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| 8-K - 8-K - JPMORGAN CHASE & CO | jpmc3q15form8k.htm |
October 13, 2015 F I N A N C I A L R E S U L T S 3Q15
F I N A N C I A L R E S U L T S 3Q15 Financial highlights 1 See note 2 on slide 18 2 Represents estimated common equity Tier 1 (“CET1”) capital and ratio under the Basel III Fully Phased-In capital rules to which the Firm will be subject to as of January 1, 2019. See note 3 on slide 18 3 See note 1 on slide 18 4 Last twelve months (“LTM”). Net of employee issuances 5 See note 8 on slide 19 6 See note 4 on slide 18 7 Reduction in non-operating deposits also includes balances previously reported in CP sweep accounts 8 See note 1 on slide 19 9 Net of employee issuance 10 The repurchase amount is presented on a settlement-date basis 11 Assumes a tax rate of 38% for items that are tax deductible 3Q15 reported net income of $6.8B and EPS of $1.68; net income of $5.4B, EPS of $1.32 and ROTCE1 of 12% excluding tax benefits, legal expense and net reserve releases5 Revenue of $23.5B3 Adjusted expense of $14.0B6 and adjusted overhead ratio of 60%6 Fortress balance sheet Balance sheet down by $156B YTD, driven by reduction in non-operating deposits of over $150B7 Core loans8 up 15% YoY and 4% QoQ Basel III Fully Phased-In CET1 capital of $172B2, Advanced and Standardized ratios of 11.4%2 Delivered strong capital return $2.7B9 of net capital returned to shareholders in 3Q15, including $1.0B of net repurchases10 Common dividend of $0.44 per share ROTCE1 15% Overhead ratio3 65% Net payout ratio LTM4 49% CET1 ratio2 11.4% Significant items ($mm, excluding EPS) Reserve releases/(builds) EPS11 Consumer $0.10 Wholesale (0.05) Net releases $0.05 Pretax Net income11 EPS11 Firmwide Legal Expense ($1,347) ($973) ($0.26) Fir ide Tax Benefits – 2,164 0.57 1
F I N A N C I A L R E S U L T S 3Q15 Financial results1 Note: Certain prior period amounts have been revised; see note 2 on slide 19 1 See note 1 on slide 18 2 Actual numbers for all periods, not over/(under) 3 See note 2 on slide 18 4 See note 4 on slide 18 $mm, excluding EPS $ O/(U) 3Q15 2Q15 3Q14 Revenue (FTE)1 $23,535 ($996) ($1,611) Expense 15,368 868 (430) Credit costs 682 (253) (75) Reported net income $6,804 $514 $1,239 Net income applicable to common stockholders $6,270 $494 $1,142 Reported EPS $1.68 $0.14 $0.33 ROE2 12% 11% 10% ROTCE2,3 15 14 13 Overhead ratio1,2 65 59 63 Memo: Adjusted expense 4 $14,021 ($188) ($715) Memo: Adjusted overhead ratio 1,2,4 60% 58% 59% 3Q15 ROE O/H ratio CCB 20% 57% CIB 8% 75% CB 14% 44% AM 20% 73% 2
F I N A N C I A L R E S U L T S 3Q15 2Q15 3Q14 Basel III Advanced Fully Phased-In2 CET1 $172 $169 $163 CET1 ratio 11.4% 11.0% 10.1% Tier 1 capital $198 $194 $183 Tier 1 capital ratio 13.1% 12.7% 11.3% Total capital $219 $215 $200 Total capital ratio 14.5% 14.0% 12.4% Risk-weighted assets $1,515 $1,532 $1,613 Firm SLR3 6.3% 6.0% 5.5% Bank SLR3 6.5 6.1 5.7 HQLA4,5 $505 $532 $572 Total assets (EOP) $2,417 $2,450 $2,527 Tangible common equity (EOP) $174 $171 $165 Tangible book value per share6 $47.36 $46.13 $44.04 $B, except where noted Fortress balance sheet and returns1 3Q15 Basel III Standardized Fully Phased-In of 11.4%2 Preferred stock issuance: $1.2B Firm is compliant with U.S. LCR5 and Basel final NSFR7 Firmwide total credit reserves of $14.2B; non- performing loan loss coverage ratio (ex. credit card) of 109%8 Note: Certain prior period amounts have been revised; see note 