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| 8-K - 8-K - JPMORGAN CHASE & CO | jpmc3q14form8k.htm |
October 14, 2014 F I N A N C I A L R E S U L T S 3Q14
F I N A N C I A L R E S U L T S 3Q14 Financial highlights 1 See note 1 on slide 20 2 See note 2 on slide 20 3 See note 4 on slide 20 4 Basel III Advanced Fully Phased-In refers to the capital rules the Firm will be subject to as of January 1, 2019. See Note 5 on slide 20 5 See note 5 on slide 20 6 See note 9 on slide 20 7 The repurchase amount is presented on a trade-date basis 8 Assumes a tax rate of 38% for items that are tax deductible 3Q14 net income of $5.6B and EPS of $1.36 Revenue of $25.2B1, adjusted expense of $14.7B2 and ROTCE of 13%3 3Q14 results included as a significant item $1.0B (after-tax) Firmwide legal expense Fortress balance sheet Basel III Advanced Fully Phased-In Common Equity Tier 1 (“CET1”) of $163B4; ratio of 10.1%4 Firm Supplementary Leverage Ratio (“SLR”) of 5.5%5 Core loans up 7% YoY and 1% QoQ6 ~$3B of capital returned to shareholders in 3Q14 Repurchased $1.5B of common equity7 – $3.6B capacity remaining for 4Q14-1Q15 Common dividend of $0.40 per share $mm, excluding EPS1 Pretax Net income8 EPS8 Firmwide – Legal Expense ($1,062) ($1,011) ($0.26) 1
F I N A N C I A L R E S U L T S $ O/(U) 3Q14 2Q14 3Q13 Revenue (FTE)1 $25,159 ($190) $1,279 Credit costs 757 65 1,300 Expense 15,798 367 (7,828) Reported net income/(loss) $5,572 ($413) $5,952 Net income/(loss) applicable to common stockholders 5,135 (438) 5,785 Reported EPS 1.36 (0.10) 1.53 ROE2 10% 11% (1)% ROTCE2,3 13 14 (2) Memo: Adjusted expense 2,4 $14,736 ($26) $582 Memo: Adjusted expense/revenue 4 59% 3Q14 Financial results1 1 See note 1 on slide 20 2 Actual numbers for all periods, not over/(under) 3 See note 4 on slide 20 4 See note 2 on slide 20 $mm, excluding EPS Adjusted expense expected to be above $58B4 for FY14 NCOs expected to be less than $5B for FY14 3Q14 ROE by LOB CCB 19% CIB 10% CB 18% AM 25% 2
F I N A N C I A L R E S U L T S 3Q14 2Q14 3Q13 Basel III Advanced Fully Phased-In2 CET1 $163 $161 $146 CET1 ratio 10.1% 9.8% 9.3% Tier 1 Capital $183 $179 $157 Tier 1 Capital ratio 11.3% 10.9% 10.0% Risk-weighted assets $1,616 $1,641 $1,564 Firm SLR3 5.5% 5.4% NA Bank SLR3 5.7 5.6 NA HQLA4 $572 $576 $538 Total assets (EOP) $2,527 $2,520 $2,463 Tangible book value per share5 $44.13 $43.17 $39.51 $B, except where noted Fortress balance sheet and returns1 Available resources6 represent ~21% of Basel III RWA Firm is compliant with final U.S. LCR7 Firmwide total credit reserves of $15.5B; loan loss coverage ratio of 1.63% Issued $1.6B of preferred stock in 3Q14 Note: Estimated for 3Q14 1 See notes on non-GAAP financial measures on slide 20 2 Basel III Advanced Fully Phased-In refers to the capital rules the Firm will be subject to as of January 1, 2019 3 See note 5 on slide 20 4 High Quality Liquid Assets (“HQLA”) is the estimated amount of assets that qualify for inclusion in the final U.S. Liquidity Coverage Ratio (“LCR”) for 3Q14 and the Basel III LCR for prior quarters 5 See note 4 on slide 20 6 Available resources include Basel III CET1, preferred and trust preferred securities, as well as holding company unsecured long-term debt with remaining maturities greater than 1 year 7 In case of LCR, based on the Firm's current understanding of the U.S. final LCR rules 3Q14 Basel III Advanced Transitional of 10.2% 3
F I N A N C I A L R E S U L T S Consumer & Community Banking1 Leadership positions $mm Headcount Total headcount12 down ~10,000 YTD and ~27,000 since the end of 2012, on track to exceed prior 2014 guidance by ~3,000 Consumer & Business Banking #1 in deposit growth for the third consecutive year4 #1 in customer satisfaction among the largest U.S. banks for the second consecutive year, according to ACSI #1 in small business banking customer satisfaction in three out of four regions by J.D. Power5 #1 most visited banking portal in the U.S.6 Mortgage Banking #2 in customer satisfaction for mortgage servicing by J.D. Power5 Card, Merchant Services & Auto #1 credit card issuer in the U.S. based on loans outstanding7 #1 U.S. co-brand credit card issuer8 #1 global