Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q4 2020 Earnings Presentation
33 slides from Jp Morgan Chase &'s earnings presentation, Jan 15, 2021
Slide 1: 4Q20 Financial Results
4Q20 Financial Results January 15, 2021
Slide 2: Agenda
Agenda Page 1 4Q20 and FY2020 Financial results 1 2 2021 Financial outlook Income statement 12 Balance sheet 15 3 Appendix – Key drivers and performance targets by LOB 18 4 Notes 22
Slide 3: 4Q20 Financial highlights
4Q20 Financial highlights ROTCE1 CET1 capital ratios2 Net payout LTM 3 24% Std. 13.1%; Adv. 13.8% 59% 4Q20 net income of $12.1B and EPS of $3.79 Managed revenue of $30.2B 4,5 Expense of $16.0B 5 and managed overhead ratio of 53%4 Balance sheet Loans6,7: average loans of $996B up 1% YoY and
Slide 4: 4Q20 Financial results
4Q20 Financial results1 $B, except per share data $ O/(U) 4Q20 3Q20 4Q19 Net interest income $13.4 $0.2 ($0.9) Noninterest revenue2 16.8 (0.0) 1.9 Managed revenue1,2 $B 4Q20 3Q20 4Q19 30.2 0.2 1.0 Net charge-offs $1.1 $1.2 $1.5 Expense2 Reserve build/(release) (2.9) (0.6) (0.1) 16.0 (0.8) (0.2) Cred
Slide 5: FY2020 Financial results
FY2020 Financial results1 $B, except per share data $ O/(U) FY2020 FY2019 FY2019 Net interest income $55.0 $57.8 ($2.8) Noninterest revenue2 67.9 60.7 7.3 Managed revenue1,2 $B FY2020 FY2019 122.9 118.5 4.5 Net charge-offs $5.3 $5.6 Expense2 Reserve build/(release) 12.2 (0.0) 66.7 65.3 1.4 Credit co
Slide 6: 4Q20 Reserves
4Q20 Reserves Allowance for credit losses ($B)1 CECL adoption 1Q20-3Q20 4Q20 12/31/2019 impact Build/(release) 9/30/2020 Build/(release) 12/31/2020 Consumer Card $5.7 $5.5 $6.6 $17.8 $0.0 $17.8 Home Lending 1.9 0.1 0.9 2.9 (0.9) 2.0 Other Consumer2 0.7 0.3 0.8 1.8 0.0 1.8 \ Total Consumer 8.3 5.9 8.
Slide 7: Update on payment deferrals
Update on payment deferrals Consumer loans with payment deferral ($mm) Loan balance with payment deferral 12/31/2020 % of accounts Loan balance % of who exited with payment loan class payment deferral 6/30/2020 9/30/2020 deferral balance1 and are current2 3 Residential real estate (including third-p
Slide 8: Fortress balance sheet
Fortress balance sheet $B, except per share data Capital return 4Q20 3Q20 4Q19 The Board has authorized a $30B Risk-based capital metrics1 common share repurchase program Plan to resume buybacks in 1Q21, CET1 capital $205 $198 $188 with a net capacity of $4.5B 5 CET1 capital ratio – Standardized
Slide 9: Consumer & Community Banking
Consumer & Community Banking 1 $mm Financial performance $ O/(U) Net income of $4.3B, up 3% YoY 4Q20 3Q20 4Q19 Revenue of $12.7B, down 8% YoY 2 Revenue $12,728 ($167) ($1,152) Consumer & Business Banking 5,744 47 (924) Expense of $7.0B, down 1% YoY Home Lending 1,456 (258) 206 Credit costs:
Slide 10: Corporate & Investment Bank
Corporate & Investment Bank1 $mm Financial performance $ O/(U) Net income of $5.3B, up 82% YoY; revenue of $11.4B, up 17% 4Q20 3Q20 4Q19 Banking revenue Revenue $11,352 ($194) $1,649 Investment Banking revenue 2,497 410 674 IB revenue of $2.5B, up 37% YoY Wholesale Payments 1,427 95 (62) – IB
Slide 11: Commercial Banking
Commercial Banking 1 $mm Financial performance $ O/(U) Net income of $2.0B, up 115% YoY 4Q20 3Q20 4Q19 Revenue of $2.5B, up 7% YoY Revenue $2,463 $178 $167 Middle Market Banking 947 67 10 Noninterest revenue of $0.9B, up 26% YoY, predominantly Corporate Client Banking 856 48 98 driven by highe
