Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q2 2008 Earnings Presentation
24 slides from Jp Morgan Chase &'s earnings presentation, Jul 21, 2008
Slide 1: Financial Results 2Q08
JULY 17, 2008 FINANCIAL RESULTS 2Q08
Slide 2: Bear Stearns Merger-Related Items
Bear Stearns Merger-Related Items FINANCIAL RESULTS . No extraordinary gain . Merger-related items of ($540mm) are reported in Corporate . Equity interest net losses1 of ($423mm) (after-tax) . Other merger-related items of ($117mm) (after-tax) . Remaining post-2Q08 merger-related costs of approximat
Slide 3: 2Q08 Financial highlights
2Q08 Financial highlights FINANCIAL RESULTS . Net income of $2.0B . Excluding $540mm after-tax loss from Bear Stearns merger-related items, net income of $2.5B . Increased credit reserves by $1.3B firmwide; loan loss allowance coverage of 2.86% for consumer businesses and 2.13% for wholesale busines
Slide 4: 2Q08 Managed Results
2Q08 Managed Results1 FINANCIAL RESULTS $ in millions 2Q08 1Q08 2Q07 1Q08 2Q07 Results Excl. Bear Stearns Merger-Related Items Revenue (FTE)1 $20,098 $2,200 $279 12% 1% Credit Costs1 4,275 (830) 2,156 (16)% 102% Expense2 11,996 3,065 968 34% 9% Net Income 2,543 $170 ($1,691) 7% (40)% Bear Stearns Me
Slide 5: Investment Bank
Investment Bank $ in millions 2Q08 1Q08 2Q07 $ O/(U) Revenue Investment Banking Fees Fixed Income Markets Equity Markets Credit Portfolio Credit Costs Expense Net Income Key Statistics1 Overhead Ratio Comp/Revenue Allowance for loan losses to average loans2 ROE3 VAR ($mm)4 EOP Equity ($B) $5,470 $2,
Slide 6: Investment Bank—Fee and Market Share Performance
Investment Bank—Fee and Market Share Performance FINANCIAL RESULTS Thomson Volumes1 1H082 20072 Rank Share Rank Share League Table Results . Ranked #1 in the four most important league tables for capital raising for the first time in our history for both the Global M&A Announced3 #3 27% #4 27% secon
Slide 7: IB Key Risk Exposures
IB Key Risk Exposures Leveraged Lending and Level 3 FINANCIAL RESULTS Leveraged Lending . $22.5B of total commitments (funded and unfunded) at 3/31/08 -$18.3B of legacy and $4.2B of current commitments . Markdowns of $696mm, net of hedges, for the quarter on the remaining legacy commitments of $16.3
Slide 8: Bear Stearns Merger Integration
Bear Stearns Merger Integration FINANCIAL RESULTS People . Completed majority of people selection decisions as of merger close on 5/30/08 . 7,000 Bear Stearns employees have been identified for retention . Talent Network has been successful in identifying internal and external job opportunities for
Slide 9: Retail Financial Services—Drivers
Retail Financial Services—Drivers Key Statistics 1 -$ in billions 2Q08 1Q08 2Q07 FINANCIAL RESULTS 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 Mo
Slide 10: Retail Financial Services
Retail Financial Services 2Q08 1Q08 2Q07 $ O/(U) $ in millions Net Interest Income Noninterest Revenue Total Revenue Credit Costs Expense Net Income Regional Banking Consumer and Business Banking Loan Portfolio/Other Mortgage Banking Auto Finance Key Statistics1 Overhead (excl. CDI) Net Charge-off R
Slide 11: Home Equity
Home Equity JPM 30-day Delinquency Trend Key Statistics 2Q08 1Q08 2Q07 2.25% EOP owned portfolio ($B) $95.1 $95.0 $91.0 2.00% Net charge-offs ($mm) $511 $447 $98 1.75% Net charge-off rate 2.16% 1.89% 0.44% 1.50% 1.25% 1.00% Sep-Dec-Mar-Jun-Oct-Jan-Apr-Aug-Nov-Feb-Jun05 050606 06 070707070808 Comment
Slide 12: Subprime Mortgage
Subprime Mortgage JPM 30-day Delinquency Trend Key Statistics 20% EOP owned portfolio ($B)1 $14.8 $15.8 $8.7 15% EOP held-for-sale ($B) — — $3.2 10% Net charge-offs ($mm) $149 $26 Net charge-off rate 4.98% 3.82% 1.21% 5% 1 Excludes mortgage loans held in the Community Development loan portfolio 0% 2
Slide 13: Prime Mortgage
Prime Mortgage JPM 30-day Delinquency Trend Key Statistics 4.00% EOP balances in Corporate ($B) $42.6 $41.1 $27.3 EOP balances in RFS1 ($B) 4.6 4.0 3.9 2Q08 1Q08 2Q07 3.00% Total EOP balances ($B) $47.2 $45.1 $31.2 2.00% Corporate net charge-offs ($mm) $84 $36 $3 RFS net charge-offs ($mm) 20 14 1 1.