Visa issuer9 #1 wholly-owned merchant acquirer10 with ~50% of U.S. eCommerce volume11 Over $600B, or ~16% of total U.S. credit and debit purchase volume10 1 See note 1 on slide 20 2 Actual numbers for all periods, not over/under 3 2014 includes $3.0B of capital held at the CCB level related to legacy mortgage servicing matters 4 Based on FDIC 2014 Summary of Deposits survey per SNL Financial 5 Based on J.D. Power 2013 Small Business Banking Satisfaction Study and 2014 Mortgage Servicing Study 6 Per compete.com as of August 2014 7 Based on disclosures by peers and internal estimates as of 2Q14 8 Based on Phoenix Credit Card Monitor for 12-month period ending June 2014; based on card accounts and revolving balance dollars 9 Based on Visa data as of 2Q14 based on consumer and business credit card sales volume 10 Based on Nilson data as of 2013 11 Based on the Internet Retailer Top 500 for 2013 and JPMC internal merchant client data 12 Includes employees and contractors; 2013 headcount adjusted for ~1,250 reduction effective January 1, 2014 $ O/(U) 3Q14 2Q14 3Q13 Net interest income $7,053 $90 ($68) Noninterest revenue 4,214 (254) 253 Revenue 11,267 (164) 185 Expense 6,305 (151) (562) Credit costs 902 50 1,169 Net income $2,468 $25 ($234) Key drivers/statistics ($B)2 EOP Equity3 $51.0 $51.0 $46.0 ROE 19% 19% 23% Overhead ratio 56 56 62 Average loans $391.0 $389.0 $391.1 Average deposi s 492.0 486.1 456.9 Client invest ent assets (EOP) 207.8 205.2 179.0 Number of branches 5,613 5,636 5,652 Active mobile custom rs (000's) 18,351 17,201 14,993 4
F I N A N C I A L R E S U L T S Consumer & Community Banking Consumer & Business Banking 1 Actual numbers for all periods, not over/(under) Financial performance Key drivers $mm Net income of $914mm, up 20% YoY and 2% QoQ Net revenue of $4.6B, up 5% YoY and 1% QoQ Expense down 1% YoY and flat QoQ, reflecting positive operating leverage Average total deposits of $476.2B, up 9% YoY and 1% QoQ Deposit margin of 2.20%, down 12 bps YoY and 3 bps QoQ Record client investment assets of $207.8B, up 16% YoY and 1% QoQ Business Banking loan originations up 27% YoY, but down 14% QoQ seasonally Average Business Banking loans up 5% YoY and 1% QoQ Added ~700,000 net households, up 3% YoY $ O/(U) 3Q14 2Q14 3Q13 Net interest income $2,786 $16 $102 Noninterest revenue 1,854 32 108 Revenue 4,640 48 210 Expense 3,032 6 (18) Credit costs 75 9 (29) Net income $914 $20 $152 Key drivers/statistics ($B)1 EOP Equity $11.0 $11.0 $11.0 ROE 33% 33% 27% Average total deposits $476.2 $471.6 $438.1 Deposit margin 2.20% 2.23% 2.32% Client investment assets (EOP) $207.8 $205.2 $179.0 Net new investment assets 4.3 4.3 3.2 Business Banking loan originations 1.6 1.9 1.3 Business Banking l an balances (Avg) 19.5 19.2 18.6 CBB Households (mm) 25.6 25.5 24.9 5
F I N A N C I A L R E S U L T S Consumer & Community Banking Mortgage Banking Financial performance $mm Mortgage Production pretax income of $74mm Revenues, excl. repurchase, down 33% YoY; – Originations down 48% YoY, but up 26% QoQ Production expense down 43% YoY, reflecting progress on fixed and variable expenses Mortgage Servicing pretax income of $138mm Net servicing-related revenue of $639mm, up 1% YoY Servicing expense of $577mm, down 33% YoY Real Estate Portfolios pretax income of $512mm Revenue of $814mm, flat YoY Credit cost benefit of $19mm – Net charge-offs of $81mm2 – Reduction in NCI allowance for loan losses of $100mm Headcount down ~6,000 YTD7, on track to exceed prior 2014 guidance by ~1,000 1 Includes the provision for credit losses 2 Excludes purchased credit-impaired (PCI) write-offs of $87mm and $48mm for 3Q14 and 2Q14, respectively. 