Exhibit 99.1
| | | |
J.P. Morgan Chase & Co.
270 Park Avenue, New York, NY 10017-2070
NYSE symbol: JPM
www.jpmorganchase.com | |  |
News release: IMMEDIATE RELEASE
JPMORGAN CHASE REPORTS 2003 FIRST QUARTER RESULTS
New York, April 16, 2003– J.P. Morgan Chase & Co. (NYSE: JPM) today reported net income of $1.4 billion, or $0.69 per share, in the first quarter of 2003, compared with net income of $982 million, or $0.48 per share, in the first quarter of 2002 and a net loss of $387 million, or ($0.20) per share, in the fourth quarter of 2002. The return on average common equity was 13%.
In 2002, reported results were lower than results on an operating basis, which excluded merger and restructuring costs incurred in each quarter and, in the fourth quarter of 2002, separately disclosed litigation-related charges. On this basis, operating earnings were $1.15 billion, or $0.57 per share, in the first quarter of 2002 and $730 million, or $0.36 per share, in the fourth quarter of 2002.
“We are encouraged by first quarter results. Sharp revenue growth in the Investment Bank and Chase Financial Services, combined with meaningful improvement in credit quality and the benefits of our expense initiatives, produced stronger earnings,” said William B. Harrison, Jr., Chairman and Chief Executive Officer. “While we continue to be cautious in our outlook for the remainder of the year, we remain committed to serving our clients, controlling our expenses and managing our risks.”
Highlights for the first quarter of 2003:
| • | | The Investment Bank had strong fixed income results, improved performance in equities and lower credit costs, generating operating income 22% higher than last year’s first quarter and a return on equity of 20%. |
| |
| • | | The Investment Bank achieved, for the first time, top three league table status concurrently in Global Announced M&A, Global Long-Term Debt and Global Equity & Equity Related underwriting. |
| |
| • | | Commercial credit costs, nonperforming assets and criticized exposures declined meaningfully from the fourth quarter of 2002. |
| |
| • | | Chase Financial Services reported earnings 39% above the first quarter of 2002 and a return on equity of 28% driven by continued strength in the national consumer credit businesses, especially Chase Home Finance, which posted record revenues and earnings. |
| | | | | | | | | |
| Investor Contact: | | Ann Borowiec
(212) 270-7318 | | | | Media Contact: | | Joe Evangelisti
(212) 270-7438 |
J.P. Morgan Chase & Co.
News Release
Investment Bank
Operating earnings were $932 million in the first quarter, up 22% from the first quarter of 2002 and 158% from the fourth quarter. Operating revenues of $4.01 billion were 11% higher than the first quarter and 21% better than the fourth quarter of 2002. Return on common equity was 20% for the quarter, compared with 16% in the first quarter and 8% in the fourth quarter of 2002.
| • | | Investment banking feesof $621 million were 16% lower than the first quarter of 2002. Strength in high grade and high yield underwriting was more than offset by continued weakness in advisory, equity underwriting and loan syndication markets. Advisory fees were down 18% from the first quarter of 2002 and reflected industry-wide weakness in M&A activity. Underwriting revenues and other fees were down 15% from the first quarter of 2002. The firm improved to #3 in Global Announced M&A, with a 19% market share, improved to #3 in Global Equity & Equity Related underwriting, and maintained its #1 ranking in Global Loan Syndications.1 In addition, the firm maintained its #2 ranking in U.S. Investment Grade Bonds and #3 ranking in Global Long-Term Debt.2 |
| |
| • | | Capital markets and lendingrevenues for the quarter were $3.39 billion, up 18% from the first quarter of 2002. On a total return basis (which represents total revenues plus the unrealized gains or losses on third party or internally transfer-priced assets and liabilities in fixed income and treasury activities), revenues of $3.28 billion were up 13% from the first quarter of 2002. The increase reflected strong results in fixed income, primarily in North America and Europe credit markets, and in Europe rate markets. Global Treasury had record total return revenues of $536 million, up 14% from the first quarter of 2002. Despite difficult market conditions revenues in Equity Capital Markets were comparable to the first quarter of 2002. |
| |
| • | | Credit costswere $246 million, down from $282 million in the first quarter of 2002. |
| |
| • | | Operating expensesof $2.26 billion increased 8% from the first quarter of 2002 driven by higher incentives resulting from increased revenues. Non-compensation expenses (excluding severance and related costs) declined 8% from the same period. Total severance and related charges were $104 million, compared to $47 million in the first quarter of 2002 and $338 million in the fourth quarter of 2002. The overhead ratio was 56% compared to 58% in the first quarter of 2002. |
Chase Financial Services
Operating earnings were $704 million for the first quarter, an increase of 39% from the first quarter of 2002 and 42% from the fourth quarter of 2002. Return on common equity was 28% for the first quarter compared to 20% in the first quarter of 2002 and 19% in the fourth quarter of 2002.
| • | | Operating revenuesof $3.74 billion for the quarter were up 21% from the first quarter of 2002 reflecting higher production volumes across all national consumer credit businesses. Home Finance generated record revenues for the quarter, up 116% from the first quarter of 2002, due to record mortgage originations and, to a lesser extent, gains on the hedging of mortgage servicing rights. Auto Finance also generated record revenues in the first quarter, up 17% from the first quarter of 2002, driven by higher originations and improved margins. Cardmember Services revenues were up 9% from the prior year primarily reflecting growth in average outstandings; over one million new accounts were originated during the first quarter. Regional Banking and Middle Market average deposits grew 5% and 23%, respectively, from the first quarter of 2002. Regional Banking reported lower revenue as lower interest rates resulted in lower spreads. |
| 1 | | Derived from Thomson Financial Securities Data |
| |
| 2 | | Derived from Thomson Financial Securities Data |
2
J.P. Morgan Chase & Co.
