![]() September 9, 2013 Marianne Lake, Chief Financial Officer Barclays Global Financial Services Conference Exhibit 99.1 |
![]() Agenda I. Performance overview II. Capital & Leverage III. Balance sheet IV. Interest rate impacts – Mortgage production – Earnings-at-risk (“EaR”) V. Credit update VI. Expense VII. Outlook 1 |
![]() Performance summary Note: Totals may not sum due to rounding Note: LTM stands for last twelve months 1 See note 1 on slide 18 2 See note 2 on slide 18 3 See note 4 on slide 18 4 See note 3 on slide 18 5 1H13 includes the impact of final Basel 2.5 capital rules 6 Estimated impact of final Basel 2.5 Rules and Basel III Advanced NPR reflected in 2012, but not 2011. 1H13 includes the impact of Final Basel III capital rules issued July 2, 2013 7 Excludes Corp/PE loss for LTM as of 1H13 of $151mm from total revenue CCB 48% Lending and deposit related – CCB 5% Lending and deposit related – other 6% IB fees 11% Principal transactions 19% Asset mgmt fees – AM 13% Asset mgmt fees – other 12% Securities gains 2% Other 9% Mortgage fees 13% Credit card 10% Including the impact of final rules 2 $mm, excluding EPS FY2011 FY2012 1H13 Revenue (FTE) $99,767 $99,890 $51,806 Credit Costs 7,574 3,385 664 Expense 62,911 64,729 31,289 Net income applicable to common stock $17,568 $19,877 $12,232 Reported EPS $4.48 $5.20 $3.19 ROTCE 15% 15% 17% Return on Basel I RWA (excl. DVA) 1.5 1.7 1.8 Basel I Tier 1 common ratio 4,5 10.1 11.0 10.4 Basel III Tier 1 common ratio 4,6 7.9 8.7 9.3 Firmwide revenue – LTM as of 1H13 1,7 NIR represents 56% of revenue – LTM as of 1H13 NIR mix 1 2 3 1 Reported net income $18,976 $21,284 $13,025 JPMorgan Chase overview – Performance summary |
![]() Growing our fortress balance sheet Shares outstanding (EOP) 3.7B 3.9B 3.9B 3.8B 3.4B 3.5B 1 Excludes legal reserves associated with mortgage-backed securities litigation 2 CAGR 3 Based on six months ended June 30, 2013, 2008 and 2003; excl. DVA, growth YoY would be 28%; see note 4 on slide 18 3.8B 3.8B 3 ($B) 2006 1H13 Tangible common equity $65.4 $150.7 Basel I Tier 1 common 7.3% 10.4% Loan loss reserve $7.3 $19.4 Repurchase reserve 1 $0.0 $2.5 EOP Deposits $638.8 $1,203.0 As of 1H13 Growth YoY 5Y 2 10Y 2 BVPS 8% 7% 9% TBVPS 12% 12% 9% EPS³ 32% 22% 8% Key metrics since FY2006 JPMorgan Chase overview – Performance summary |
![]() Key business drivers by LOB JPMorgan Chase overview 1 LTM average deposits represents the day-weighted average of the 3Q12, 4Q12, 1Q13 and 2Q13 average deposits 2 LTM average VaR represents the day-weighted average of the 3Q12, 4Q12, 1Q13 and 2Q13 average VaR 3 Represents client deposits and other third-party liabilities 4 Represents total CIB trading and Credit Portfolio VaR 5 Chase ranked #4 by J.D. Power for customer satisfaction in retail banking among large bank peers 6 Based on 2Q13 earnings 7 1H13 rank of JPM markets revenue of 10 leading competitors based on reported information, excl. DVA 8 Source: Strategic Insights 1 1 1 1 CCB #1 in customer satisfaction among the largest banks by both J.D. Power 5 (Apr 13) and the American Customer Satisfaction Index (Dec 12) Deposit growth 2x industry and fastest amongst large cap banks 6 #2 in mortgage originations in 2Q13, up from #5 in 2006 Record Card sales volume in 2Q13, outpacing the industry Auto originations up 17% in 2Q13 YoY CIB #1 in Global IB fees #1 in Markets revenue share 7 CB 12 consecutive quarters of loan growth AM 17 consecutive quarters of positive long- term client flows #1 in active managed mutual funds flows YTD in the US, EMEA and Asia 8 2 4 Key drivers/statistics ($B, except where noted) Key highlights 3 4 CAGR 2011 2012 1H13 LTM 2011-LTM CBB Deposits (Avg) $360.8 $392.1 $427.0 $412.8 9.4% Client inv. assets (EOP) 137.9 158.5 171.9 171.9 15.9% Mortgage originations 145.6 180.8 101.7 200.2 23.7% Card Sales volume 343.7 381.1 199.9 398.1 10.3% Auto originations 21.0 23.4 13.3 25.1 12.6% Loans (EOP) $114.1 $115.3 $110.8 $110.8 (1.9%) Client deposits (Avg) 318.8 355.8 363.2 361.1 8.7% AUC ($T, EOP) 16.9 18.8 18.9 18.9 8.0% Average VaR ($mm) 76.0 96.0 51.0 82.7 N/M Loans (EOP) $112.0 $128.2 $130.9 $130.9 11.0% Deposits (Avg) 174.7 195.9 195.6 195.3 7.7% AUM (EOP) $1,336 $1,426 $1,470 $1,470 6.6% Long Term AUM Flows 51.0 58.0 55.0 84.0 39.5% Loans (EOP) 57.6 80.2 86.0 86.0 30.7% Deposits (Avg) 106.4 129.2 138.0 134.3 16.8% CCB CB AM CIB |