3 Actual numbers for all periods, not over/(under) 4 Firmwide mortgage origination volume was $22.7B, $18.0B and $44.2B for 3Q14, 2Q14 and 3Q13, respectively 5 Real Estate Portfolios only 6 Excludes the impact of PCI loans. The allowance for PCI loan losses was $3.7B at the end of both 3Q14 and 2Q14 and $5.0B at the end of 3Q13, respectively. See note 3 on slide 20 7 Includes employees and contractors; 2013 headcount adjusted for ~1,250 reduction effective January 1, 2014 $ O/(U) 3Q14 2Q14 3Q13 Mortgage Production Production-related revenue, excl. repurchase (losses)/benefits $393 $54 ($191) Production expense1 381 (32) (288) Income, excl. repurchase (losses)/benefits 12 86 97 Repurchase (losses)/benefits 62 (75) (113) Income before income tax expense $74 $11 ($16) Mortgage Servicing Net servicing-related revenue $639 ($54) $7 Default servicing expense 349 9 (274) Core servicing expense1 228 16 (7) Servicing expense 577 25 (281) Income, excl. MSR risk management 62 (79) 288 MSR risk management 76 (262) 256 Income/(loss) before income tax expense/(benefit) $138 ($341) $544 Real Estate Portfolios Revenue $814 $35 $5 Expense 321 (21) (54) Net charge-offs2 81 (30) (123) Change in allowance2 (100) 200 1,150 Credit costs (19) 170 1,027 Income before income tax expense $512 ($114) ($968) Mortgage Banking net income $439 ($270) ($266) Key drivers/statistics ($B)3 EOP Equity $18.0 $18.0 $19.5 ROE 10% 16% 14% Mortgage originations4 $21.2 $16.8 $40.5 EOP third-party mortgage loans serviced 766.3 786.2 831.1 EOP NCI owned portfolio5 118.1 116.3 115.7 ALL/EOP loans5,6 1.92% 2.04% 2.39% Net charge-off rate2,5,6 0.27 0.38 0.70 6
F I N A N C I A L R E S U L T S 1 Actual numbers for all periods, not over/(under) 2 Excludes Commercial Card 3 See note 6 on slide 20 Consumer & Community Banking Card, Merchant Services & Auto $mm Financial performance Key drivers Net income of $1.1B, down 10% YoY Net income, excluding loan loss reserve releases3, up 4% YoY Revenue of $4.6B, flat YoY Noninterest expense of $2.0 billion, up 4% YoY Credit costs of $846mm, up 26% YoY, driven by lower loan loss reserve releases, partially offset by lower net charge- offs Card Services Average loans of $126.1B, up 2% YoY and QoQ Sales volume2 of $119.5B, up 12% YoY and 1% QoQ Net charge-off rate of 2.52%, down from 2.86% in the prior year and 2.88% in the prior quarter Merchant Services Merchant processing volume of $213.3B, up 15% YoY and 2% QoQ Transaction volume of 9.4B, up 6% YoY and 1% QoQ Auto Average loans up 4% YoY and flat QoQ Originations up 6% YoY, but down 4% QoQ 3Q14 2Q14 3Q13 Revenue $4,643 $90 $11 Expense 1,994 (130) 77 Net charge-offs 946 (81) (78) Change in allowance (100) (47) 251 Credit costs 846 (128) 173 Net income $1,115 $275 ($120) EOP Equity ($B)1 $19.0 $19.0 $15.5 ROE1 23% 18% 32% Card Services – Key drivers/statistics ($B)1 Average loans $126.1 $123.7 $123.9 Sales volume2 119.5 118.0 107.0 Net revenue rate 12.07% 12.15% 12.22% Net charge-off rate 2.52 2.88 2.86 30+ day delinquency rate 1.43 1.41 1.69 # of accounts with sales activity (mm)2 32.1 31.8 30.0 % of accounts acquired online2 56% 54% 53% Merchant Services – Key drivers/statistics ($B)1 Merchant processing volume $213.3 $209.0 $185.9 # of total transactions (B) 9.4 9.3 8.9 Auto – Key drivers/statistics ($B)1 Average loans $52.7 $52.8 $50.4 Originations 6.8 7.1 6.4 $ O/(U) 7
F I N A N C I A L R E S U L T S $ O/(U) 3Q14 2Q14 3Q13 Corporate & Investment Bank revenue $8,787 ($204) $598 Investment banking fees 1,542 (231) 32 Treasury Services 1,037 25 (16) Lending 147 (150) (204) Total Banking 2,726 (356) (188) Fixed Income Markets 3,512 30 73 Equity Markets 1,231 66 (18) Securities Services 1,078 (59) 82 Credit Adjustments & Other 240 115 649 Total Markets & Investor Services 6,061 152 786 Expense 6,035 (23) 1,036 Credit costs (67) 17 151 Net income $1,485 ($478) ($755) Key drivers/statistics ($B)2 EOP equity $61.0 $61.0 $56.5 ROE3 10% 13% 16% Overhead ratio4 69 67 61 Comp/revenue5 32 31 28 EOP loans $102.3 $108.8 $108.0 Average client deposits 419.6 403.3 386.0 Assets under custody ($T) 21.2 21.7 19.7 ALL/EOP loans ex-conduits and trade6 1.88% 1.80% 2.01% Net charge-off/(recovery) rate (0.01) (0.02) (0.02) Average VaR ($mm) $35 $43 $45 Corporate & Investment Bank1 $mm Financial performance Pro forma results ($mm)7 Net income of $1.5B on revenue of $8.8B with an ROE of 10% Banking revenue IB fees of $1.5B, up 2% YoY, primarily driven by higher advisory and equity underwriting fees, largely offset by lower debt underwriting fees – Ranked #1 in Global IB fees for YTD14 Treasury Services revenue of $1.0B, down 2% YoY Lending revenue of $147mm, down 58% YoY, primarily