News Release
| • | | Operating expensesof $1.75 billion for the quarter were up 13% from the first quarter of 2002 reflecting higher business volumes, higher incentives due to better financial performance and increased marketing costs. Savings generated by Six Sigma productivity programs continued to partially offset the growth in expenses. |
| |
| • | | Credit costsof $878 million were 21% higher than the first quarter of 2002. Charge-offs increased 10%, driven by a 15% increase in average managed loans from the first quarter of 2002. Credit costs for the first quarter of 2002 included a release of reserves primarily related to the run-off of an installment loan portfolio in Regional Banking. Delinquency rates in the consumer loan portfolios have decreased compared to the fourth quarter 2002. |
Treasury & Securities Services
Operating earnings were $147 million, up 3% from the first quarter of 2002 and 8% from the fourth quarter of 2002. Return on common equity for the quarter was 19%, comparable to the first quarter of 2002 and up slightly from the fourth quarter of 2002.
| • | | Operating revenuesfor the first quarter were $966 million, virtually unchanged from the first quarter of 2002. Treasury Services revenues increased 8% from the first quarter of 2002 due to growth in product revenues, notably in commercial card and prepaid debit card, and higher balance deficiency fees, which offset declines in the value of non-interest bearing balances resulting from low interest rates. Institutional Trust Services revenues increased 1% from the prior year as general business growth was offset by declines in ADR activity and in selected debt product lines. Investor Services revenues declined 10% from the prior year as the business continues to be adversely affected by difficult market conditions resulting in reduced deposit balances, custody fees, foreign exchange revenue and securities lending activity. |
| |
| • | | Operating expenseswere down 1% from the first quarter of 2002, reflecting continued cost containment measures that included Six Sigma and other productivity and quality initiatives and selected reductions in staff, particularly in Investor Services. |
Investment Management & Private Banking
Operating earnings were $64 million in the first quarter, down 50% from the first quarter of 2002, but up 49% from the fourth quarter. The pre-tax margin in the first quarter of 2003 was 11%, compared with 22% in the first quarter of 2002 and 4% for the fourth quarter of 2002. Return on common equity was 4% compared with 8% in first quarter of 2002 and 3% in the fourth quarter of 2002. Return on tangible common equity was 14% compared with 27% in the first quarter of 2002 and 9% in the fourth quarter of 2002.
| • | | Operating revenuesof $652 million were 16% below the same period last year and 2% lower than the fourth quarter of 2002. Lower global equity valuations (the S&P 500 index was down 26% year-on-year and down 4% from the fourth quarter) and lower investor activity negatively affected revenues. Revenues for the quarter included the gain on the sale of a Brazilian investment management subsidiary, offset by non-operating charges incurred at American Century. |
| |
| • | | Operating expensesof $574 million were 2% lower than the first quarter of 2002 and 8% below the fourth quarter of 2002. |
| |
| • | | Total assets under supervisionwere $622 billion at March 31, 2003, a decrease of 15% from the first quarter of 2002 and 3% lower than the fourth quarter of 2002. Assets under management decreased from both the first quarter of 2002 and the fourth quarter of 2002 reflecting market depreciation and institutional outflows. Not reflected in assets under management is the firm’s 45% interest in American Century, which had assets under management of $71 billion as of the first quarter 2003. |
3
J.P. Morgan Chase & Co.
News Release
JPMorgan Partners
JPMorgan Partners generated an operating loss of $224 million for the quarter compared to operating losses of $252 million in the first quarter of 2002 and $101 million in the fourth quarter of 2002.
| • | | Total net private equity gainswere negative $230 million, compared to negative $255 million in the first quarter of 2002. Private equity market conditions remain muted with limited exit opportunities. During the quarter, JPMP’s direct private equity investments recorded net losses of $136 million compared to net losses of $236 million in the first quarter of 2002. JPMP’s direct private equity results included $46 million in net realized cash gains, which were more than offset by negative valuation adjustments of $176 million taken on direct private investment positions, and mark-to-market losses of $6 million recorded on direct public investments. Limited partner interests in third-party private equity funds resulted in net losses of $94 million compared to net losses of $19 million in the first quarter of 2002. |
Expenses
Operating expenseswere $5.54 billion, up 9% from the first quarter of 2002. The increase was primarily driven by higher compensation expenses, resulting from higher revenue-related incentive accruals and increased costs related to stock-based compensation and pension expenses. Severance and related costs in the first quarter of 2003 were $171 million and included real estate related write-offs of $78 million. Non-compensation related expenses, excluding the real estate related write-offs, were flat compared to the first quarter of 2002, despite higher occupancy-related costs, including real estate taxes in New York, extra safety measures and higher insurance premiums.
Credit
| • | | Credit costswere $1.20 billion in the first quarter compared to $1.07 billion in the first quarter of 2002 and $1.35 billion in the fourth quarter of 2002. In the first quarter of 2003, commercial and consumer net charge-offs totaled $1.13 billion, and $73 million was added to the allowance for lending-related commitments. |
| |
| • | | Total Nonperforming Assetswere $4.39 billion at March 31, 2003, down 8% from the fourth quarter of 2002 but up slightly from the first quarter of 2002. Nonperforming assets were $4.78 billion as of December 31, 2002 and $4.31 billion at March 31, 2002. Criticized exposures (including loans, derivative receivables and unfunded commitments) declined $2 billion, or 12%, since December 31, 2002. |
| |
| • | | Commercialloan net charge-offs in the first quarter of 2003 were $292 million, compared to $434 million in the fourth quarter and $320 million in the first quarter of 2002. The charge-off ratio for commercial loans was 1.32% during the first quarter of 2003, compared to 1.88% in the fourth quarter and 1.27% for the first quarter of 2002. |
| |
| • | | Consumerloan net charge-offs on a managed basis were $835 million, up from $832 million in the fourth quarter of 2002 and $754 million in the first quarter of 2002. The increase from the first quarter of 2002 was due primarily to higher loan balances. On a managed basis, the credit card net charge-off ratio was 5.95% for the first quarter of 2003, compared to 5.70% for the fourth quarter and 5.87% for the first quarter of 2002. |
4
J.P. Morgan Chase & Co.
