Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q3 2006 Earnings Presentation
15 slides from Jp Morgan Chase &'s earnings presentation, Oct 18, 2006
Slide 1: Financial Results Third Quarter 2006
O C T O B E R 1 8, 2 0 0 6 FINANCIAL RESULTS Third Quarter 2006
Slide 2: 3Q06 Managed Results
3Q06 Managed Results1 ($ in millions) $O/(U) %O/(U) 3Q06 2Q06 3Q05 2Q06 3Q05 1 Revenue (FTE) $16,229 $511 $875 3% 6% 1 Credit Costs 1,419 365 (693) 35% (33%) 2 Expense (ex. Merger Cost) 9,603 453 465 5% 5% Income ex. Merger Costs & Disc. Ops 3,262 (275) 656 (8%) 25% Merger Costs (after-tax) 30 (23)
Slide 3: Investment Bank
Investment Bank ($ in millions) Net income of $976mm on record third- quarter revenue of $4.7bn, our second 3Q06 2Q06 3Q05 highest quarterly revenue Revenue $4,673 $489 $202 ROE of 18% Investment Banking Fees 1,419 51 434 Record IB fees of $1.4bn up 44% YoY driven by record debt underwriting a
Slide 4: Retail Financial Services
Retail Financial Services ($ in millions) $ O/(U) Net income of $746mm up 14% YoY Excluding Katrina-related provision of 3Q06 2Q06 3Q05 $250mm pre-tax in 3Q05, net income down 8% YoY Revenue $3,555 ($224) ($35) 1 Results reflect sale of insurance Credit Costs 114 14 (264) underwriting business
Slide 5: Regional Banking
Regional Banking ($ in millions) Net income of $744mm up 32% YoY Excluding Katrina-related provision in 3Q05, $ O/(U) net income up 5% YoY 3Q06 2Q06 3Q05 Results reflect sale of insurance underwriting business in early July 2006; Revenue $2,962 ($101) $84 Approximately $150mm in revenue and 1
Slide 6: Mortgage Banking & Auto Finance
Mortgage Banking & Auto Finance Mortgage Banking ($ in millions) Auto Finance ($ in millions) $ O/(U) $ O/(U) 3Q06 2Q06 3Q05 3Q06 2Q06 3Q05 Revenue $198 ($120) ($194) Revenue $395 ($3) $75 Production 197 (5) (32) Credit Costs 61 31 (20) Net Mortgage Servicing 1 (115) (162) Expense 194 10 20 Expense
Slide 7: Card Services (Managed)
Card Services (Managed) ($ in millions) Net income of $711mm up 31% YoY $ O/(U) ROO of 3.14% Prior year included $200mm increase in 3Q06 2Q06 3Q05 allowance (Katrina and bankruptcy) Revenue $3,646 ($18) ($334) Avg outstandings of $142bn up 3% YoY driven by Rev. adj. for Paymentech 3,646 (18)
Slide 8: Commercial Banking
Commercial Banking ($ in millions) Net income of $231mm down 19% YoY $ O/(U) Loans up 11% YoY driven by solid growth across all 3Q06 2Q06 3Q05 businesses; Liability balances up 11% YoY Revenue $933 ($16) $56 Revenue up 6% YoY driven by higher liability balances and loan volumes, partially offs
Slide 9: Treasury & Securities Services
Treasury & Securities Services ($ in millions) $ O/(U) Net income of $256mm up 15% YoY 3Q06 2Q06 3Q05 Pre-tax margin of 27% Revenue $1,499 ($89) $119 Liability balances up 22% YoY; Assets under Treasury Services 697 (5) 27 custody up 23% YoY Worldwide Securities Svcs 802 (84) 92 Expense 1,064
Slide 10: Asset & Wealth Management
Asset & Wealth Management ($ in millions) $ O/(U) Net income of $346mm up 10% YoY driven by higher assets under management, 3Q06 2Q06 3Q05 partially offset by sale of BrownCo in 4Q05 Revenue $1,636 $16 $187 Pre-tax margin of 34% 1 Credit Costs (28) (21) (9) Revenue up 13% YoY with double-digit
Slide 11: Corporate
Corporate Total Corporate ($ in millions) Treasury ($ in millions) $ O/(U) $ O/(U) 3Q06 2Q06 3Q05 3Q06 2Q06 3Q05 Net Income $31 $15 $590 Net Income $70 $417 $371 1 Net Income ex. Disc. Ops (34) 6 583 Net Interest Income 149 253 564 Private Equity 95 (198) (46) Securities Gains/(Losses) 24 516 67 Tre
Slide 12: Capital Strength
Capital Strength 3Q06 2Q06 3Q05 Capital/Balance Sheet ($bn) 1 Tier 1 Capital $79.8 $75.0 $70.7 1 Risk Weighted Assets $925.7 $884.2 $866.3 1 Tier 1 Capital Ratio 8.6% 8.5% 8.2% 1 Total Capital Ratio 12.1% 12.0% 11.3% 1 Leverage Ratio 6.3% 5.8% 6.2% Common Shareholders' Equity less Goodwill $70.2 $67
Slide 13: 3Q06 Summary Assessment
3Q06 Summary Assessment Continued benefit from favorable credit environment Record IB fees and strong markets results Card Services – ongoing pressure on balances and revenue Retail Financial Services Growth in checking accounts and loans; continued competitive and rate pressures Weak re
Slide 14: Comments on Outlook
Comments on Outlook Investment Bank IB fee pipeline strong Trading – continue to build out capabilities but results are market-dependent Credit Costs – will increase over time Retail Financial Services – continued modest margin pressure Card Services Continuation of trends will keep pr
Slide 15: 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