driven by losses on securities received from restructured loans Markets & Investor Services revenue Markets revenue of $4.7B, up 1% YoY, primarily driven by: – Fixed Income Markets of $3.5B, up 2% YoY, driven by stronger revenue in currencies and emerging markets – Equity Markets of $1.2B, down 1% YoY, primarily on lower derivatives revenue Securities Services revenue of $1.1B, up 8% YoY, driven by higher NII on increased deposits Credit Adjustments & Other gain of $240mm was driven primarily by DVA/FVA as a result of credit spread widening and refinements to certain funding assumptions Expense of $6.0B, up 21% YoY, driven by higher legal and compensation expense 1 See note 1 on slide 20 2 Actual numbers for all periods, not over/under 3 Return on equity excluding DVA, a non-GAAP financial measure, was 17% for 3Q13 4 Overhead ratio excluding DVA, a non-GAAP financial measure, was 58% for 3Q13 5 Compensation expense as a percentage of total net revenue excluding DVA, a non-GAAP financial measure, was 27% for 3Q13 6 ALL/EOP loans as reported was 1.13%, 1.11% and 1.09% for 3Q14, 2Q14 and 3Q13, respectively. See note 8 on slide 20 7 Pro forma results exclude DVA in 3Q13; 2014 reported results include FVA/DVA, net of hedges. See note 8 on slide 20 $ O/(U) 3Q14 2Q14 3Q13 Corporate & Investment Bank revenue $8,787 ($204) $201 Total Banking 2,726 (356) (188) Total Markets & Investor Services 6,061 152 389 Net income $1,485 ($478) ($1,001) ROE2 10% 13% 17% Overhead ratio2 69 67 58 Comp/revenue2 32 31 27 8
F I N A N C I A L R E S U L T S Commercial Banking1 Net income of $649mm, down 2% YoY and 1% QoQ Revenue of $1.7B, down 3% YoY and 2% QoQ Record YTD gross Investment Banking revenue of $1.4B Expense of $668mm, flat YoY Credit cost benefit of $79mm Net charge-off rate of 1 bp; 7th consecutive quarter of single-digit net charge-off rate or net recoveries Excluding recoveries, charge-off rate of 3 bps EOP loan balances up 6% YoY and 1% QoQ C&I4 loans flat QoQ CRE5 loans up 3% QoQ Average client deposits of $204.7B, up 4% YoY and 2% QoQ 1 See note 1 on slide 20 2 Actual numbers for all periods, not over/(under) 3 Loans held-for-sale and loans at fair value were excluded when calculating the loan loss coverage ratio and net charge-off/(recovery) rate 4 CB’s Commercial and Industrial (C&I) grouping is internally defined to include certain client segments (Middle Market, which includes Government, Nonprofit & Healthcare Clients; and Corporate Client Banking) and does not align with regulatory definitions 5 CB's Commercial Real Estate (CRE) grouping is internally defined to include certain client segments (Real Estate Banking, Commercial Term Lending and Community Development Banking) and does not align with regulatory definitions $mm Financial performance 3Q14 2Q14 3Q13 Revenue $1,667 ($34) ($58) Middle Market Banking 684 (25) (61) Corporate Client Banking 480 3 21 Commercial Term Lending 303 (4) (8) Real Estate Banking 121 (8) 3 Other 79 – (13) Expense 668 (7) 7 Credit costs (79) (12) (38) Net income $649 ($9) ($16) Key drivers/statistics ($B)2 EOP equity $14.0 $14.0 $13.5 ROE 18% 19% 20% Overhead ratio 40 40 38 Average loans $142.8 $140.8 $131.6 EOP loans 143.8 142.3 135.2 Average client deposits 204.7 200.0 196.8 Allowance for loan losses 2.5 2.6 2.6 Nonaccrual loans 0.4 0.4 0.6 Net charge-off/(r covery) rate3 0.01% (0.07)% 0.05% ALL/loans3 1.76 1.87 1.99 $ O/(U) 9
F I N A N C I A L R E S U L T S Asset Management1 1 See note 1 on slide 20 2 Actual numbers for all periods, not over/(under) $mm Financial performance Record net income of $572mm, up 20% YoY and 4% QoQ Revenue of $3.0B, up 9% YoY and 2% QoQ Record AUM of $1.7T, up 11% YoY and flat QoQ AUM net inflows for the quarter of $24B, driven by net inflows of $16B to long-term products and $8B to liquidity products Client assets of $2.3T, up 4% YoY, but down 5% QoQ Excluding the sale of Retirement Plan Services, client assets were up 10% YoY and flat QoQ Expense of $2.1B, up 4% YoY and 1% QoQ, as the business continues to invest in both infrastructure and controls Record average loan balances of $101.4B, up 16% YoY and 3% QoQ Record average deposit balances of $151.2B, up 9% YoY and 2% QoQ Strong investment performance 71% of mutual fund AUM ranked in the 1st or 2nd quartiles over 5 years 10 3Q14 2Q14 3Q13 Revenue $3,016 $60 $253 Global Investment Management 1,595 48 186 Global Wealth Management 1,421 12 67 Expense 2,081 19 78 Credit costs 9 8 9 Net income $572 $20 $96 Key drivers/statistics ($B)2 EOP equity $9.0 $9.0 $9.0 ROE 25% 25% 21% Pretax margin 31 30 28 Assets under management (AUM) $1,711 $1,707 $1,540 Client assets 2,344 2,473 2,246 Average loans 101.4 98.7 87.8 EOP loans 102.4 100.9 90.5 Average deposits 151.2 147.7 138.7 $ O/(U)