News Release
Total assets and capital
| • | | Total assetsas of March 31, 2003 were $755 billion, compared with $759 billion as of December 31, 2002 and $713 billion as of March 31, 2002. Commercial loans were down 3%, or $3.1 billion, from year-end and decreased 13%, or $13.3 billion, from March 31, 2002. Managed consumer loans increased 3% from year-end and 18% from March 31, 2002. The Tier 1 capital ratio was 8.4% at March 31, 2003, compared to 8.2% at December 31, 2002 and 8.6% at March 31, 2002. |
Other financial information (on a pre-tax basis)
| • | | There were noSpecial Itemsin the first quarter of 2003. The fourth quarter of 2002 included a $400 million charge in connection with the Enron surety litigation settlement, the establishment of litigation reserves of $900 million, and $393 million in merger and restructuring costs. Special items in the first quarter of 2002 included $255 million in merger and restructuring costs. |
J.P. Morgan Chase & Co. is a leading global financial services firm with assets of $755 billion and operations in more than 50 countries. The firm is a leader in investment banking, asset management, private banking, private equity, custody and transaction services and in retail and middle market financial services. A component of the Dow Jones Industrial Average, JPMorgan Chase is headquartered in New York and serves more than 30 million consumer customers and the world’s most prominent corporate, institutional and government clients. Information about JPMorgan Chase is available on the internet at www.jpmorganchase.com.
JPMorgan Chase will hold a conference call for the investment community on Wednesday, April 16, 2003 at 11:00 a.m. (Eastern Daylight Time) to review first quarter 2003 financial results. The dial-in number is (973) 935-8506. A live audio webcast of the call will be available on www.jpmorganchase.com. Slides for the call will also be available on www.jpmorganchase.com. A telephone replay of the presentation will be available beginning at 1:30 p.m. (EDT) on April 16, 2003 and continuing through 6:00 p.m. (EDT) on April 23, 2003 at (973) 341-3080 pin #3803517. The replay also will be available on www.jpmorganchase.com. Additional detailed financial, statistical and business-related information is included in a financial supplement. The earnings release and the financial supplement are available on the JPMorgan Chase web site (www.jpmorganchase.com).
This press release contains statements that are forward-looking 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. These risks and uncertainties could cause our results to differ materially from those set forth in such forward-looking statements. Such risks and uncertainties are described in our 2002 Annual Report on Form 10-K filed with the Securities and Exchange Commission and available at the Securities and Exchange Commission’s internet site (www.sec.gov), to which reference is hereby made.
5
| | | |
J.P. MORGAN CHASE & CO.
CONSOLIDATED FINANCIAL HIGHLIGHTS — REPORTED BASIS
(in millions, except per share and ratio and employee data) | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | 1QTR 2003 |
| | | | | | | | | | | | | | | | Over (Under) |
| | | | 1QTR | | 4QTR | | 1QTR | |
|
| | | | 2003 | | 2002 | | 2002 | | 4Q 2002 | | 1Q 2002 |
| | | |
| |
| |
| |
| |
|
INCOME STATEMENT | | | | | | | | | | | | | | | | | | | | |
REVENUE: | | | | | | | | | | | | | | | | | | | | |
| Investment Banking Fees | | $ | 616 | | | $ | 678 | | | $ | 755 | | | | (9 | )% | | | (18 | )% |
| Trading Revenue | | | 1,232 | | | | 585 | | | | 1,299 | | | | 111 | | | | (5 | ) |
| Fees and Commissions | | | 2,598 | | | | 2,282 | | | | 2,584 | | | | 14 | | | | 1 | |
| Private Equity — Realized Gains (Losses) | | | (4 | ) | | | (45 | ) | | | (10 | ) | | | 91 | | | | 60 | |
| Private Equity — Unrealized Gains (Losses) | | | (217 | ) | | | (23 | ) | | | (228 | ) | | NM | | | 5 | |
| Securities Gains | | | 485 | | | | 747 | | | | 114 | | | | (35 | ) | | | 325 | |
| Other Revenue | | | 481 | | | | 290 | | | | 157 | | | | 66 | | | | 206 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
Total Noninterest Revenue | | | 5,191 | | | | 4,514 | | | | 4,671 | | | | 15 | | | | 11 | |
Net Interest Income | | | 3,215 | | | | 2,981 | | | | 2,927 | | | | 8 | | | | 10 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
| Revenue before Provision for Credit Losses | | | 8,406 | | | | 7,495 | | | | 7,598 | | | | 12 | | | | 11 | |
| Provision for Credit Losses | | | 743 | | | | 921 | | | | 753 | | | | (19 | ) | | | (1 | ) |
| | | |
| | | |
| | | |
| | | | | | | | | |
TOTAL NET REVENUE | | | 7,663 | | | | 6,574 | | | | 6,845 | | | | 17 | | | | 12 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
EXPENSE: | | | | | | | | | | | | | | | | | | | | |
| Compensation Expense | | | 3,174 | | | | 3,032 | | | | 2,823 | | | | 5 | | | | 12 | |
| Occupancy Expense | | | 496 | | | | 425 | | | | 338 | | | | 17 | | | | 47 | |
| Technology and Communications Expense | | | 637 | | | | 635 | | | | 665 | | | | — | | | | (4 | ) |
| Amortization of Intangibles | | | 74 | | | | 82 | | | | 69 | | | | (10 | ) | | | 7 | |
| Other Expense | | | 1,160 | | | | 1,294 | | | | 1,208 | | | | (10 | ) | | | (4 | ) |
| Surety Settlement and Litigation Reserve (a) | | | — | | | | 1,300 | | | | — | | | NM | | NM |
| Merger and Restructuring Costs | | | — | | | | 393 | | | | 255 | | | NM | | NM |
| | | |
| | | |
| | | |
| | | | | | | | | |
TOTAL NONINTEREST EXPENSE | | | 5,541 | | | | 7,161 | | | | 5,358 | | | | (23 | ) | | | 3 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
| Income (Loss) before Income Tax Expense | | | 2,122 | | | | (587 | ) | | | 1,487 | | | NM | | | 43 | |
| Income Tax Expense (Benefit) | | | 722 | | | | (200 | ) | | | 505 | | | NM | | | 43 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
NET INCOME (LOSS) | | $ | 1,400 | | | $ | (387 | ) | | $ | 982 | | | NM | | | 43 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