Slide 12: Asset & Wealth Management
Asset & Wealth Management1 $mm Financial performance $ O/(U) Net income of $786mm, down 2% YoY 4Q20 3Q20 4Q19 Revenue of $3.9B, up 10% YoY Revenue $3,867 $313 $353 Asset Management 2,210 286 318 Higher performance and management fees, as well as higher Wealth Management 1,657 27 35 deposit and
Slide 13: Corporate
Corporate1 $mm Financial performance $ O/(U) Revenue 4Q20 3Q20 4Q19 Revenue was a loss of $249mm Revenue ($249) $90 ($21) Expense 361 (358) 18 Net interest income was down $730mm predominantly driven Credit costs (42) (138) (41) by lower rates, including the impact of faster prepayments on Net i
Slide 14: Agenda
Agenda Page 1 4Q20 and FY2020 Financial results 1 2 2021 Financial outlook Income statement 12 Balance sheet 15 3 Appendix – Key drivers and performance targets by LOB 18 4 Notes 22
Slide 15: Net interest income – 2021 Outlook
Net interest income – 2021 Outlook Net interest income 1 ($B) 1Q21: ~$13.6 4Q21: $14+ $57.8 $1.0 ~$55.5 Risks / Opportunities $55.0 $1.0 +/- Pace of recovery ($1.5) +/- Card payment rate Strong deposit growth and higher Markets NII, partially +/- Markets NII offset by mix as loan growth remains mute
Slide 16: Noninterest expense – 2021 Outlook
Noninterest expense – 2021 Outlook Adjusted noninterest expense1 ($B) $0.3 $0.3 $2.4 $68+ ($0.5) $65.5 CCB volume FX impact $65.0 growth Workforce AWM distribution optimization fees Technology Brokerage & efficiencies clearing Largely offset by: Auto lease depreciation Compensation N
Slide 17: Noninterest expense – Investments
Noninterest expense – Investments Investments ($B) ~$12.4 Non-technology: +$1.5B Other $30B commitment to Path Forward initiative $10.0 $9.7 cxLoyalty Broader distribution Other Front office hiring – primarily bankers and advisors Market expansion Broader distribution CBB: U.S. market expa
Slide 18: Agenda
Agenda Page 1 4Q20 and FY2020 Financial results 1 2 2021 Financial outlook Income statement 12 Balance sheet 15 3 Appendix – Key drivers and performance targets by LOB 18 4 Notes 22
Slide 19: Current system expansion is likely to persist
Current system expansion is likely to persist Quantitative easing (“QE”), as part of the extraordinary response to COVID -19, has driven significant deposit growth in the U.S. banking system Federal Reserve balance sheet normalization will take several years Following initial tapering in 2015,
Slide 20: GSIB and Leverage are top of mind for capital in 2021
GSIB and Leverage are top of mind for capital in 2021 Original calibration of size-based rules did not contemplate the magnitude of this expansion JPM GSIB score1 Potential path forward… Market pressure to Index coefficients and normalize STWF2 4.0% or higher Recalibrate to Average quarterly exp
Slide 21: Impact of size-based constraints on marginal deposit growth
Impact of size-based constraints on marginal deposit growth Excess liquidity combined with gold-plated size rules can lead to negative economics Potential outcomes… Issue preferred or retain common Reduce or turn away deposits OR… Recalibration equity above 12% CET1 target Deposit marginal economics
Slide 22: Agenda
Agenda Page 1 4Q20 and FY2020 Financial results 1 2 2021 Financial outlook Income statement 12 Balance sheet 15 3 Appendix – Key drivers and performance targets by LOB 18 4 Notes 22