F I N A N C I A L R E S U L T S Private Equity Private Equity net income of $71mm Private Equity portfolio of $5.4B Treasury and CIO Treasury and CIO net loss of $30mm, compared to a net loss of $46mm in 2Q14 Other Corporate Noninterest expense includes legal expense of $512mm (pretax) Includes ~$400mm net income benefit from tax adjustments 1 See note 1 on slide 20 $mm Corporate/Private Equity1 Financial performance 3Q14 2Q14 3Q13 Private Equity $71 $64 ($171) Treasury and CIO (30) 16 163 Other Corpo ate 357 (51) 6,869 Net income/(loss) $398 $29 $6,861 $ O/(U) 11
F I N A N C I A L R E S U L T S Expect small negative Production pretax income in 4Q14 – actual results will be market dependent Expect Servicing revenue to be at or slightly below $600mm in 4Q14, and to continue to decrease in 20152 Expect a $1B+ reduction in allowance for consumer loan losses over the next couple of years, as the credit quality of the portfolio continues to improve Outlook Consumer & Community Banking Expect 4Q14 Markets revenue to be impacted by normal seasonal trends and business simplification Corporate & Investment Bank Asset Management Expect FY14 pretax margin and ROE to be below TTC targets Firmwide Expect Firmwide adjusted expense to be above $58B for FY14; actual Firmwide expense will be affected by performance-related compensation for FY141 Expect Firmwide net charge-offs for FY14 to be less than $5B (below previous guidance) 1 See note 2 on slide 20 2 This line item is net of changes in the MSR asset fair value due to collection/realization of expected cash flows, plus net interest income Commercial Banking Expect 4Q14 revenue to be down YoY, impacted by the absence of one-time proceeds of ~$100mm from a lending related workout 12
Agenda Page F I N A N C I A L R E S U L T S 13 Appendix 13
A P P E N D I X Core NII up ~$110mm QoQ Firm NII up ~$320mm QoQ, largely due to: Lower interest expense in CIB Core NII and net interest margin1 1 See note 7 on slide 20 2 The core and market-based NII presented for FY2010, FY2011 and FY2012 represents their quarterly averages (e.g. total for the year divided by 4); the yield for all periods represents the annualized yield 3.67% 3.29% 2.97% 2.83% 2.60% 2.60% 2.64% 2.66% 2.64% 2.59% 1.51% 1.41% 1.16% 1.14% 1.05% 0.89% 0.86% 0.84% 0.82% 0.96% 3.06% 2.74% 2.48% 2.37% 2.20% 2.18% 2.20% 2.20% 2.19% 2.19% FY2010 FY2011 FY2012 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 Core NII Market-based NII Core NIM Market-based NIM JPM NIM Net interest income trend Comments 2 Average balances Deposits with banks $80B $157B $266B $321B $329B $319B $48B 2 $118B 2 $335B Core NIM down 5 bps QoQ, largely due to: Higher cash balances – up $27B QoQ Lower loan yields $362B 14
A P P E N D I X $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 $500 $2,000 $3,500 $5,000 $6,500 $8,000 $9,500 $11,000 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 30+ day delinquencies 30-89 day delinquencies Consumer credit – Delinquency trends1 Note: Prime mortgages exclude Asset Management, Corporate/Private Equity and government-insured loans 1 Excluding purchased credit-impaired and held-for-sale loans Credit card delinquency trend ($mm) Prime mortgage delinquency trend ($mm) Home equity delinquency trend ($mm) Subprime mortgage delinquency trend ($mm) 30 – 149 day delinquencies 150+ day delinquencies 30 – 149 day delinquencies 150+ day delinquencies 30 – 149 day delinquencies 150+ day delinquencies 15