PER COMMON SHARE | | | | | | | | | | | | | | | | | | | | |
| Net Income (Loss): | | | | | | | | | | | | | | | | | | | | |
| | Basic | | $ | 0.69 | | | $ | (0.20 | ) | | $ | 0.49 | | | NM | | | 41 | % |
| | Diluted | | | 0.69 | | | | (0.20 | ) | | | 0.48 | | | NM | | | 44 | |
| Cash Dividends Declared | | | 0.34 | | | | 0.34 | | | | 0.34 | | | | — | % | | | — | |
| Share Price at Period End | | | 23.71 | | | | 24.00 | | | | 35.65 | | | | (1 | ) | | | (33 | ) |
| Book Value at Period End | | | 20.73 | | | | 20.66 | | | | 20.16 | | | | — | | | | 3 | |
COMMON SHARES OUTSTANDING | | | | | | | | | | | | | | | | | | | | |
| Average Common Shares: | | | | | | | | | | | | | | | | | | | | |
| | Basic | | | 1,999.8 | | | | 1,990.0 | | | | 1,978.2 | | | | — | % | | | 1 | % |
| | Diluted | | | 2,021.9 | | | | 2,008.5 | | | | 2,005.8 | | | | 1 | | | | 1 | |
| Common Shares at Period End | | | 2,030.0 | | | | 1,998.7 | | | | 1,990.2 | | | | 2 | | | | 2 | |
PERFORMANCE RATIOS (b) | | | | | | | | | | | | | | | | | | | | |
| Return on Average Assets | | | 0.73 | % | | NM | | | 0.55 | % | | NM | | | 18 | bp |
| Return on Average Common Equity | | | 13.4 | | | NM | | | 9.7 | | | NM | | | 370 | |
CAPITAL RATIOS | | | | | | | | | | | | | | | | | | | | |
| Tier I Capital Ratio | | | 8.4% | (c) | | | 8.2 | % | | | 8.6 | % | | | 20 | bp | | | (20 | )bp |
| Total Capital Ratio | | | 12.1 | (c) | | | 12.0 | | | | 12.5 | | | | 10 | | | | (40 | ) |
| Tier I Leverage Ratio | | | 5.0 | (c) | | | 5.1 | | | | 5.4 | | | | (10 | ) | | | (40 | ) |
SELECTED BALANCE SHEET ITEMS | | | | | | | | | | | | | | | | | | | | |
| Net Loans | | $ | 212,256 | | | $ | 211,014 | | | $ | 209,541 | | | | 1 | % | | | 1 | % |
| Total Assets | | | 755,156 | | | | 758,800 | | | | 712,508 | | | | — | | | | 6 | |
| Deposits | | | 300,667 | | | | 304,753 | | | | 282,037 | | | | (1 | ) | | | 7 | |
| Long-Term Debt (d) | | | 48,290 | | | | 45,190 | | | | 42,761 | | | | 7 | | | | 13 | |
| Common Stockholders’ Equity | | | 42,075 | | | | 41,297 | | | | 40,122 | | | | 2 | | | | 5 | |
| Total Stockholders’ Equity | | | 43,084 | | | | 42,306 | | | | 41,131 | | | | 2 | | | | 5 | |
FULL-TIME EQUIVALENT EMPLOYEES | | | 93,878 | | | | 94,335 | | | | 96,938 | | | | — | | | | (3 | ) |
| (a) | | Represents a charge related to the settlement of the Enron surety litigation and the establishment of a reserve for certain material litigation, proceedings and investigations. |
| |
| (b) | | Quarterly ratios are based on annualized amounts. |
| |
| (c) | | Estimated |
| |
| (d) | | Includes Guaranteed Preferred Beneficial Interests in the Firm’s Junior Subordinated Deferrable Interest Debentures. |
| |
| bp | — | Denotes basis points; 100 bp equals 1% |
| |
| NM | — | Not meaningful |
Page 6
| | | |
J.P. MORGAN CHASE & CO.
RECONCILIATION OF QUARTERLY REPORTED TO OPERATING RESULTS
(in millions, except per share data) | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | FIRST QUARTER 2003 |
| | | |
|
| | | | REPORTED | | CREDIT | | SPECIAL | | | | | | OPERATING |
| | | | BASIS (a) | | CARD (b) | | ITEMS (c) | | RECLASSES | | BASIS |
| | | |
| |
| |
| |
| |
|
INCOME STATEMENT | | | | | | | | | | | | | | | | | | | | |
| Revenue | | | | | | | | | | | | | | | | | | | | |
| | Investment Banking Fees | | $ | 616 | | | $ | — | | | $ | — | | | $ | — | | | $ | 616 | |
| | Trading Revenue (d) | | | 1,232 | | | | — | | | | — | | | | 683 | | | | 1,915 | |
| | Fees and Commissions | | | 2,598 | | | | (169 | ) | | | — | | | | — | | | | 2,429 | |
| | Private Equity — Gains (Losses) | | | (221 | ) | | | — | | | | — | | | | — | | | | (221 | ) |
| | Securities Gains | | | 485 | | | | — | | | | — | | | | — | | | | 485 | |
| | Other Revenue | | | 481 | | | | (4 | ) | | | — | | | | — | | | | 477 | |
| | Net Interest Income (d) | | | 3,215 | | | | 630 | | | | — | | | | (683 | ) | | | 3,162 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Total Revenue | | | 8,406 | | | | 457 | | | | — | | | | — | | | | 8,863 | |
| Noninterest Expense | | | | | | | | | | | | | | | | | | | | |
| | Compensation Expense (e) | | | 3,174 | | | | — | | | | — | | | | — | | | | 3,174 | |
| | Noncompensation Expense (e) (f) | | | 2,367 | | | | — | | | | — | | | | — | | | | 2,367 | |
| | Merger and Restructuring Costs | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Total Noninterest Expense | | | 5,541 | | | | — | | | | — | | | | — | | | | 5,541 | |
Operating Margin | | | 2,865 | | | | 457 | | | | — | | | | — | | | | 3,322 | |
| Credit Costs | | | 743 | | | | 457 | | | | — | | | | — | | | | 1,200 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| Income before Income Tax Expense | | | 2,122 | | | | — | | | | — | | | | — | | | | 2,122 | |
| Income Tax Expense | | | 722 | | | | — | | | | — | | | | — | | | | 722 | |
| | | |
| | | |
| | | |
| | | | | | | |
| |
Net Income | | $ | 1,400 | | | $ | — | | | $ | — | | | $ | — | | | $ | 1,400 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
EARNINGS PER SHARE — DILUTED | | $ | 0.69 | | | $ | — | | | $ | — | | | $ | — | | | $ | 0.69 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | FIRST QUARTER 2002 |
| | | |
|
| | | | REPORTED | | CREDIT | | SPECIAL | | | | | | OPERATING |
| | | | BASIS(a) | | CARD(b) | | ITEMS(c) | | RECLASSES | | BASIS |
| | | |
| |
| |
| |
| |
|
INCOME STATEMENT | | | | | | | | | | | | | | | | | | | | |
| Revenue | | | | | | | | | | | | | | | | | | | | |
| | Investment Banking Fees | | $ | 755 | | | $ | — | | | $ | — | | | $ | — | | | $ | 755 | |
| | Trading Revenue (d) | | | 1,299 | | | | — | | | | — | | | | 421 | | | | 1,720 | |
| | Fees and Commissions | | | 2,584 | | | | (91 | ) | | | — | | | | — | | | | 2,493 | |
| | Private Equity — Gains (Losses) | | | (238 | ) | | | — | | | | — | | | | — | | | | (238 | ) |
| | Securities Gains | | | 114 | | | | — | | | | — | | | | — | | | | 114 | |
| | Other Revenue | | | 157 | | | | (20 | ) | | | — | | | | — | | | | 137 | |