![]() Capital & Leverage Buffer of 50+ bps above B3T1C and of 50 bps above SLR, reflects potential: Capital volatility – RWA and AOCI Capital Conservation or Leverage Buffer impacts to capital distributions – when fully phased-in Firm SLR consistent with Tier 1 capital ratio requirements Bank SLR behind Firm SLR More resources have been maintained at HoldCo to preserve firmwide flexibility Majority of relevant off-balance sheet exposures held at the Bank Targets to be achieved via a combination of actions – Retain Bank earnings and potentially downstream capital from HoldCo – Actions to reduce Bank leverage assets Expect to resubmit CCAR in September 1 Corresponds to the Firm’s lead bank, JPMorgan Chase Bank, National Association Increase in capital may impact return targets, but likely not proportionately, as we optimize B3T1C ratio 2Q13 – standardized approach: 9.7% Leverage assets ~ 2x B3 RWA 5 Capital and Supplementary Leverage Ratio (“SLR”) Estimated 2Q13 Comments Basel III Tier 1 common ratio 9.3% Target of 10-10.5% Basel III Tier 1 ratio 10.0% Target of 11.5%+ Firm SLR 4.7% Target of 5.5%+/- Bank SLR 1 4.3% Target of 6%+ 1 |
![]() JPMorgan Chase fortress balance sheet Note: Totals may not sum due to rounding Note: For footnoted information, refer to slide 19 ~$800B cash and high quality assets 60% loan-to-deposit ratio 10 HoldCo pre-funding 11 : greater than 24 months Less than $40B wholesale ST unsecured debt 12 Wholesale Consumer $2,439B $2,439B Goodwill Other 7 Loans 4 $706B Eligible securities Cash¹ $341B Unencumbered marketable securities³ Capital markets liabilities Capital markets secured financing $564B 8 Other liabilities 9 Equity $209B B3 RWA $1,587B Other capital markets secured financing 5 Capital markets trading assets 6 $640B Deposits $1,203B $B 2Q13 Eligible cash $279 Eligible securities 175 Total HQLA² $454 $808B $475B Note: HoldCo debt included above excl. maturities within 1 year $B 2Q13 (B3T1C+HoldCo debt+pref) $302 (B3T1C+HoldCo debt+pref)/B3 RWA ~19% Estimated LCR ratio 118% 6 CP & other borrowed funds JPMorgan Chase balance sheet – June 30, 2013 ($B) Assets Liabilities/Equity LTD $266B Long-term debt and equity $475B $67B secured $165B senior and structured notes $34B subordinated debt & TruPS $11B preferred stock $151B TCE (excl. goodwill & other intang.) |
![]() The mortgage market volume reduction has been dramatic and rapid Interest rate impacts Primary and secondary mortgage rates (%) MBA Weekly Application Index: Jan 2013-Aug 2013 Source: Freddie Mac, Bloomberg Primary and secondary mortgage rates have increased >100 bps since the lows in early 2Q13, driving: More than 60% reduction in market refinance applications relative to peak in May 2013 2H13 U.S. market originations expected to be down 30-40% versus 1H13 Medium-term profitability challenged by: Lost revenue from volume – Purchase volume expected to increase but not to replace lost refinance volume Compression of revenue margins – Due to competitive pressures, change in mix and higher secondary rates Negative operating leverage – Adjusting capacity of the business will take time – Addressing fixed costs may take longer Commentary Expect 3Q13 and 4Q13 pretax margin to be slightly negative Maintain TTC Mortgage Production pretax income target guidance of $1.5B+/- 110 bps 102 bps (64)% Source: Mortgage Bankers Association Note: MBA Weekly Application Index data is not seasonally adjusted +111 bps 7 July-August mean: 95 bps |
![]() Focus on growing purchase market share Interest rate impacts Chase purchase market share Commentary Increase in rates has reduced the remaining refinance opportunity by >50% HPI improvement likely to increase eligible population over time We will continue to invest to capture purchase share Technology and process improvements Customer service Distribution – Retail mortgage bankers and Correspondent Marketing and brand Source: Inside Mortgage Finance 1 Households eligible for refinance with offer rate 50 bps lower than the current mortgage rate and credit eligible defined as meets FICO and LTV requirements with no bankruptcy or foreclosure history 8 Chase purchase market share Increasing mortgage rates Commentary Refinance opportunity at July 2013 (households) 1 |