A P P E N D I X Real Estate Portfolios and Card Services – Coverage ratios Real Estate Portfolios and Card Services credit data ($mm) NCOs ($mm) O/(U) 3Q14 2Q14 3Q13 3Q13 Real Estate Portfolios (NCI) Net charge-offs $81 $111 $204 ($123) NCO rate 0.27% 0.38% 0.70% (43) bps Allowance for loan losses $2,268 $2,368 $2,768 ($500) LLR/annualized NCOs1 700% 533% 339% Card Services Net charge-offs $798 $885 $892 ($94) NCO rate 2.52% 2.88% 2.86% (34) bps Allowance for loan losses $3,590 $3,594 $4,097 ($507) LLR/annualized NCOs1 112% 102% 115% 2,075 1,372 1,214 1,157 1,076 954 899 876 808 696 595 520 448 288 204 167 174 111 81 4,512 3,721 3,133 2,671 2,226 1,810 1,499 1,390 1,386 1,254 1,116 1,097 1,082 1,014 892 891 888 885 798 $0 $1,000 $2,000 $3,000 $4,000 $5,000 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 Real Estate Portfolios Card Services 2 3 4 5 1 Net charge-offs annualized (NCOs are multiplied by 4) 2 4Q10 adjusted net charge-offs for Real Estate Portfolios exclude a one-time $632mm adjustment related to the timing of when the Firm recognizes charge-offs on delinquent loans 3 2Q12 adjusted net charge-offs for Card Services were $1,254mm or 4.03%; excluding the effect of a change in charge-off policy for troubled debt restructurings, 2Q12 reported net charge-offs were $1,345mm or 4.32% 4 3Q12 adjusted net charge-offs for Real Estate Portfolios exclude the effect of an incremental $825mm of net charge-offs based on regulatory guidance 5 4Q12 adjusted net charge-offs for Real Estate Portfolios reflects a full quarter of normalized Chapter 7 Bankruptcy discharge activity, which exclude one-time adjustments related to the adoption of Chapter 7 Bankruptcy discharge regulatory guidance 16
A P P E N D I X Firmwide – Coverage ratios $14.9B of loan loss reserves at September 30, 2014, down $2.7B from $17.6B in the prior year, reflecting improved portfolio credit quality Loan loss coverage ratio of 1.63%1 1 See note 3 on slide 20 $mm Comments JPM Credit Summary 11,124 10,609 10,296 9,578 9,027 8,317 8,123 7,634 7,241 22,824 21,936 20,780 19,384 17,571 16,264 15,847 15,326 14,889 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 0% 100% 200% 300% 400% 500% Loan loss reserve Nonperforming retained loans Loan loss reserve/Total loans1 Loan loss reserve/NPLs1 3Q14 2Q14 3Q13 Consumer, ex. credit card LLR/Total loans 1.58% 1.68% 1.92% LLR/NPLs 58 58 56 Credit Card LLR/Total loans 2.84% 2.86% 3.31% Wholesale LLR/Total loans 1.20% 1.24% 1.30% LLR/NPLs 583 549 424 Firmwide LLR/Total loans 1.63% 1.69% 1.89% LLR /NPLs (ex. credit card) 105 105 94 LLR /NPLs 155 152 140 17
A P P E N D I X Corporate & Investment Bank – Key metrics & leadership positions Comments Note: LTM rankings included as available. All-America Institutional Investor research rankings are as of October of their respective year 1 Last twelve months 2 International client deposits and other third party liabilities 3 Includes TS product revenue reported in other LOBs related to clients who are also clients of those LOBs 4 Volume rank as of YTD September 2014; per Federal Reserve 5 International electronic funds transfer represents volume over the period and includes non-U.S. dollar Automated Clearing House ("ACH") and clearing volume 6 1H14 rank of JPM Markets revenue of 10 leading competitors based on reported information, excluding DVA Corporate & Investment Bank Banking Markets & Investor Services International AUC ($T, EOP) $9.6 $9.2 $8.3 $7.1 All-America Institutional Investor research rankings #1 #1 #1 #1 ($B) LTM1 FY2013 FY2012 FY2011 International revenue $16.3 $16.5 $16.3 $17.1 International deposits (Avg)2 237.7 213.5 189.6 180.1 International loans (EOP) 58.2 59.9 67.7 67.0 Gross CIB revenue from CB 4.4 4.1 4.0 3.7 Corporate & Investment Bank 50% of revenue is international for LTM 3Q14 International deposits increased 32% from FY2011 driven by growth across regions Banking Maintained #1 ranking in Global IB fees #1 in combined Fedwire and CHIPS volume4 LTM 3Q14 total international electronic funds transfer volume up 36% from FY13 Markets & Investor Services #1 in Total Markets revenue share of top 10 investment banks6 International AUC up 34% from FY2011; represents 45% of total AUC at 3Q14 l bal IB fees (Dealogic) #1 # #1 #1 TS firmwide reve ue3 $6.9 $6.9 $6.9 $6.4 Combined Fedwire/CHIPS volume4 #1 #1 #1 #1 International electronic funds transfer volume (mm)5 442.5 325.5 304.8 250.5 18