| | Net Interest Income (d) | | | 2,927 | | | | 432 | | | | — | | | | (421 | ) | | | 2,938 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Total Revenue | | | 7,598 | | | | 321 | | | | — | | | | — | | | | 7,919 | |
| Noninterest Expense | | | | | | | | | | | | | | | | | | | | |
| | Compensation Expense (e) | | | 2,823 | | | | — | | | | — | | | | — | | | | 2,823 | |
| | Noncompensation Expense (e) (f) | | | 2,280 | | | | — | | | | — | | | | — | | | | 2,280 | |
| | Merger and Restructuring Costs | | | 255 | | | | — | | | | (255 | ) | | | — | | | | — | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Total Noninterest Expense | | | 5,358 | | | | — | | | | (255 | ) | | | — | | | | 5,103 | |
Operating Margin | | | 2,240 | | | | 321 | | | | 255 | | | | — | | | | 2,816 | |
| Credit Costs | | | 753 | | | | 321 | | | | — | | | | — | | | | 1,074 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| Income before Income Tax Expense | | | 1,487 | | | | — | | | | 255 | | | | — | | | | 1,742 | |
| Income Tax Expense | | | 505 | | | | — | | | | 87 | | | | — | | | | 592 | |
| | | |
| | | |
| | | |
| | | | | | | |
| |
Net Income | | $ | 982 | | | $ | — | | | $ | 168 | | | $ | — | | | $ | 1,150 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
EARNINGS PER SHARE — DILUTED | | $ | 0.48 | | | $ | — | | | $ | 0.09 | | | $ | — | | | $ | 0.57 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
| (a) | | Represents condensed results as reported in JPMorgan Chase’s financial statements. |
| |
| (b) | | Represents the impact of credit card securitizations. For securitized receivables, amounts that normally would be reported as net interest income and as provision for credit losses are reported as noninterest revenue. |
| |
| (c) | | Includes merger and restructuring costs and other special items. There were no special items reported in the first quarter of 2003. The 2002 first quarter includes $255 million (pre-tax) of merger and restructuring costs. See page 9 for a reconciliation of the effect of special items on earnings per share. |
| |
| (d) | | On an operating basis, JPMorgan Chase reclassifies trading-related net interest income from Net Interest Income to Trading Revenue. |
| |
| (e) | | Includes severance and other related costs associated with expense containment programs implemented in 2002. |
| |
| (f) | | Includes Occupancy Expense, Technology and Communications Expense, Amortization of Intangibles and Other Expense. |
Page 7
| | | |
J.P. MORGAN CHASE & CO.
CONSOLIDATED FINANCIAL HIGHLIGHTS – OPERATING BASIS
(in millions, except per share and ratio data) | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | 1QTR 2003 |
| | | | | | | | | | | | | | | | Over (Under) |
| | | | 1QTR | | 4QTR | | 1QTR | |
|
| | | | 2003 | | 2002 | | 2002 | | 4Q 2002 | | 1Q 2002 |
| | | |
| |
| |
| |
| |
|
OPERATING INCOME STATEMENT (a) | | | | | | | | | | | | | | | | | | | | |
OPERATING REVENUE: | | | | | | | | | | | | | | | | | | | | |
| Investment Banking Fees | | $ | 616 | | | $ | 678 | | | $ | 755 | | | | (9 | )% | | | (18 | )% |
| Trading-Related Revenue (Includes Trading NII) | | | 1,915 | | | | 1,253 | | | | 1,720 | | | | 53 | | | | 11 | |
| Fees and Commissions | | | 2,429 | | | | 2,052 | | | | 2,493 | | | | 18 | | | | (3 | ) |
| Private Equity – Realized Gains (Losses) | | | (4 | ) | | | (45 | ) | | | (10 | ) | | | 91 | | | | 60 | |
| Private Equity – Unrealized Gains (Losses) | | | (217 | ) | | | (23 | ) | | | (228 | ) | | | NM | | | | 5 | |
| Securities Gains | | | 485 | | | | 747 | | | | 114 | | | | (35 | ) | | | 325 | |
| Other Revenue | | | 477 | | | | 303 | | | | 137 | | | | 57 | | | | 248 | |
| Net Interest Income (Excludes Trading NII) | | | 3,162 | | | | 2,960 | | | | 2,938 | | | | 7 | | | | 8 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
| | TOTAL OPERATING REVENUE | | | 8,863 | | | | 7,925 | | | | 7,919 | | | | 12 | | | | 12 | |
OPERATING EXPENSE: | | | | | | | | | | | | | | | | | | | | |
| Compensation Expense (b) | | | 3,174 | | | | 3,032 | | | | 2,823 | | | | 5 | | | | 12 | |
| Noncompensation Expense (b) (c) | | | 2,367 | | | | 2,436 | | | | 2,280 | | | | (3 | ) | | | 4 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
| | TOTAL OPERATING EXPENSE | | | 5,541 | | | | 5,468 | | | | 5,103 | | | | 1 | | | | 9 | |
| Credit Costs | | | 1,200 | | | | 1,351 | | | | 1,074 | | | | (11 | ) | | | 12 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
| Operating Income before Income Tax Expense | | | 2,122 | | | | 1,106 | | | | 1,742 | | | | 92 | | | | 22 | |
| Income Tax Expense | | | 722 | | | | 376 | | | | 592 | | | | 92 | | | | 22 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
OPERATING EARNINGS | | $ | 1,400 | | | $ | 730 | | | $ | 1,150 | | | | 92 | | | | 22 | |
| Special Items | | | — | | | | (1,117 | ) | | | (168 | ) | | | NM | | | | NM | |
| | | |
| | | |
| | | |
| | | | | | | | | |
NET INCOME (LOSS) | | $ | 1,400 | | | $ | (387 | ) | | $ | 982 | | | | NM | | | | 43 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
OPERATING BASIS | | | | | | | | | | | | | | | | | | | | |
| Diluted Earnings per Share | | $ | 0.69 | | | $ | 0.36 | | | $ | 0.57 | | | | 92 | | | | 21 | |
| Shareholder Value Added | | | 148 | | | | (551 | ) | | | (59 | ) | | | NM | | | | NM | |
| Return on Average Managed Assets (d) | | | 0.70 | % | | | 0.37 | % | | | 0.63 | % | | | 33 | bp | | | 7 | bp |
| Return on Common Equity (d) | | | 13.4 | | | | 6.8 | | | | 11.4 | | | | 660 | | | | 200 | |
| Common Dividend Payout Ratio | | | 50 | | | | 96 | | | | 60 | | | | (4,600 | ) | | | (1,000 | ) |
| Compensation Expense as a % of Revenue | | | 36 | | | | 38 | | | | 36 | | | | (200 | ) | | | — | |
| Noncompensation Expense as a % of Revenue | | | 27 | | | | 31 | | | | 29 | | | | (400 | ) | | | (200 | ) |
| Overhead Ratio | | | 63 | | | | 69 | | | | 64 | | | | (600 | ) | | | (100 | ) |
(a) See page 7 for a reconciliation of reported results to operating basis.
