Jp Morgan Chase & Co. · NYSE:JPM
Jp Morgan Chase & — Q3 2010 Earnings Presentation
24 slides from Jp Morgan Chase &'s earnings presentation, Oct 13, 2010
Slide 1: Financial Results 3Q10
FINANCIAL RESULTS 3Q10 October 13, 2010
Slide 2: 3Q10 Financial highlights
3Q10 Financial highlights 3Q10 Net income of $4.4B; EPS of $1.01; revenue1 of $24.3B Results include the following significant items: $ in millions, excluding EPS Net Income EPS Card reduction to loan loss allowance $930 $0.22 Corporate increase to litigation reserve (776) (0.18) RFS increase to mor
Slide 3: 3Q10 Financial results
3Q10 Financial results1 $ in millions, excluding EPS $ O/(U) 3Q10 2Q10 3Q09 Revenue (FTE)1 $24,335 ($1,278) ($4,445) Credit Costs1 3,223 (140) (6,579) Expense 14,398 (233) 943 Reported Net Income $4,418 ($377) $830 Net Income Applicable to Common $4,019 ($344) $779 Reported EPS $1.01 ($0.08) $0.19 R
Slide 4: Investment Bank
Investment Bank $ in millions Net income of $1.3B on revenue of $5.4B $ O/(U) ROE of 13% 3Q10 2Q10 3Q09 IB fees of $1.5B down 9% YoY Revenue $5,353 ($979) ($2,155) Ranked #1 YTD in Global Investment Banking Investment Banking Fees 1,502 97 (156) Fees Fixed Income Markets 3,123 (440) (1,888) Equity M
Slide 5: Retail Financial Services
Retail Financial Services $ in millions Retail Financial Services net income of $907mm compared with $7mm in the prior year $ O/(U) Retail Banking net income of $848mm down 19% YoY: 3Q10 2Q10 3Q09 Total revenue of $4.4B down 3% YoY driven by declining Retail Financial Services deposit-related fees,
Slide 6: Retail Financial Services — drivers
Retail Financial Services — drivers Retail Banking ($ in billions) Average deposits of $335.5B down 1% both YoY and QoQ: 3Q10 2Q10 3Q09 Deposit margin expansion YoY and QoQ reflects the portfolio shift to wider spread deposit products Key Statistics Average Deposits $335.5 $337.8 $339.6 Branch produ
Slide 7: Home Lending update
Home Lending update Key statistics1 Overall commentary 3Q10 2Q10 3Q09 Delinquencies in 3Q flat QoQ EO P ow ned portf olio ($B) Home Equity $91.7 $94.8 $104.8 It is not clear when we will see delinquencies 2 Prime Mortgage 56.7 57.8 60.1 improve Subprime Mortgage 12.0 12.6 13.3 Net ch arge-offs ($mm)
Slide 8: Card Services
Card Services1 $ in millions Net income of $735mm compared with a net loss of $700mm in the prior year $ O/(U) Credit costs of $1.6B reflect lower net charge-offs 3Q10 2Q10 3Q09 and a reduction of $1.5B to the allowance for Revenue $4,253 $36 ($906) loan losses, reflecting lower estimated losses Cre
Slide 9: Commercial Banking
Commercial Banking1 $ in millions Net income of $471mm up 38% YoY $ O/(U) Average loan balances down 7% YoY and up 1% 3Q10 2Q10 3Q09 QoQ Revenue $1,527 $41 $68 QoQ increase reflects acquisition of a $3.5B Middle Market Banking 766 (1) (5) loan portfolio Commercial Term Lending 256 19 24 Mid-Corporat
Slide 10: Treasury & Securities Services
Treasury & Securities Services $ in millions Net income of $251mm down 17% YoY and 14% QoQ $ O/(U) Pretax margin of 21% 3Q10 2Q10 3Q09 QoQ decrease due to a decline in securities Revenue $1,831 ($50) $43 lending and depositary receipts revenue Treasury Services 937 11 18 reflecting seasonal activity
Slide 11: Asset Management
Asset Management $ in millions Net income of $420mm down 2% YoY $ O/(U) Pretax margin of 30% 3Q10 2Q10 3Q09 Revenue of $2.2B up 4% YoY due to higher loan Revenue $2,172 $104 $87 originations, the effect of higher market levels and 1 Private Banking 1,181 28 101 net inflows to products with higher ma
Slide 12: Corporate/Private Equity