Slide 23: CCB Key drivers and performance targets
CCB Key drivers and performance targets1 ($B, except ratios and where otherwise noted) Outlook 2020 2019 YoY∆ Expect an ROE of 25%+/- and an overhead ratio of 50-55% in a Households 2 (mm) 63.3 62.6 1% normalized environment Active mobile customers 3 (mm) 40.9 37.3 10 Average loans 4 $448 $478 (6)
Slide 24: CIB Key drivers and performance targets
CIB Key drivers and performance targets ($B, except ratios and where otherwise noted) Outlook 2020 2019 YoY∆ Expect an ROE of ~16%, revenue of ~$43B, and an overhead ratio Revenue $49.3 $39.3 26% of 54%+/- in a normalized Merchant processing volume1 1,597 1,512 6 environment Markets revenue / day
Slide 25: CB Key drivers and performance targets
CB Key drivers and performance targets ($B, except ratios and where otherwise noted) Outlook 2020 2019 YoY∆ Revised long-term gross IB target of $4B Gross IB revenue ($mm) $3,348 $2,744 22% Wholesale payments revenue1 ($mm) 1,439 1,453 (1) Maintain our long-term targets of: Average CRE loans 109
Slide 26: AWM Key drivers and performance targets
AWM Key drivers and performance targets1 ($B, except ratios and where otherwise noted) Outlook 2020 2019 YoY∆ In a normalized environment continue to expect long-term Total AUM (EOP) $2,716 $2,328 17% AUM flows of 4% of book, Total client assets (EOP) 3,652 3,089 18 revenue growth of 5%, pre-tax L
Slide 27: Agenda
Agenda Page 1 4Q20 and FY2020 Financial results 1 2 2021 Financial outlook Income statement 12 Balance sheet 15 3 Appendix – Key drivers and performance targets by LOB 18 4 Notes 22
Slide 28: Notes on non-GAAP financial measures
Notes on non-GAAP financial measures 1. In addition to analyzing the Firm’s results on a reported basis, management reviews Firmwide results, including the overhead ratio, on a “managed” basis; these Firmwide managed basis results are non-GAAP financial measures. The Firm also reviews the results of
Slide 29: Additional notes
Additional notes 1. Effective January 1, 2020, the Firm adopted the Financial Instruments - Credit Losses ("CECL") accounting guidance. Refer to Note 1 – Basis of Presentation on pages 98-99 of the Firm’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020 for further inf
Slide 30: Additional notes on slides 7-9
Additional notes on slides 7-9 Slide 7 – Consumer & Community Banking 3. Actual numbers for all periods, not over/(under) 4. See note 7 on slide 23 5. Includes the impact of loans originated under the PPP. For further information, see page 12 of the Earnings Release Financial Supplement 6. Included
Slide 31: Notes on slides – CCB Key drivers and performance targets
Notes on slides 18 – CCB Key drivers and performance targets 1. See note 1 on slide 22 and notes 5 and 8 on slide 23 2. 2020 reflects households as of November 2020 3. Users of all mobile platforms who have logged in within the past 90 days 4. Includes ~$37B of loan sales for FY2019 and FY2020. Refl
Slide 32: Notes on slides – AWM Key drivers and performance targets
Notes on slides 21 – AWM Key drivers and performance targets 1. See note 1 on slide 22 and notes 5 and 8 on slide 23 2. YoY represents net flows as a % of starting balance (book of business) 3. Includes AWM and CCB advisors 4. Total client positions represents the sum of total client assets and cred
Slide 33: 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