(b) Includes severance and other related costs associated with expense containment programs implemented in 2002.
(c) Includes Occupancy Expense, Technology and Communications Expense, Amortization of Intangibles and Other Expense.
(d) Quarterly ratios are based on annualized amounts.
Page 8
| | | |
J.P. MORGAN CHASE & CO.
LINES OF BUSINESS FINANCIAL HIGHLIGHTS SUMMARY
(in millions, except per share and ratio data) | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | 1QTR 2003 |
| | | | | | | | | | | | | | | | Over (Under) |
| | | | 1QTR | | 4QTR | | 1QTR | |
|
| | | | 2003 | | 2002 | | 2002 | | 4Q 2002 | | 1Q 2002 |
| | | |
| |
| |
| |
| |
|
OPERATING REVENUE | | | | | | | | | | | | | | | | | | | | |
| Investment Bank | | $ | 4,012 | | | $ | 3,311 | | | $ | 3,607 | | | | 21 | % | | | 11 | % |
| Treasury & Securities Services | | | 966 | | | | 962 | | | | 968 | | | | — | | | | — | |
| Investment Management & Private Banking | | | 652 | | | | 663 | | | | 773 | | | | (2 | ) | | | (16 | ) |
| Chase Financial Services | | | 3,737 | | | | 3,378 | | | | 3,091 | | | | 11 | | | | 21 | |
| JPMorgan Partners | | | (290 | ) | | | (95 | ) | | | (321 | ) | | | NM | | | | 10 | |
| Support Units and Corporate | | | (214 | ) | | | (294 | ) | | | (199 | ) | | | 27 | | | | (8 | ) |
| | | |
| | | |
| | | |
| | | | | | | | | |
OPERATING REVENUE (a) | | $ | 8,863 | | | $ | 7,925 | | | $ | 7,919 | | | | 12 | | | | 12 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
EARNINGS | | | | | | | | | | | | | | | | | | | | |
| Investment Bank | | $ | 932 | | | $ | 361 | | | $ | 764 | | | | 158 | | | | 22 | |
| Treasury & Securities Services | | | 147 | | | | 136 | | | | 143 | | | | 8 | | | | 3 | |
| Investment Management & Private Banking | | | 64 | | | | 43 | | | | 129 | | | | 49 | | | | (50 | ) |
| Chase Financial Services | | | 704 | | | | 496 | | | | 508 | | | | 42 | | | | 39 | |
| JPMorgan Partners | | | (224 | ) | | | (101 | ) | | | (252 | ) | | | NM | | | | 11 | |
| Support Units and Corporate | | | (223 | ) | | | (205 | ) | | | (142 | ) | | | (9 | ) | | | (57 | ) |
| | | |
| | | |
| | | |
| | | | | | | | | |
OPERATING EARNINGS (a) | | | 1,400 | | | | 730 | | | | 1,150 | | | | 92 | | | | 22 | |
| Special Items (Net of Taxes): | | | | | | | | | | | | | | | | | | | | |
| | Surety Settlement and Litigation Reserve | | | — | | | | (858 | ) | | | — | | | | NM | | | | NM | |
| | Merger and Restructuring Costs | | | — | | | | (259 | ) | | | (168 | ) | | | NM | | | | NM | |
| | | |
| | | |
| | | |
| | | | | | | | | |
NET INCOME (LOSS) (a) | | $ | 1,400 | | | $ | (387 | ) | | $ | 982 | | | | NM | | | | 43 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
EARNINGS PER SHARE — DILUTED | | | | | | | | | | | | | | | | | | | | |
OPERATING EARNINGS (a) | | $ | 0.69 | | | $ | 0.36 | | | $ | 0.57 | | | | 92 | | | | 21 | |
| Special Items (Net of Taxes): | | | | | | | | | | | | | | | | | | | | |
| | Surety Settlement and Litigation Reserve | | | — | | | | (0.43 | ) | | | — | | | | NM | | | | NM | |
| | Merger and Restructuring Costs | | | — | | | | (0.13 | ) | | | (0.09 | ) | | | NM | | | | NM | |
| | | |
| | | |
| | | |
| | | | | | | | | |
NET INCOME (LOSS) (a) | | $ | 0.69 | | | $ | (0.20 | ) | | $ | 0.48 | | | | NM | | | | 44 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
OPERATING RETURN ON COMMON EQUITY | | | | | | | | | | | | | | | | | | | | |
| Investment Bank | | | 19.7 | % | | | 7.6 | % | | | 16.3 | % | | | 1,210 | bp | | | 340 | bp |
| Treasury & Securities Services | | | 19.5 | | | | 18.4 | | | | 19.6 | | | | 110 | | | | (10 | ) |
| Investment Management & Private Banking | | | 4.2 | | | | 2.7 | | | | 8.5 | | | | 150 | | | | (430 | ) |
| Chase Financial Services | | | 27.5 | | | | 18.9 | | | | 20.2 | | | | 860 | | | | 730 | |
OPERATING RETURN ON COMMON EQUITY (a) | | | 13.4 | | | | 6.8 | | | | 11.4 | | | | 660 | | | | 200 | |
(a) Represents consolidated JPMorgan Chase.