2 on slide 19 1 See notes on non-GAAP financial measures on slide 18 2 Estimated for 3Q15, 2Q15 and 3Q14. Represents the capital rules the Firm will be subject to as of January 1, 2019. See note 3 on slide 18 3 Estimated for 3Q15, 2Q15 and 3Q14. Represents the supplementary leverage rules the Firm will be subject to as of January 1, 2018. See note 3 on slide 18 4 High quality liquid assets (“HQLA”) represents the amount of assets that qualify for inclusion in the liquidity coverage ratio under the final U.S. rule (“U.S. LCR”) for 3Q15 and 2Q15 as well as the estimated amount as of 3Q14, prior to the effective date of the final rule 5 Estimated for 3Q15 6 See note 2 on slide 18 7 Estimate as of 2Q15 8 See note 5 on slide 18 9 Reduction in non-operating deposits also includes balances previously reported in CP sweep accounts Balance sheet down by $156B YTD, driven by reduction in non-operating deposits of over $150B9 3
F I N A N C I A L R E S U L T S Consumer & Community Banking1 $mm $ O/(U) 3Q15 2Q15 3Q14 Net interest income $7,150 $224 ($3) Noninterest revenue 3,729 (360) (485) Revenue 10,879 (136) (488) Expense 6,237 27 (68) Net charge-offs 965 (62) (137) Change in allowance (576) (251) (376) Credit costs 389 (313) (513) Net income $2,630 $97 $101 Key drivers/statistics ($B)2 EOP Equity3 $51.0 $51.0 $51.0 ROE 20% 19% 19% Overhead ratio 57 56 55 Average loans $421.9 $408.1 $391.0 Average deposits 536.0 529.4 492.0 Client investment assets (EOP) 213.3 221.5 207.8 Number of branches 5,471 5,504 5,613 Active mobile customers (mm) 22.2 21.0 18.4 CCB households (mm) 58.0 57.8 57.1 Leadership positions Reduced expense by $0.6B for 3Q15 YTD YoY $0.7B excluding legal expense Total headcount11 down by ~10,000 YTD and ~40,000 from 2012 Consumer & Business Banking Deposit volume growing at nearly twice the industry growth rate4 #1 in customer satisfaction among the largest U.S. banks for the third consecutive year, according to ACSI Largest active mobile customer base among major U.S. banks5 growing at 21% YoY Mortgage Banking #2 mortgage originator and servicer6 Card, Commerce Solutions & 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 1 See note 1 on slide 18 2 Actual numbers for all periods, not over/(under) 3 Equity is allocated to the sub-business segments with $5.0 billion and $3.0 billion of capital in 2015 and 2014, respectively, held at the CCB level related to legacy mortgage servicing matters 4 Based on FDIC 2015 Summary of Deposits survey per SNL Financial – excludes branches with greater than $500mm of deposits or identified as non-retail 5 Based on disclosures by peers as of 2Q15 6 Based on Inside Mortgage Finance as of 2Q15 for Servicer and Originator rankings 7 Based on disclosures by peers and internal estimates as of 2Q15 8 Based on Phoenix Credit Card Monitor for 12-month period ending June 2015; based on card accounts and revolving balance dollars 9 Based on Visa data as of 2Q15 for consumer and business credit card sales volume 10 Based on Nilson data as of 2014 and internal estimates 11 Includes employees and contractors Headcount and expense 4