A P P E N D I X IB League Tables League table results – volumes League table results – wallet share YTD 2014 FY2013 Rank Share Rank Share Based on fees 1 : Global Debt, Equity & Equity-related 1 7.5% 1 8.3% US Debt, Equity & Equity-related 1 10.5% 1 11.5% Global Long-term Debt2 1 7.7% 1 8.2% US Long-term Debt 2 11.3% 1 11.6% Global Equity & Equity-related3 3 7.2% 2 8.4% US Equity & Equity-related 2 9.7% 1 11.3% Global M&A4 2 8.1% 2 7.6% US M&A 2 10.1% 2 8.8% Global Loan Syndications 1 9.5% 1 9.9% US Loan Syndications 1 13.2% 1 13.8% Global IB fees1,5 1 8.0% 1 8.5% Source: Wallet data from Dealogic Media Manager as of Oct. 1, 2014 & Volume data from Dealogic Analytics as of Sep. 30, 2014 1 Reflects ranking of fees and market share 2 Long-term debt rankings include investment-grade, high-yield, supranational, sovereigns, agencies, covered bonds, asset-backed securities (“ABS”) and mortgage-backed securities (“MBS”); and exclude money market, short-term debt and U.S. municipal securities 3 Global Equity and equity-related ranking includes rights offerings and Chinese A-Shares 4 Announced M&A and M&A reflects the removal of any withdrawn transactions. U.S. announced M&A volumes represent any U.S. involvement ranking. US M&A wallet represents wallet from client parents based in the U.S. 5 Global Investment Banking fees rankings exclude money market, short-term debt and shelf deals 6 Rankings reflect transaction volume rank and market share. Global announced M&A is based on transaction value at announcement; because of joint M&A assignments, M&A market share of all participants will add up to more than 100%. All other transaction volume-based rankings are based on proceeds, with full credit to each book manager/equal if joint YTD 2014 FY2013 Rank Share Rank Share Based on volumes 6 : Global Debt, Equity & Equity-related 1 6.7% 1 7.3% US Debt, Equity & Equity-related 1 11.4% 1 11.9% Global Long-term Debt2 1 6.5% 1 7.2% US Long-term Debt 1 10.9% 1 11.7% Global Equity & Equity-related3 2 7.9% 2 8.2% US Equity & Equity-related 2 11.3% 2 12.1% Global M&A Announced4 4 20.8 2 23.2% US M&A Announced 3 27.8% 2 35.5% Global Loan Syndications 1 10.7% 1 9.9% US Loan Syndications 1 19.6% 1 17.6% 19
A P P E N D I X 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 reported U.S. GAAP results and includes certain reclassifications to present total net revenue for the Firm (and each of the business segments) on a fully taxable-equivalent (“FTE”) basis. Accordingly, revenue from investments that receive tax credits and tax exempt securities is presented in the managed results on a basis comparable to taxable securities and investments. This non-GAAP financial measure allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The corresponding income tax impact related to tax-exempt items is recorded within income tax expense. These adjustments have no impact on net income as reported by the Firm as a whole or by the lines of business. 2. Adjusted expense, a non-GAAP financial measure, excludes firmwide legal expense and expense related to foreclosure-related matters (“FRM”). Management believes this information helps investors understand the effect of these items on reported results and provides an alternate presentation of the Firm’s performance. 3. The ratio of the allowance for loan losses to end-of-period loans retained excludes the following: loans accounted for at fair value and loans held-for-sale; purchased credit- impaired (“PCI”) loans; and the allowance for loan losses related to PCI loans. Additionally, net charge-offs and net charge-off rates exclude the impact of PCI loans. 4. Tangible common equity (“TCE”), return on tangible common equity (“ROTCE”) and tangible book value per share (“TBVPS”), are each non-GAAP financial measures. TCE represents the Firm’s common stockholders’ equity (i.e., total stockholders’ equity less preferred stock) less goodwill and identifiable intangible assets (other than MSRs), net of related deferred tax liabilities. ROTCE measures the Firm’s earnings as a percentage of TCE. TBVPS represents the Firm’s tangible common equity divided by period-end common shares. TCE, ROTCE, and TBVPS are meaningful to the Firm, as well as analysts and investors in assessing the Firm’s use of equity and are used in facilitating comparisons of the Firm with competitors. 