Page 9
| | | |
| J.P. MORGAN CHASE & CO | | |
| CONSOLIDATED BALANCE SHEET | |
| (in millions) | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Mar 31, 2003 |
| | | | | | | | | | | | | | | | Over (Under) |
| | | | | | | | | | | | | | | |
|
| | | | Mar 31 | | Dec 31 | | Mar 31 | | Dec 31 | | Mar 31 |
| | | | 2003 | | 2002 | | 2002 | | 2002 | | 2002 |
| | | |
| |
| |
| |
| |
|
ASSETS | | | | | | | | | | | | | | | | | | | | |
| Cash and Due from Banks | | $ | 22,229 | | | $ | 19,218 | | | $ | 22,637 | | | | 16 | % | | | (2 | )% |
| Deposits with Banks | | | 6,896 | | | | 8,942 | | | | 9,691 | | | | (23 | ) | | | (29 | ) |
| Federal Funds Sold and Securities Purchased under Resale Agreements | | | 69,764 | | | | 65,809 | | | | 76,719 | | | | 6 | | | | (9 | ) |
| Securities Borrowed | | | 39,188 | | | | 34,143 | | | | 40,880 | | | | 15 | | | | (4 | ) |
| Trading Assets: | | | | | | | | | | | | | | | | | | | | |
| | Debt and Equity Instruments | | | 146,783 | | | | 165,199 | | | | 144,992 | | | | (11 | ) | | | 1 | |
| | Derivative Receivables | | | 86,649 | | | | 83,102 | | | | 63,224 | | | | 4 | | | | 37 | |
| Securities | | | 85,178 | | | | 84,463 | | | | 61,225 | | | | 1 | | | | 39 | |
| Loans (Net of Allowance for Loan Losses) | | | 212,256 | | | | 211,014 | | | | 209,541 | | | | 1 | | | | 1 | |
| Private Equity Investments | | | 8,170 | | | | 8,228 | | | | 8,553 | | | | (1 | ) | | | (4 | ) |
| Goodwill | | | 8,122 | | | | 8,096 | | | | 8,055 | | | | — | | | | 1 | |
| Mortgage Servicing Rights | | | 3,235 | | | | 3,230 | | | | 6,918 | | | | — | | | | (53 | ) |
| Other Intangibles: | | | | | | | | | | | | | | | | | | | | |
| | Purchased Credit Card Relationships | | | 1,205 | | | | 1,269 | | | | 1,508 | | | | (5 | ) | | | (20 | ) |
| | All Other Intangibles | | | 294 | | | | 307 | | | | 327 | | | | (4 | ) | | | (10 | ) |
| Other Assets | | | 65,187 | | | | 65,780 | | | | 58,238 | | | | (1 | ) | | | 12 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
TOTAL ASSETS | | $ | 755,156 | | | $ | 758,800 | | | $ | 712,508 | | | | — | | | | 6 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
LIABILITIES | | | | | | | | | | | | | | | | | | | | |
| Deposits | | $ | 300,667 | | | $ | 304,753 | | | $ | 282,037 | | | | (1 | ) | | | 7 | |
| Federal Funds Purchased and Securities Sold under Repurchase Agreements | | | 160,221 | | | | 169,483 | | | | 152,837 | | | | (5 | ) | | | 5 | |
| Commercial Paper | | | 14,039 | | | | 16,591 | | | | 23,726 | | | | (15 | ) | | | (41 | ) |
| Other Borrowed Funds | | | 12,848 | | | | 8,946 | | | | 16,968 | | | | 44 | | | | (24 | ) |
| Trading Liabilities: | | | | | | | | | | | | | | | | | | | | |
| | Debt and Equity Instruments | | | 64,427 | | | | 66,864 | | | | 71,141 | | | | (4 | ) | | | (9 | ) |
| | Derivative Payables | | | 64,804 | | | | 66,227 | | | | 44,997 | | | | (2 | ) | | | 44 | |
| Accounts Payable, Accrued Expenses and Other Liabilities (including the Allowance for Lending-Related Commitments) | | | 46,776 | | | | 38,440 | | | | 36,910 | | | | 22 | | | | 27 | |
| Long-Term Debt | | | 42,851 | | | | 39,751 | | | | 37,322 | | | | 8 | | | | 15 | |
| Guaranteed Preferred Beneficial Interests in the Firm’s Junior Subordinated Deferrable Interest Debentures | | | 5,439 | | | | 5,439 | | | | 5,439 | | | | — | | | | — | |
| | | |
| | | |
| | | |
| | | | | | | | | |
TOTAL LIABILITIES | | | 712,072 | | | | 716,494 | | | | 671,377 | | | | (1 | ) | | | 6 | |
STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | | | | |
| Preferred Stock | | | 1,009 | | | | 1,009 | | | | 1,009 | | | | — | | | | — | |
| Common Stock | | | 2,032 | | | | 2,024 | | | | 2,016 | | | | — | | | | 1 | |
| Capital Surplus | | | 12,477 | | | | 13,222 | | | | 12,783 | | | | (6 | ) | | | (2 | ) |
| Retained Earnings | | | 26,538 | | | | 25,851 | | | | 27,278 | | | | 3 | | | | (3 | ) |
| Accumulated Other Comprehensive Income (Loss) | | | 1,113 | | | | 1,227 | | | | (909 | ) | | | (9 | ) | | | NM | |
| Treasury Stock, at Cost | | | (85 | ) | | | (1,027 | ) | | | (1,046 | ) | | | 92 | | | | 92 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
TOTAL STOCKHOLDERS’ EQUITY | | | 43,084 | | | | 42,306 | | | | 41,131 | | | | 2 | | | | 5 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 755,156 | | | $ | 758,800 | | | $ | 712,508 | | | | — | | | | 6 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
Page 10
| | | |
| J.P. MORGAN CHASE & CO | | |
| CREDIT-RELATED INFORMATION | |
| (in millions, except ratios) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | Mar 31, 2003 |
| | | | | | | | | | | | | | | | | Over (Under) |
| | | | | | | | | | | | | | | | |
|
| | | | | Mar 31 | | Dec 31 | | Mar 31 | | Dec 31 | | Mar 31 |
| | | | | 2003 | | 2002 | | 2002 | | 2002 | | 2002 |
| | | | |
| |
| |
| |
| |
|
CREDIT EXPOSURE: | | | | | | | | | | | | | | | | | | | | |