F I N A N C I A L R E S U L T S Consumer & Community Banking Consumer & Business Banking $mm $ O/(U) 3Q15 2Q15 3Q14 Net interest income $2,605 ($14) ($202) Noninterest revenue 1,950 86 96 Revenue 4,555 72 (106) Expense 2,956 (100) (76) Credit costs 50 (18) (25) Net income $954 $123 $27 Key drivers/statistics ($B)1 EOP Equity $11.5 $11.5 $11.0 ROE 32% 28% 33% Average total deposits $519.4 $512.8 $476.2 Deposit margin 1.86% 1.92% 2.20% Client investment assets (EOP) $213.3 $221.5 $207.8 Net new investment assets 2.8 3.4 4.3 Business Banking loan balances (Avg) 20.6 20.4 19.5 Business Banking loan originations 1.7 1.9 1.6 1 Actual numbers for all periods, not over/(under) Financial performance Key drivers Net income of $954mm, up 3% YoY and 15% QoQ Revenue of $4.6B, down 2% YoY and up 2% QoQ Expense of $3.0B, down 3% YoY and QoQ Average total deposits of $519.4B, up 9% YoY and 1% QoQ Deposit margin of 1.86%, down 34 bps YoY and 6 bps QoQ Client investment assets of $213.3B, up 3% YoY and down 4% QoQ Average Business Banking loans of $20.6B, up 6% YoY and 1% QoQ Business Banking loan originations of $1.7B, up 4% YoY and down seasonally 10% QoQ 5
F I N A N C I A L R E S U L T S Consumer & Community Banking Mortgage Banking $mm $ O/(U) 3Q15 2Q15 3Q14 Net interest income $1,112 $56 $53 Noninterest revenue 443 (334) (525) Revenue 1,555 (278) (472) Expense 1,118 8 (161) Net charge-offs1 41 (40) (40) Change in allowance1 (575) (275) (475) Credit costs (534) (315) (515) Net income $602 $18 $137 Key drivers/statistics ($B)2 EOP equity $16.0 $16.0 $18.0 ROE 14% 14% 10% Mortgage originations3 $29.9 $29.3 $21.2 Average NCI4 owned portfolio 165.5 152.6 132.8 EOP total loans serviced 929.0 917.0 963.4 ALL/nonaccrual loans retained5 33% 35% 39% Net charge-off rate1,5 0.10 0.21 0.24 1 Excludes purchased credit-impaired (PCI) write-offs of $52mm, $55mm, and $87mm for 3Q15, 2Q15, and 3Q14, respectively. See note 5 on slide 18 2 Actual numbers for all periods, not over/(under) 3 Firmwide mortgage origination volume was $32.2B, $31.7B, and $22.7B, for 3Q15, 2Q15 and 3Q14, respectively 4 Non credit-impaired (NCI) 5 Excludes the impact of PCI loans. The allowance for PCI loan losses was $2.8B, $3.2B and $3.7B at the end of 3Q15, 2Q15 and 3Q14, respectively. See note 5 on slide 18 Financial performance Key drivers Net income of $602mm, up 29% YoY Revenue of $1.6B, down 23% YoY and 15% QoQ, primarily on lower net servicing revenue Expense of $1.1B, down 13% YoY Credit costs down $515mm YoY Reduction in allowance for loan losses of $575mm – Non credit-impaired – $200mm – Purchased credit-impaired1 – $375mm Mortgage originations of $29.9B, up 41% YoY and 2% QoQ Net charge-off rate1 of 10bps, down 14bps YoY and 11bps QoQ Average NCI4 owned portfolio of $165.5B, up 25% YoY and 8% QoQ EOP total loans serviced of $929.0B, down 4% YoY and up 1% QoQ 6
F I N A N C I A L R E S U L T S Consumer & Community Banking Card, Commerce Solutions & Auto $mm 3Q15 2Q15 3Q14 Net interest income $3,433 $182 $146 Noninterest revenue 1,336 (112) (56) Revenue 4,769 70 90 Expense 2,163 119 169 Net charge-offs 874 (4) (72) Change in allowance (1) 24 99 Credit costs 873 20 27 Net income $1,074 ($44) ($63) EOP equity ($B)1 $18.5 $18.5 $19.0 ROE1 22% 23% 23% Card Services – Key drivers/statistics ($B)1 Average loans $126.3 $124.5 $126.1 Sales volume2 126.6 125.7 119.5 Net revenue rate 12.22% 12.35% 12.17% Net charge-off rate 2.41 2.61 2.52 30+ day delinquency rate 1.38 1.29 1.43 # of accounts with sales activity (mm)2 33.0 32.6 32.1 Commerce Solutions – Key drivers/statistics ($B)1 Merchant processing volume $235.8 $234.1 $213.3 # of total transactions (B) 10.4 10.1 9.4 Auto – Key drivers/statistics ($B)1 Average loans and leased assets $64.5 $63.2 $58.9 Loan and lease originations 8.1 7.8 