business card Expanded product set and improved credit decision time Merchant services Next-da
Slide 59: Fintech collaboration can accelerate our growth
Fintech collaboration can accelerate our growth Chase Business Quick Capital Small business online lending in the U.S. ($B)1 +57% CAGR 9.6 1.6 2012 2016 1 Loan originations derived from internal JPMorgan Chase estimates using select financial reporting of online marketplace lenders and “Global Marke
Slide 60: Net Promoter Score and primary bank market share momentum
Our Net Promoter Score and primary bank market share show the momentum we have to build upon Net Promoter Score1 Primary bank market share of top 3 banks2 Bank of America Wells Fargo Chase 45 12% 40 9.6% 9.7% 36 9.5% 36 8.8% 34 8.5% 35 8% 29 6.2% 25 4% 2012 2013 2014 2015 2016 2012 2013 2014 2015 20
Slide 61: Competitive positions across our businesses and opportunity to grow
We have competitive positions across our businesses, and opportunity remains to continue to grow Consumer relationships with almost half of U.S. households Powerful customer franchise #1 in primary bank relationships within Chase footprint1 Access to J.P. Morgan investment expertise, advice, a
Slide 62: Agenda
Agenda Page Consumer & Community Banking 1 Payments 13 Mortgage Banking 24 Banking 37 Appendix 57 CONSUMER & COMMUNITY BANKING
Slide 63: Notes on slide – Digitally-engaged customer base
Notes on slide 7 – Our growing digitally-engaged customer base delivers strong performance metrics 1. Consumer Bank household channel segments are defined based on the tenure of the household as of the respective time period. For households with tenure of greater than 12 months, we use the following
Slide 64: Notes on slide – Substantially reduced expense
Notes on slide 9 – We have substantially reduced expense, while continuing to prudently invest Note: Numbers may not sum due to rounding; 2016 exit reflects 4Q16 annualized 1. Includes marketing, investments in select payments and digital projects, and select business growth and technology investmen
Slide 65: Notes on slide – Lead the industry in deposit balance growth
Notes on slide 39 – We continue to lead the industry in deposit balance growth 1. FDIC 2016 Summary of Deposits survey per SNL Financial. Excludes all branches with $500mm+ in deposits in any of the last ten years (excluded branches are assumed to include a significant level of commercial deposits o
Slide 66: Notes on slide – Physical presence in faster growing markets
Notes on slide 40 – We have established our physical presence in faster growing markets 1. FDIC 2016 Summary of Deposits survey per SNL Financial. Excludes all branches with $500mm+ in deposits in any of the last ten years (excluded branches are assumed to include a significant level of commercial d
Slide 67: Notes on slide – Three-quarters of growth from branch users
Notes on slide 41 – Three-quarters of our growth has come from customers who use our branches 1. Represents growth from 4Q12 to 4Q16. Consumer Bank household channel segments are defined based on the tenure of the household as of the respective time period. For households with tenure of greater than
Slide 68: Notes on slide – Competitive positions across our businesses
Notes on slide 56 – We have competitive positions across our businesses, and opportunity remains to continue to grow 1. Kantar TNS 4Q16 Retail Banking Monitor. Data is based on total U.S. (5K surveys per quarter) and Chase footprint (~2.8K surveys per quarter); Calculations derived from the followin
Slide 69: 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