![]() Firm well-positioned for rising rates Interest rate impacts 1 As of 6/30/2013. Reflects risk exposure to pretax NII of the Firm's non-market-based business activities (see 2Q13 Form 10-Q disclosure for further discussion on interest rate exposure) As of June 30, 2013 The Firm is positioned to benefit from rising rates EaR of $2.1B and $3.7B for a 100 bps and a 200 bps parallel move, respectively AOCI/NII relationship for 200 bps parallel rise in market rates Would reduce AOCI by incremental ~$15B pre-tax Would generate cumulative incremental NII of $17B+/- over 3 years 100 Potential increases in NII relative to the forward curve 10Yr Swap (bps) No curve change 0 100 200 $2.1B $2.0B $0.9B $1.7B 9 EaR – Simulated net interest income increases Commentary $3.7B 1 |
![]() Simulated impact of a 200 bps parallel rate shock over a three year period Interest rate impacts Note: TTC stands for through-the-cycle Note: Assumes tax rate of 38% Note: Balance sheet and RWA assumed constant at 2Q13 over the three year simulation period 1 2Q13 annualized not incremental Incremental to core earnings As of June 30, 2013 200 bps instantaneous “parallel” shock; immediate AOCI impact Mortgage production market size/pretax margin: <$1T in year 1; exit year 3 at TTC targets ($1.5T and 65 bps) The combination of a more normal rate environment with a broader economic recovery would also increase core earnings Capital impact manageable; additional earnings power significant 10 $B, except where noted Simulation assumptions Impact of simulation 2Q13 annualized Year 1 Cumulative over 3 years Change in NII $43.6 $3.7 $17.0+/- Mortgage Production pretax earnings $2.3 ($0.5)+/- $1.0+/- Change in Mortgage Production pretax earnings ($2.8)+/- ($6.0)+/- Pretax earnings $45.9 $0.9 $11.0 AOCI impact (pretax) ~($15) <($15) Est. cumulative impact on B3T1C (%) 9.3% ~(0.6)% ~0.0% 1 |
![]() Credit quality trends Credit update The Firm’s net charge-offs and nonperforming loans are down 83% 6 and 45% 6 , respectively, from peak levels Adjusted NPLs $15B $8B NCO rate MB 4 2.70% 1.81% 1.79% NCO rate Card 5 9.73% 5.44% 3.95% $7B 0.85% 3.43% 0.10% (prime) – 0.50% (HE) 4.00% $19.4B LLR, incl. PCI 11 $10B NCOs by line of business Strong coverage and reserve position Strong reserve coverage ratio 1 Card, Merchant Services & Auto 2 1H13 adjusted NCOs exclude CIB net recoveries 3 2012 NPLs are impacted by regulatory guidance issued in the first quarter of 2012 as a result of which the Firm began reporting performing junior liens that are subordinate to nonaccrual senior liens as nonaccrual loans and by regulatory guidance issued in the third quarter of 2012 requiring loans not reaffirmed by the borrower and discharged under Chapter 7 bankruptcy to be reported as nonaccrual loans. For reference, reported NPLs were $14,841mm, $9,993mm, $10,720mm and $9,734mm for 2010, 2011, 2012 and 1H13, respectively 4 Represents Real Estate Portfolios (“REP”) only 5 Represents Credit Card only; excludes loans held-for-sale 6 Based on peak levels of NCOs and NPLs in 3Q09 3 $13.7B LLR, excl. PCI $21.9B $16.2B $27.3B CCB CIB CB LLR, ex-PCI $24B $12B $9B $6B $7-8B MB MB MB MB MB Card Card Card Card Card 1 1 1 1 1 2010 2011 2012 Adjusted 1H13 Annualized 2 TTC guidance (Investor Day 2013) |
![]() Card Services Credit update Comments and outlook Given improved delinquencies, lower volume of new TDR together with portfolio seasoning – expect a $500mm+/- reserve release in 2H13 If delinquencies continue to improve in 2014 – potential incremental reserve releases Credit card: 0-30 $ roll rate Source: Internal Chase Data Note: TDR stands for troubled debt restructuring Note: Totals may not sum due to rounding 1 Credit card delinquencies prior to January 1, 2010 to principally reflect managed portfolio performance; the dotted part of the line has been adjusted to eliminate impact of legacy payment strategy TDR portfolio and NCO rates 22.0% 12.1% Total NCO rate Potential incremental reserve releases in 2014 12 1 NCO rate 0-24 25-36 37+ Mar-10 22.9% 13.4% 8.7% Jun-13 16.4% 8.5% 6.0% $3.9B Mar-10 Jun-13 |