6.8 $ O/(U) Note: Commerce Solutions, formerly known as Merchant Services, includes Chase Paymentech, ChaseNet and Chase Offers businesses 1 Actual numbers for all periods, not over/(under) 2 Excludes Commercial Card Key drivers Net income of $1.1B, down 6% YoY Revenue of $4.8B, up 2% YoY and 1% QoQ Expense of $2.2B, up 8% YoY due to higher auto lease depreciation and higher marketing Credit costs up 3% YoY, driven by lower loan loss reserve releases, largely offset by lower net charge-offs Card Services Average loans of $126.3B, flat YoY and up 1% QoQ Sales volume2 of $126.6B, up 6% YoY and 1% QoQ Net charge-off rate of 2.41%, down from 2.52% in the prior year and 2.61% in the prior quarter Commerce Solutions Merchant processing volume of $235.8B, up 11% YoY and 1% QoQ Transaction volume of 10.4B, up 11% YoY and 3% QoQ Auto Average loans and leased assets up 9% YoY and 2% QoQ Originations up 19% YoY and 4% QoQ Financial performance 7
F I N A N C I A L R E S U L T S Corporate & Investment Bank1 $mm Financial performance $ O/(U) 3Q15 2Q15 3Q14 Corporate & Investment Bank revenue $8,168 ($555) ($937) Investment banking revenue2 1,530 (216) 79 Treasury Services3 899 (2) (41) Lending3 334 32 21 Total Banking2 2,763 (186) 59 Fixed Income Markets2 2,933 2 (854) Equity Markets2 1,403 (173) 117 Securities Services 915 (80) (173) Credit Adjustments & Other 154 (118) (86) Total Markets & Investor Services2 5,405 (369) (996) Expense 6,131 994 96 Credit costs 232 182 299 Net income $1,464 ($877) ($216) Key drivers/statistics ($B)4 EOP equity $62.0 $62.0 $61.0 ROE 8% 14% 10% Overhead ratio 75 59 66 Comp/revenue 30 30 31 IB Fees ($mm) $1,612 $1,825 $1,542 EOP loans 104.8 103.8 102.3 Average client deposits 372.1 401.3 419.6 Assets under custody ($T) 19.7 20.5 21.2 ALL/EOP loans ex-conduits and trade5,6 1.85% 1.73% 1.88% Net charge-off/(recovery) rate 0.01 (0.06) (0.01) Average VaR ($mm) $57 $43 $35 Note: Certain prior period amounts have been revised; see note 2 on slide 19 1 See note 1 on slide 18 2 Effective in the second quarter of 2015, Investment banking revenue (formerly Investment banking fees) incorporates all revenue associated with investment banking activities, and is reported net of investment banking revenue shared with other lines of business; previously such shared revenue had been reported in Fixed Income Markets and Equity Markets. Prior periods have been revised to conform with the current period presentation 3 Effective in the second quarter of 2015, Trade Finance revenue was transferred from Treasury Services to Lending. Prior periods have been revised to conform with the current period presentation 4 Actual numbers for all periods, not over/(under) 5 ALL/EOP loans as reported was 1.19%, 1.12% and 1.13% for 3Q15, 2Q15, and 3Q14, respectively 6 See note 6 on slide 18 Net income of $1.5B on revenue of $8.2B ROE of 8%; 13% adjusted for legal expense, tax benefits and reserve build6 Banking revenue IB revenue of $1.5B, up 5% YoY on strong performance across debt underwriting fees and advisory fees, largely offset by lower equity underwriting fees – Ranked #1 in Global IB fees for 3Q15 Treasury Services revenue of $899mm, down 4% YoY Lending revenue of $334mm, up 7% YoY Markets & Investor Services revenue Markets revenue of $4.3B, down 6% YoY, excluding business simplification6 – Fixed Income Markets of $2.9B, down 11% YoY, excluding business simplification6 – Equity Markets of $1.4B, up 9% YoY, driven by strong performance across derivatives and cash Securities Services revenue of $915mm, down 16% YoY Credit Adjustments & Other, a $154mm gain, as a result of spread widening Expense of $6.1B, up 2% YoY, driven by higher legal expense, offset by lower compensation expense and business simplification Credit costs of $232mm reflecting higher reserves driven by Oil & Gas 8