5. Common Equity Tier 1 (“CET1”) capital, Tier 1 Capital, risk-weighted assets (“RWA”), the CET1 and Tier 1 Capital ratios under the Basel III Advanced Fully Phased-In rules, and the supplementary leverage ratio (“SLR”) under the U.S. final SLR rule, are each non-GAAP financial measures. These measures are used by management, bank regulators, investors and analysts to assess and monitor the Firm’s capital position. For additional information on these measures, see Regulatory capital on pages 161-165 of JPMorgan Chase & Co.’s Annual Report on Form 10-K for the year ended December 31, 2013, and on pages 74-78 of the Firm’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014. 6. Within Consumer & Community Banking, Card, Merchant Services and Auto presents its change in net income excluding the change in the allowance for loan losses (assuming a tax rate of 38%). This non-GAAP financial measure is used by management to facilitate a more meaningful comparison with prior periods. 7. In addition to reviewing JPMorgan Chase's net interest income on a managed basis, management also reviews core net interest income to assess the performance of its core lending, investing (including asset-liability management) and deposit-raising activities (which excludes the impact of Corporate & Investment Bank's ("CIB") market-based activities). The core net interest income data presented are non-GAAP financial measures due to the exclusion of CIB’s market-based net interest income and the related assets. Management believes this exclusion provides investors and analysts a more meaningful measure by which to analyze the non-market-related business trends of the Firm and provides a comparable measure to other financial institutions that are primarily focused on core lending, investing and deposit-raising activities. 8. The CIB provides certain non-GAAP financial measures, as such measures are used by management to assess the underlying performance of the business and for comparability with peers: The ratio of the allowance for loan losses to end-of-period loans is calculated excluding the impact of consolidated Firm-administered multi-seller conduits and trade finance loans, to provide a more meaningful assessment of CIB’s allowance coverage ratio. Prior to January 1, 2014, the CIB provided several non-GAAP financial measures excluding the impact of FVA (effective fourth quarter 2013) and DVA on: net revenue, net income, and compensation, overhead and return on equity ratios. Beginning in the first quarter 2014, the Firm does not exclude FVA and DVA from its assessment of business performance; however, the Firm continues to present these non-GAAP measures for the periods prior to January 1, 2014, as they reflected how management assessed the underlying business performance of the CIB in those prior periods. Additional notes on financial measures 9. Core loans include loans considered central to the Firm’s ongoing businesses; core loans exclude runoff portfolios, discontinued portfolios and portfolios the Firm has an intent to exit. Notes 20
A P P E N D I X 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 and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause JPMorgan Chase & Co.’s actual results to differ materially from those described in the forward-looking statements can be found in JPMorgan Chase & Co.’s Annual Report on Form 10-K for the year ended December 31, 2013, and Quarterly Report on Form 10-Q for the quarters ended March 31, 2014 and June 30, 2014, which have been filed with the Securities and Exchange Commission and are available on JPMorgan Chase & Co.’s website (http://investor.shareholder.com/jpmorganchase), and on the Securities and Exchange Commission’s website (www.sec.gov). JPMorgan Chase & Co. does not undertake to update the forward- looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements. 21