Slide 14: Card Services (Managed)
Card Services (Managed) 2Q08 1Q08 2Q07 $ O/(U) $ in millions Revenue Credit Costs Expense Net Income $250Key Statistics ($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 n
Slide 15: Commercial Banking
Commercial Banking FINANCIAL RESULTS $ in millions 2Q08 1Q08 2Q07 $ O/(U) Revenue $1,106 43% 0.28% $39 $99 Middle Market Banking 708 2 55 Mid-Corporate Banking 235 28 38 Real Estate Banking 94 (3) (15) Other 69 12 21 Credit Costs 47 (54) 2 Expense 476 (9) (20) Net Income $63 $71 Key Statistics ($B)1
Slide 16: Treasury & Securities Services
Treasury & Securities Services 2Q08 1Q08 2Q07 $ O/(U) $ in millions Revenue Treasury Services 852 Worldwide Securities Svcs 1,167 $2,019 Expense 1,317 $106 $278 39 132 67 146 89 168 Net Income $425 $22 $73 Key Statistics1 Avg Liability Balances ($B)2 $268.3 Assets under Custody ($T) $15.5 Pretax Mar
Slide 17: Asset Management
Asset Management $ in millions 2Q08 1Q08 2Q07 $ O/(U) Revenue $2,064 $163 ($73) Private Bank Retail Institutional Private Client Services Bear Stearns Brokerage Credit Costs Expense 765 110 119490 24 (112) 472 (18) (145) 299 927 38 38 38 17 128 1,400 77 45 Net Income $395 $39 ($98) Key Statistics ($
Slide 18: Corporate/Private Equity
Corporate/Private Equity FINANCIAL RESULTS Corporate/Private Equity Net Income -$ in millions 2Q08 1Q08 2Q07 $ O/(U) Private Equity $99 19 $42 ($603) Corporate excl. BSC merger-related items (951) 299 Bear Stearns merger-related items (540) (540) (540) Net Income1 ($422) ($1,449) ($804) Bear Stearns
Slide 19: Capital Management
Capital Management FINANCIAL RESULTS $ in billions 2Q08 1Q08 2Q07 Tier 1 Capital1 $98.7 $89.6 $85.1 Tangible Common Equity2 $75.5 $74.0 $67.3 Risk Weighted Assets1 $1,083.2 $1,075.7 $1,016.0 Tangible Assets $1,724.0 $1,591.2 $1,406.1 Tier 1 Capital Ratio1 9.1% 8.3% 8.4% Total Capital Ratio1 13.5% 12
Slide 20: 3Q08 Outlook
3Q08 Outlook Investment Bank Treasury and Security Services . Continued lower earnings is a reasonable expectation . Strong loan reserves; credit is idiosyncratic . Balance sheet risks remain Retail Financial Services . Solid underlying growth . Continued deterioration in home equity, subprime and p
Slide 21: Appendix
A P P E N D I X A P P E N D I X FINANCIAL RESULTS
Slide 22: Significant Items
Significant Items Pretax After-tax EPS Results excl. Bear Stearns merger-related items $3,827 $2,543 Net Income $ in millions Addition to credit allowance Wholesale (464) (288) (0.08) Consumer (861) (534) (0.15) IB markdowns (1,101) (683) (0.19) Sale of MasterCard shares $668 $414 $0.12 FINANCIAL RE
Slide 23: Bear Stearns Extraordinary Gain
Bear Stearns Extraordinary Gain $ in millions 5/12/2008 Change 6/30/2008 BSC Capital at 2/29/08 Transaction-related costs (after-tax) . Operating losses . Credit market dislocation/de-risking . Minimal client revenue flow coupled with operating expense base . Valuation adjustments . Other misc. merg
Slide 24: Notes on non-GAAP financial measures and forward-looking statements
FINANCIAL RESULTS Notes on non-GAAP financial measures and forward-looking statements This presentation includes non-GAAP financial measures. 1. TCE as used on slide 3 for purposes of a return on tangible common equity and presented as Tangible Common Equity on slide 19 (line 2) is defined as common