F I N A N C I A L R E S U L T S Commercial Banking1 $mm Financial performance Net income of $518mm, down 23% YoY and 1% QoQ Revenue of $1.6B, down 3% YoY Down 5% QoQ on lower investment banking revenue Expense of $719mm, up 8% YoY Credit costs of $82mm Net charge-off rate of 0bps, 11th consecutive quarter of single digit NCO rate or net recoveries EOP loan balances up 13% YoY and 2% QoQ C&I5 loans flat QoQ CRE6 loans up 4% QoQ Average client deposits of $180.9B, down 12% YoY and 8% QoQ largely on reduced non-operating deposits 1 See note 1 on slide 18 2 Effective January 1, 2015, mortgage warehouse lending clients were transferred from Middle Market Banking to Corporate Client Banking. Prior period revenue, period-end loans, and average loans by client segment were revised to conform with current period presentation 3 Actual numbers for all periods, not over/(under) 4 Loans held-for-sale and loans at fair value were excluded when calculating the loan loss coverage ratio and net charge-off/(recovery) rate 5 CB’s Commercial and Industrial (C&I) grouping is internally defined to include certain client segments (Middle Market, which includes Nonprofit Clients and Corporate Client Banking) and does not align with regulatory definitions 6 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 3Q15 2Q15 3Q14 Revenue $1,644 ($95) ($59) Middle Market Banking2 675 (13) (11) Corporate Client Banking2 446 (86) (56) Commercial Term Lending 318 – 6 Real Estate Banking 123 6 (1) Other 82 (2) 3 Expense 719 16 51 Credit costs 82 (100) 161 Net income $518 ($7) ($153) Key drivers/statistics ($B)3 EOP equity $14.0 $14.0 $14.0 ROE 14% 14% 18% Overhead ratio 44 40 39 Gross IB Revenue ($mm) $382 $589 $501 Average loans 159.2 156.0 142.8 EOP loans 162.5 159.5 143.8 Average client deposits 180.9 197.0 204.7 Allowance for loan losses 2.8 2.7 2.5 Nonaccrual loans 0.4 0.4 0.4 Net charge-off/(r c very) rate4 – (0.01)% 0.01% ALL/loans4 1.71 1.71 1.76 $ O/(U) 9
F I N A N C I A L R E S U L T S 3Q15 2Q15 3Q14 Revenue $2,894 ($281) ($152) Global Investment Management 1,483 (187) (126) Global Wealth Management 1,411 (94) (26) Expense 2,109 (297) 28 Credit costs (17) (17) (26) Net income $475 $24 ($115) Key drivers/statistics ($B)2 EOP equity $9.0 $9.0 $9.0 ROE 20% 19% 25% Pretax margin 28 24 31 Assets under management (AUM) $1,711 $1,781 $1,711 Client assets 2,323 2,423 2,344 Average loans 108.7 107.3 101.4 EOP loans 110.3 109.3 102.4 Average deposits 141.9 152.6 151.2 $ O/(U) Asset Management1 1 See note 1 on slide 18 2 Actual numbers for all periods, not over/(under) $mm Financial performance Net income of $475mm, down 19% YoY and up 5% QoQ Revenue of $2.9B, down 5% YoY and 9% QoQ Expense of $2.1B, up 1% YoY and down 12% QoQ AUM of $1.7T, flat YoY and down 4% QoQ Net outflows of $4B from long-term products and $5B from liquidity products, resulting in total AUM net outflows for the quarter of $9B Client assets of $2.3T, down 1% YoY and down 4% QoQ Record average loan balances of $108.7B, up 7% YoY and 1% QoQ Average deposit balances of $141.9B, down 6% YoY and 7% QoQ Strong investment performance 81% of mutual fund AUM ranked in the 1st or 2nd quartiles over 5 years 10