| Commercial Loans | | $ | 88,446 | | | $ | 91,548 | | | $ | 101,752 | | | | (3 | )% | | | (13 | )% |
| Derivative Receivables (a) | | | 86,649 | | | | 83,102 | | | | 63,224 | | | | 4 | | | | 37 | |
| Other Receivables (b) | | | 108 | | | | 108 | | | | — | | | | — | | | | NM | |
| | | |
| | | |
| | | |
| | | | | | | | | |
| | Total Commercial Credit-Related Assets | | | 175,203 | | | | 174,758 | | | | 164,976 | | | | — | | | | 6 | |
| Lending-Related Commitments (c) | | | 230,698 | | | | 238,120 | | | | 242,827 | | | | (3 | ) | | | (5 | ) |
| | | |
| | | |
| | | |
| | | | | | | | | |
| | Total Commercial Credit Exposure (d) | | | 405,901 | | | | 412,878 | | | | 407,803 | | | | (2 | ) | | | — | |
| Managed Consumer Loans (e) (f) | | | 160,424 | | | | 155,538 | | | | 136,019 | | | | 3 | | | | 18 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
| | Total Credit Portfolio | | $ | 566,325 | | | $ | 568,416 | | | $ | 543,822 | | | | — | | | | 4 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
NET CHARGE-OFFS: | | | | | | | | | | | | | | | | | | | | |
| Commercial Loans | | $ | 292 | | | $ | 434 | | | $ | 320 | | | | (33 | ) | | | (9 | ) |
| Lending-Related Commitments | | | — | | | | 212 | | | | — | | | | NM | | | | NM | |
| | | |
| | | |
| | | |
| | | | | | | | | |
| | Total Commercial Credit Exposure | | | 292 | | | | 646 | | | | 320 | | | | (55 | ) | | | (9 | ) |
| Managed Credit Card (e) | | | 732 | | | | 716 | | | | 658 | | | | 2 | | | | 11 | |
| All Other Consumer | | | 103 | | | | 116 | | | | 96 | | | | (11 | ) | | | 7 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
| | Total Managed Consumer Loans | | | 835 | | | | 832 | | | | 754 | | | | — | | | | 11 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
| | Total Credit Portfolio | | $ | 1,127 | | | $ | 1,478 | | | $ | 1,074 | | | | (24 | ) | | | 5 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
NET CHARGE-OFF RATES — ANNUALIZED: | | | | | | | | | | | | | | | | | | | | |
| Total Commercial Loans | | | 1.32 | % | | | 1.88 | % | | | 1.27 | % | | | (56 | )bp | | | 5 | bp |
| Managed Credit Card | | | 5.95 | | | | 5.70 | | | | 5.87 | | | | 25 | | | | 8 | |
| Total Credit Portfolio | | | 0.95 | | | | 1.22 | | | | 0.90 | | | | (27 | ) | | | 5 | |
NONPERFORMING ASSETS: | | | | | | | | | | | | | | | | | | | | |
| Commercial Loans | | $ | 3,286 | | | $ | 3,672 | | | $ | 2,359 | | | | (11 | )% | | | 39 | % |
| Derivative Receivables (a) | | | 277 | | | | 289 | | | | 1,285 | | | | (4 | ) | | | (78 | ) |
| Other Receivables (b) | | | 108 | | | | 108 | | | | — | | | | — | | | | NM | |
| Consumer Loans | | | 495 | | | | 521 | | | | 534 | | | | (5 | ) | | | (7 | ) |
| Assets Acquired in Loan Satisfactions | | | 225 | | | | 190 | | | | 130 | | | | 18 | | | | 73 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
| | | Total Credit Portfolio (g) | | $ | 4,391 | | | $ | 4,780 | | | $ | 4,308 | | | | (8 | ) | | | 2 | |
| | | |
| | | |
| | | |
| | | | | | | | | |
SELECTED COUNTRY EXPOSURE | | | | | | | | | | | | | | | | | | | | |
(in billions) | | | | | | | | | | | | | | | | | | | | |
| Brazil | | $ | 1.5 | (h) | | $ | 2.1 | | | $ | 2.7 | | | | (29 | ) | | | (44 | ) |
| Venezuela | | | 0.4 | (h) | | | 0.4 | | | | 0.2 | | | | — | | | | 100 | |
| (a) | | Includes $141 million of Enron-related surety receivables at March 31, 2003 and $125 million at December 31, 2002 that were the subject of settled litigation. Includes $1,130 million of Enron-related surety receivables and a letter of credit at March 31, 2002. |
| |
| (b) | | Represents the Enron-related letter of credit, which continues to be the subject of litigation and was classified in Other Assets. These receivables were classified in Derivative Receivables at March 31, 2002. |
| |
| (c) | | Includes unused advised lines of credit of $22 billion at March 31, 2003 and December 31, 2002, and $19 billion at March 31, 2002. |
| |
| (d) | | Credit exposure excludes risk participations and does not reflect the benefit of credit derivative hedges or liquid collateral held against derivatives contracts. |
| |
| (e) | | Includes securitized credit card receivables. |
| |
| (f) | | At March 31, 2003, excludes $978 million of accrued interest and fees on securitized credit card loans that was classified in Other Assets. |
| |
| (g) | | Nonperforming assets at March 31, 2003 have not been reduced for credit protection (single name credit default swaps and collateralized loan obligations) relating to nonperforming counterparties in amounts aggregating $50 million at March 31, 2003. Nonperforming assets exclude nonaccrual loans held for sale (“HFS”) of $58 million at March 31, 2003. HFS loans are carried at the lower of cost or market, and declines in value are recorded in Other Revenue. |
| |
| (h) | | Estimated |
Page 11