![]() 90+ Day Delinquencies, excl. PCI (‘000 units) Comments and outlook Delinquencies down 24% since 1Q11 Severities down from ~40% in 3Q11 to ~25% in 2Q13 due to continuing HPI improvements Total quarterly net charge-offs expected to be at $200mm+/- in 3Q13 If current trends continue, net charge-offs will be at or around these levels in 4Q13 NCI reserve releases expected to be $500mm+/- in 3Q13 Mortgage Banking – Non credit-impaired loans Credit update Source: Internal Chase Data Notes: Reflects Chase owned inventory Source: Internal Chase Data Loss severities at initial write-down, excl. PCI 13 |
![]() Mortgage Banking – Purchased credit-impaired loans Credit update Initial fair value mark reflected $30.5B of estimated lifetime principal credit losses Incremental impairments of $5.7B ¹ recorded in the allowance for loan losses since acquisition Recent HPI improvements have resulted in a probable and significant decrease in lifetime loss estimates Expect reserve reduction of $750mm+/- in 3Q13 taken through provision expense We could see additional reserve reductions if HPI and delinquencies continue to improve Source: Moody’s July 2013 national HPI assumptions 1 Impairments taken 2009-2011; last impairment 4Q11 As of year-end 2013 2014 2015 2016 4Q11 (31)% (26)% (22)% (19)% Current (23) (18) (15) (13) Improvement 8% 8% 7% 6% 14 HPI assumptions – change from peak Commentary Changes in HPI since last PCI impairment |
![]() 2013 Firmwide expense Primarily non-Corporate litigation 1 Excludes Corporate litigation and foreclosure-related matters (“FRM”); includes elevated mortgage expense $64.7 #1 priority – led by Operating Committee Unprecedented efforts with 23 workstreams, including: CCAR Consent orders Significant resources committed to addressing control and regulatory agendas ~3,000 people added across control functions 15 Control agenda Firmwide adjusted expense ($B) |
![]() Mortgage Banking Quarterly net charge-offs – 3Q13: expect $200mm+/- – 4Q13: at or around these levels, if current trends continue 3Q13 reserve releases – NCI: expect $500mm+/- – PCI: expect $750mm+/- Mortgage Production pretax income – Expect 3Q13 and 4Q13 pretax margin to be slightly negative – Maintain TTC target pretax guidance of $1.5B+/- Card, Merchant Services & Auto Portfolio improvements – delinquencies and restructured loans – Expect $500mm+/- reserve release in 2H13 Outlook 3Q13 Markets revenue, excluding DVA, expected to be flat to down 5% YoY Expect NII slightly up in 3Q13 vs. 2Q13 Expect FY2013 firmwide adjusted expense of $59.5-$60B Expect to increase litigation reserves in 3Q13 1 As defined at Investor Day, firmwide adjusted expense excludes Corporate litigation and FRM Basel III Tier 1 common ratio target of 10-10.5% over time Firm SLR target of 5.5%+/- over time Bank SLR target of 6%+ over time 16 Consumer & Community Banking Corporate & Investment Bank Firmwide guidance Capital and leverage 1 |
![]() Enhancements to Corporate Governance Principles Directors Corporate governance announcements Expect to join the JPM Board in January 2014 after retiring from General Electric Company at the end of 2013 Experience General Electric Company (1979-present), including 26 years at GE Capital Currently: Vice Chairman, General Electric Company Previously: Chairman and CEO of GE Capital, President and COO of GE Capital, CEO of GE Commercial Finance Michael A. Neal Other Board best practices include: Lead Independent Director position not rotating on an annual basis Directors, including the Lead Independent Director, will be available for consultation with major shareholders and other constituencies where appropriate Executive sessions (without company management) will take place at every regularly scheduled Board meeting Expect to be elected to the JPM Board on September 16, 2013 Experience Director, Freddie Mac (2008-2013) Deputy Head of Risk Management, JPMorgan Chase & Co. (2004-2005) Chief Risk Management Officer, Bank One Corporation (2001-2004) – Chair of the Business and Risk Committee Former Board Member, Risk Management Association Former Chair, Loan Syndications and Trading Association Linda B. Bammann Establishment of a Lead Independent Director role Lee R. Raymond, formerly Presiding Director, continues as Lead Independent Director Responsibilities and authorities of the Lead Director role include: Authority to call for a Board meeting at any time Preside over meetings when the CEO is conflicted or absent Approve the Board agenda for a meeting and may add agenda items Guide annual performance evaluation of Chairman and CEO Guide full Board consideration of CEO succession issues Facilitate communication between the company’s management and independent directors Meet one-on-one with the CEO after every regularly scheduled Board meeting Guide full Board consideration of compensation of CEO Guide annual self-assessment of full Board Lead Director Other Board Best Practices 17 |