F I N A N C I A L R E S U L T S $mm Corporate1 Financial performance Treasury and CIO Treasury and CIO net loss of $40mm, compared to a net loss of $112mm in 2Q15 Other Corporate2 Net income includes tax benefits of $1.9B Firmwide Firm NIM is up 7bps QoQ largely driven by positive mix impact of lower cash balances and higher loan balances Firm NII is up ~$246mm QoQ primarily due to higher loan NII Firm loans-to-deposits ratio of 64%, up 8% since year-end 1 See note 1 on slide 18 2 Effective with the first quarter of 2015, the Firm began including the results of Private Equity in the Other Corporate line within the Corporate segment. Prior period amounts have been revised to conform with the current period presentation. The Corporate segment’s balance sheets and results of operations were not impacted by this reporting change 3Q15 2Q15 3Q14 Treasury and CIO ($40) $72 $293 Other Corporate2 1,757 1,205 1,329 Net income $1,717 $1,277 $1,622 $ O/(U) 11
F I N A N C I A L R E S U L T S Outlook 1 See note 1 on slide 19 2 See note 4 on slide 18 Consumer & Community Banking Corporate & Investment Bank Firmwide Commercial Banking Expect 4Q15 expense to be ~$720mm Expect 4Q15 YoY core loan1 growth to continue at 15%+/- Expect 2H15 NCOs to be consistent with 1H15 Expect FY2015 adjusted expense2 of $56.5B+/- For 4Q15, expect business simplification to generate YoY negative variance in Markets revenue of 2%; also expect normal seasonal trends At current market levels, expect Securities Services revenue to be less than $950mm Expect Mortgage Banking noninterest revenue for 4Q15 to be down ~$250mm YoY – market dependent Expect card revenue rate in 4Q15 of ~11.75%+/- 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 Consumer credit – Delinquency trends1 Note: Home equity and prime mortgages exclude Asset Management, Corporate and government-insured loans 1 Excluding purchased credit-impaired and held-for-sale loans $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Prime mortgage delinquency trend ($mm) Home equity delinquency trend ($mm) Subprime mortgage delinquency trend ($mm) Credit card delinquency trend ($mm) 30 – 149 day delinquencies 150+ day delinquencies 30 – 149 day delinquencies 150+ day delinquencies $0 $1,500 $3,000 $4,500 $6,000 $7,500 $9,000 $10,500 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 30+ day delinquencies 30-89 day delinquencies $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 30 – 149 day delinquencies 150+ day delinquencies 14
A P P E N D I X Mortgage Banking and Card Services – Coverage ratios1 Mortgage Banking and Card Services credit data ($mm) O/(U) 3Q15 2Q15 3Q14 3Q14 Mortgage Banking (NCI) Net charge-offs $41 $81 $81 ($40) NCO rate 0.10% 0.21% 0.24% (14) bps Allowance for loan losses $1,588 $1,788 $2,288 ($700) ALL/annualized NCOs2 968% 552% 706% ALL/nonaccrual loans retained 33% 35% 39% Card Services Net charge-offs $759 $800 $798 ($39) NCO rate 2.41% 2.61% 2.52% (11) bps Allowance for loan losses $3,434 $3,434 $3,590 ($156) ALL/annualized NCOs2 113% 107% 112% 1 See note 7 on slide 18 2 Net charge-offs annualized (NCOs are multiplied by 4) 3 4Q10 adjusted net charge-offs for Mortgage Banking exclude a one-time $632mm adjustment related to the timing of when the Firm recognizes charge-offs on delinquent loans 4 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% 