Corporate/Private Equity Net Income ($ in millions) Private Equity $ O/(U) Private Equity gains of $750mm 3Q10 2Q10 3Q09 Private Equity portfolio of $9.4B (7.5% of Private Equity $344 $333 $256 stockholders’ equity less goodwill) Corporate 4 (638) (1,195) Corporate Investment portfolio results down
Slide 13: Fortress balance sheet
Fortress balance sheet $ in billions 3Q10 2Q10 3Q09 1 Tier 1 Capital $139 $137 $127 1,2 Tier 1 Common Capital $111 $108 $101 1 Risk-Weighted Assets $1,169 $1,131 $1,238 Total Assets $2,142 $2,014 $2,041 1 Tier 1 Capital Ratio 11.9% 12.1% 10.2% 1,2 Tier 1 Common Ratio 9.5% 9.6% 8.2% Firmwide total cr
Slide 14: Outlook
Outlook Retail Financial Services Card Services Home Lending loss guidance: EOP outstandings for Chase (excluding WaMu) are Quarterly losses could be: projected to decline by 15% or $21B YoY in 2010 to – $1B for Home Equity $123B – $0.4B for Prime Mortgage More than half of the decline in receivable
Slide 15: We're addressing the foreclosure affidavit issues
We’re addressing the foreclosure affidavit issues Issues have been identified relating to mortgage foreclosure affidavits, such as where: Signers did not personally review the underlying loan files, but instead relied on the work of others (who personally conducted reviews of the underlying loan fil
Slide 16: Our priority is foreclosure avoidance
Our priority is foreclosure avoidance Based on our processes and reviews to date, we believe underlying foreclosure decisions were justified by the facts and circumstances We are comfortable that our process between initial delinquency and foreclosure is robust and we make every effort to avoid fore
Slide 17: Agenda
Agenda Page Appendix 16 FINANCIAL RESULTS 16
Slide 18: Consumer credit — delinquency trends
Consumer credit — delinquency trends (Excl. purchased credit-impaired loans) Home Equity delinquency trend ($ in millions) Prime Mortgage delinquency trend ($ in millions) $4,000 30+ day delinquencies 30 – 150 day delinquencies $6,500 30+ day delinquencies 30 – 150 day delinquencies 150+ day delinqu
Slide 19: Firmwide coverage ratio remains strong
Firmwide coverage ratio remains strong ($ in millions) Loan Loss Reserve/Total Loans1 Loan Loss Reserve Loan Loss Reserve/NPLs1 6.00% 500% Nonperforming Loans 5.00% 38,186 400% 34,161 30,633 31,602 35,836 4.00% 300% 29,072 27,381 3.00% 200% 23,164 19,052 2.00% 100% 17,767 17,564 17,050 16,179 15,503
Slide 20: IB League Tables
IB League Tables League table results For YTD September 30, 2010, JPM ranked: YTD Sep 2010 2009 #1 in Global IB fees Rank Share Rank Share #1 in Global Debt, Equity & Equity-related Based on fees: #1 in Global Equity & Equity-related 1 Global IB fees #1 7.6% #1 9.0% #1 in Global Long-term Debt Based
Slide 21: Foreclosure review process
Foreclosure review process A separate group performs additional reviews on all loans going to foreclosure Sample of items reviewed Does the loan meet the required delinquency criteria? Have the appropriate demand letters and notices been sent? Is the loan currently in any form of active Loss Mitigat
Slide 22: Delinquent loan facts
Delinquent loan facts Average delinquency at foreclosure is 448 days Florida 678 days NY 792 days ~35-40% of homes are vacant at the time of foreclosure sale ~20% of all loans in active foreclosure are non-owner occupied on the application Around half of seriously delinquent loans have not gone to f
Slide 23: 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 the Firm’s results and the results of the lines of business on a “managed” basis, which is a non-GAAP financial measure. The Firm’s definition of managed basis starts with the
Slide 24: 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