![]() Notes on non-GAAP financial measures Notes 18 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. Tangible common equity (“TCE”) represents 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. Return on tangible common equity measures the Firm’s earnings as a percentage of average TCE. Tangible book value per share represents the TCE divided by the period-end number of common shares. In management’s view, these measures are meaningful to the Firm, as well as to analysts and investors, in assessing the Firm’s use of equity and in facilitating comparisons with peers. 3. The Tier 1 common ratio under both Basel I and Basel III are both non-GAAP financial measures. These measures are used by management, bank regulators, investors and analysts to assess the Firm's capital position and to compare the Firm's capital to that of other financial services companies. The Basel I Tier 1 common ratio is Tier 1 common capital divided by Basel I risk-weighted assets. Tier 1 common capital is defined as Tier 1 capital less elements of Tier 1 capital not in the form of common equity, such as perpetual preferred stock, noncontrolling interests in subsidiaries, and trust preferred securities. In July 2013, the U.S. Federal Reserve approved the final rule for implementing Basel III in the United States. For further information on Basel I and Basel III, see Regulatory capital on pages 117-119, 60-63, and 42-45 of JPMorgan Chase & Co.’s Annual Report on Form 10-K for the year ended December 31, 2012, and Quarterly Reports on Form 10-Q for the quarters ended June, 30, 2013 and March 31, 2013, respectively. 4. The impact of DVA is excluded from the calculation of the return on Basel I risk-weighted assets and EPS growth, which are non-GAAP financial measures used by management to assess the underlying performance of the business and for comparability with peers. |
![]() Notes on slide 6 – JPMorgan Chase fortress balance sheet 1. In addition to eligible cash included in High Quality Liquid Assets (“HQLA”), cash balance includes non- operational deposits with third party banks and float (considered inflows under Basel III LCR), as well as operational cash primarily used for settlement purposes 2. HQLA is the estimated amount of assets the Firm believes will qualify for inclusion in the Liquidity Coverage Ratio (“LCR”) based on the Firm’s current understanding of the proposed rules 3. The Firm has approximately $278 billion of unencumbered marketable securities, such as equity and fixed income securities available to raise liquidity if required 4. Net of allowance for loan losses 5. Includes resales, securities borrowed and cash and due from banks from CIB not included in the $808B total cash and unencumbered securities 6. Includes CIB trading assets and derivatives receivables 7. Includes other assets, other intangible assets, MSR, premises and equipment, accrued interest and accounts receivable and non-CIB trading assets 8. Includes trading liabilities, Fed funds purchased and securities loaned or sold under repurchase agreements, VIEs, other borrowed funds and other liabilities all in CIB and derivatives payable 9. Includes accounts payable and other liabilities, Fed funds purchased and securities loaned or sold under repurchase agreements and VIEs (excluding CIB) 10. Loan-to-deposit ratio is based on a gross loans basis 11. Number of months of pre-funding: the Firm targets pre-funding of the parent holding company to ensure that both contractual and non-contractual obligations can be met for at least 18 months assuming no access to wholesale funding markets 12. Includes wholesale CP funding and a portion of other borrowed funds, which are unsecured 19 |
![]() Forward-looking statements 20 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, 2012, and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2013 and June 30, 2013, 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. |