5 3Q12 adjusted net charge-offs for Mortgage Banking exclude the effect of an incremental $825mm of net charge-offs based on regulatory guidance 6 4Q12 adjusted net charge-offs for Mortgage Banking 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 7 4Q14 adjusted net charge-offs for Card Services were $797mm or 2.48% excluding losses from portfolio exits; 4Q14 reported net charge-offs were $858mm or 2.69% NCOs ($mm) 2,081 1,385 1,224 1,169 1,080 952 901 877 808 697 599 534 452 293 206 168 177 112 81 113 104 81 41 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 1,014 892 891 888 885 798 797 789 800 759 $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 4Q14 1Q15 2Q15 3Q15 Mortgage Banking Card Services 3 4 5 6 7 15
A P P E N D I X 3Q15 2Q15 3Q14 Consumer, ex. credit card LLR/Total loans 1.06% 1.20% 1.58% LLR/NPLs 55 57 58 Credit Card LLR/Total loans 2.73% 2.75% 2.84% Wholesale LLR/Total loans 1.21% 1.18% 1.20% LLR/NPLs 385 457 583 Firmwide LLR/Total loans 1.40% 1.45% 1.63% LLR/NPLs (ex. credit card) 109 109 105 LLR/NPLs 161 161 155 Firmwide – Coverage ratios1 $13.5B of loan loss reserves at September 30, 2015, down $1.4B from $14.9B in the prior year, reflecting improved portfolio credit quality Nonperforming loan loss coverage ratio (ex. credit card) of 109%1 1 See note 5 on slide 18 Comments JPM Credit Summary $mm 9,027 8,317 8,123 7,634 7,241 7,017 6,921 6,645 6,616 17,571 16,264 15,847 15,326 14,889 14,185 14,065 13,915 13,466 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 0% 100% 200% 300% 400% 500% 600% Loan loss reserve Nonperforming retained loans Loan loss reserve/Total loans1 Loan loss reserve/NPLs1 16
A P P E N D I X IB League Tables League table results – volumes League table results – wallet share YTD2015 FY2014 Rank Share Rank Share Based on volumes 6 : Global Debt, Equity & Equity-related 1 7.1 % 1 6.8% U.S. Debt, Equity & Equity-related 1 11.8 % 1 11.8% Global Long-term Debt2 1 7.0 % 1 6.7% U.S. Long-term Debt 1 11.2 % 1 11.3% Global Equity & Equity-related3 2 7.4 % 3 7.5% U.S. Equity & Equity-related 1 12.8 % 2 11.0% Global M&A Announced4 3 24.2 % 2 20.3% U.S. M&A Announced 3 30.2 % 3 25.1% Global Loan Syndications 1 10.9 % 1 12.3% U.S. Loan Syndications 1 16.6 % 1 19.0% YTD2015 FY2014 Rank Share Rank Share Based on fees 1 : Global Debt, Equity & Equity-related 1 8.0 % 1 7.6% U.S. Debt, Equity & Equity-related 1 11.7 % 1 10.7% Global Long-term Debt2 1 8.5 % 1 8.0% U.S. Long-term De t 1 11.9 % 1 11.6% Global Equity & Equity-related3 1 7.4 % 3 7.1% U.S. Equity & Equity-related 1 11.4 % 2 9.6% Global M&A4 2 8.6 % 2 8.0% U.S. M&A 2 9.8 % 2 9.7% Global Loan Syndications 1 8.2 % 1 9.3% U.S. Loan Syndications 1 11.7 % 1 13.1% Global IB fees1,5 1 8.2 % 1 8.0% Source: Volumes from Dealogic Analytics as of September 30, 2015 & Wallet from Dealogic Media Manager Cortex as of October 1, 2015 1 Reflects ranking of revenue wallet 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 revenue wallet represents wallet from client parents based in the U.S. 5 Global Investment Banking fees per Dealogic 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 17
