Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q3 2007 Earnings Presentation
19 slides from Jp Morgan Chase &'s earnings presentation, Oct 17, 2007
Slide 1: Financial Results 3Q07
OCTOBER 17, 2007 FINANCIAL RESULTS 3Q07
Slide 2: 3Q07 Highlights
3Q07 Highlights Earnings of $3.4B EPS of $0.97 up 5% from 3Q06 Return on tangible common equity1 of 20% Firmwide results benefited from: Diversified business mix Improvements in operating performance over past several years Strong capital, reserves and liquidity R E S U L T S F I N A N
Slide 3: 3Q07 Managed Results
3Q07 Managed Results1 $ $ in in millions millions $ O/(U) O/(U) % 3Q07 2Q07 3Q06 2Q07 3Q06 Revenue (FTE)1 $16,977 ($2,842) $603 (14)% 4% Credit Costs1 2,363 244 944 12% 67% Expense2 9,327 (1,701) (469) (15)% (5)% Income from Continuing Ops. $3,373 ($861) $141 (20)% 4% Income from Discontinued Ops.3
Slide 4: Investment Bank
Investment Bank $ $ in in millions millions $ O/(U) Net income of $296mm on revenue of $2.9B IB fees of $1.3B down 6% YoY reflecting lower debt 3Q07 2Q07 3Q06 underwriting fees offset partially by record advisory fees Revenue $2,946 ($2,852) ($1,870) Fixed income markets revenue decreased 72%
Slide 5: Leveraged lending
Leveraged lending Markdowns of $1.3B net of fees ($1.9B gross of fees) or 4.9% of notional balances were taken on leveraged loans in the quarter1 $16.0B closed during the quarter, of which $14.7B was funded as of 9/30/07 $23.8B represents the future pipeline of deals expected to close includin
Slide 6: Other Investment Bank Risk Topics
Other Investment Bank Risk Topics CDO warehouse and unsold positions markdowns net of hedges of $339 mm CDO warehouse and unsold positions of $6.8B; mostly loan underlying Subprime warehouse and residuals positions – net P&L impact modestly positive Subprime mortgage warehouse of $2.6B; whole lo
Slide 7: Retail Financial Services - Drivers
Retail Financial Services - Drivers Key Key Statistics¹ Statistics¹ ($ ($ in in billions) billions) Average deposits up 10% YoY 3Q07 2Q07 3Q06 Branch production statistics YoY Regional Banking Checking accounts up 15% Average Deposits $205.3 $207.3 $187.4 Credit card sales up 59% Checking Ac
Slide 8: Retail Financial Services
Retail Financial Services $ $ in in millions millions Net income of $639mm, down 14% YoY and 19% QoQ $ O/(U) NII growth of 9% YoY reflects wider spreads on loans 3Q07 2Q07 3Q06 and higher deposit balances Net Interest Income $2,681 $8 $224 Lending and deposit-related fees up 21% YoY due to gro
Slide 9: Home Equity
Home Equity JPM 30-day JPM 30-day delinquency delinquency trend trend Key Key statistics statistics 3Q07 2Q07 3Q06 1.60% EOP owned portfolio ($B) $93.0 $91.0 $80.4 Net charge-offs ($mm) $150 $98 $29 1.40% Net charge-off rate 0.65% 0.44% 0.15% 1.20% 1.00% Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun-
Slide 10: Subprime Mortgage
Subprime Mortgage JPM 30-day JPM 30-day delinquency trend11 delinquency trend Key Key statistics statistics 12.00% Subprime Prime 3Q07 2Q07 3Q06 10.00% EOP owned portfolio ($B)2 $12.1 $8.7 $12.0 8.00% EOP held-for-sale ($B) - $3.2 $4.3 6.00% Net charge-offs ($mm) $40 $26 $13 4.00% 2.00% Net charge-o
Slide 11: Card Services (Managed)
Card Services (Managed) $ in $ in millions millions Net income of $786mm up by $75mm, or 11% $ O/(U) YoY ROE of 22% 3Q07 2Q07 3Q06 ROO of 3.31% Revenue $3,867 $150 $221 Avg Outstandings of $148.7B up 5% YoY and 1% Credit Costs 1,363 32 93 QoQ Expense 1,262 74 9 Charge volume growth of 3% Y
Slide 12: Commercial Banking
Commercial Banking $ $ in in millions millions $ O/(U) Net income of $258mm, up 12% YoY Average loans up 15% and liability 3Q07 2Q07 3Q06 balances up 22% YoY, both due to Revenue $1,009 $2 $76 organic growth and BNY Middle Market 680 27 63 Revenue of $1B up 8% YoY, primarily Mid-Corporate Bank
Slide 13: Treasury & Securities Services
Treasury & Securities Services $ $ in in millions millions $ O/(U) Record net income of $360mm up 41% YoY 3Q07 2Q07 3Q06 Pretax margin of 33% Revenue $1,748 $7 $249 Liability balances up 23% YoY Treasury Services 780 60 83 Assets under custody up 21% YoY Worldwide Securities Svcs 968 (53) 16
Slide 14: Asset Management
Asset Management $ $ in in millions millions $ O/(U) Record net income of $521mm up 51% YoY Pretax margin of 38% 3Q07 2Q07 3Q06 Assets under management of $1.2T, up Revenue $2,205 $68 $569 24% YOY, including growth of 31% in Private Bank 686 40 217 alternative assets Retail 639 37 183 Net AU
Slide 15: Corporate
Corporate Total Total Corporate Corporate ($ ($ in in millions) millions) $ O/(U) Private Equity 3Q07 2Q07 3Q06 Private Equity gains of $766mm in 3Q07 Private Equity $409 ($293) $314 EOP Private Equity Portfolio of $6.6B Represents 8.8% of common equity less Treasury and Other Corporate 142 42
Slide 16: Capital Management / Fortress Balance Sheet
Capital Management / Fortress Balance Sheet $ $ in in billions billions 3Q07 2Q07 3Q06 Tier 1 Capital Ratio 8.4% 8.4% 8.6% Total Capital Ratio 12.5% 12.0% 12.1% Leverage Ratio 6.0% 6.2% 6.3% 1 TCE/Managed RWA 6.4% 6.5% 6.4% Stable or improved capital positions with Tier I capital ratio at 8.4% R
Slide 17: 3Q07 Summary Assessment
3Q07 Summary Assessment Overall Firm - earned $3.4B or $0.97 per share, up 5% from 3Q06 Results demonstrate benefits of diversified business mix Substantially improved operating margins over past several years Strong capital and liquidity levels Investment Bank – earnings of $0.3B and ROE
Slide 18: Notes on non-GAAP financial measures
Notes on non-GAAP financial measures This presentation includes non-GAAP financial measures. 1. TCE as used on slides 1 and 2 for purposes of a return on tangible common equity is defined as common stockholders’ equity less identifiable intangible assets (other than MSRs) and goodwill. TCE as used i
Slide 19: Forward-looking statements
Forward-looking statements 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 unc