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, including the overhead ratio, 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. 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 investors and analysts, in assessing the Firm’s use of equity. 3. Common equity Tier 1 (“CET1”) capital, Tier 1 capital, Total capital, risk-weighted assets (“RWA”) and the CET1, Tier 1 capital and total capital ratios and the supplementary leverage ratio (“SLR”) under the Basel III Fully Phased-In rules 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 146- 153 of JPMorgan Chase & Co.’s Annual Report on Form 10-K for the year ended December 31, 2014, and on page 67-71 of the Firm’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015. 4. Adjusted expense and adjusted overhead ratio are each non-GAAP financial measures, and exclude Firmwide legal expense ($1.3B in the third quarter of 2015). Management believes this information helps investors understand the effect of this item on reported results and provides an alternate presentation of the Firm’s performance. 5. The ratios of the allowance for loan losses to end-of-period loans retained and allowance for loan losses to nonperforming loans exclude 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. 6. 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. Adjusted ROE for the third quarter 2015 is calculated excluding a total of $673mm, after tax, of legal expense, tax benefits and reserve build Within Markets & Investor Services revenue, the change in Markets revenue and Fixed Income Markets revenue excludes the decline related to business simplification 7. Net charge-offs for Mortgage Banking and Card Services may be adjusted for significant items, as indicated. These adjusted charge-offs are non-GAAP financial measures used by management to facilitate comparisons with prior periods. Notes 18
A P P E N D I X 8. The Firm presents pretax income, net income (assumes a tax rate of 38% for items that are tax deductible) and earnings per share excluding certain notable items. These measures should be viewed in addition to, and not as a substitute for, the Firm's reported results. Management believes this information helps investors understand the effect of these items on reported results and provides an additional presentation of the Firm's performance. The table below provides a reconciliation of reported results to these non-GAAP financial measures: Reconciliation of reported to adjusted results Additional notes on financial measures 1. Core loans include loans considered central to the Firm’s ongoing businesses; core loans exclude loans classified as trading assets, runoff portfolios, discontinued portfolios and portfolios the Firm has an intent to exit. 2. Effective January 1, 2015, the Firm adopted new accounting guidance for investments in affordable housing projects that qualify for the low-income housing tax credit. The guidance was required to be applied retrospectively and accordingly, certain prior period amounts have been revised to conform with the current period presentation. For further discussion, see page 2 of the Earnings Release Financial Supplement. Notes 19 Three months ended September 30, 2015 (in millions, except per share) R p rted sults 6,730$ 6,804$ 1.68$ Adj tm nts: Firmwide legal expense 1,347 973 0.26 Firmwide tax benefits – (2,164) (0.57) Consumer credit reserve releases (591) (366) (0.10) Wholesale credit reserve builds 310 192 0.05 Total adjustments 1,066 (1,365) (0.36) Adjusted results 7,796$ 5,439$ 1.32$ Pretax income Net income EPS
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, 2014, and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2015 and June 30, 2015, 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. 20