JPMorgan Chase & Co. · NYSE:JPM
JPMorgan Chase & — Q4 2006 Earnings Presentation
20 slides from JPMorgan Chase &'s earnings presentation, Jan 17, 2007
Slide 1: Financial Results Fourth Quarter 2006
F I N A N C I A L R E S U L T S Fourth Quarter 2006 J A N U A R Y 1 7, 2 0 0 7
Slide 2: Agenda
Agenda FY 2006 and 4Q06 Results 2007 Outlook
Slide 3: FY 2006 Managed Results
FY 2006 Managed Results1 $ in millions Record annual revenue and earnings 1 Managed basis presents revenue and credit costs without the effect of credit card securitizations. All references to credit costs refer to managed provision for credit losses 2 Includes merger costs of $305mm in 2006 and $72
Slide 4: 4Q06 Managed Results
4Q06 Managed Results1 $ in millions 1 Managed basis presents revenue and credit costs without the effect of credit card securitizations. All references to credit costs refer to managed provision for credit losses 2 Includes merger costs of $100mm in 4Q06, $48mm in 3Q06, and $77mm in 4Q05 3 Includes
Slide 5: 4Q06 Significant Items - Continuing Operations
4Q06 Significant Items - Continuing Operations $ in millions
Slide 6: Investment Bank
Net income of $1.0bn on record revenue of $4.7bn ROE of 19% Record IB fees of $1.6bn up 36% YoY driven by record debt underwriting and advisory and strong equity underwriting fees Fixed Income Markets up 77% from weak 4Q05 with improved performance in credit, currencies and emerging markets, partial
Slide 7: Retail Financial Services
Retail Financial Services $ in millions 1 Actual numbers for all periods, not over/under Net income of $718mm down 11% YoY and 4% QoQ Regional Banking results include net losses on portfolio repositioning of ($215)mm in current quarter and ($120)mm in prior year Regional Banking current quarter resu
Slide 8: Regional Banking
Regional Banking $ in millions 1 Actual numbers for all periods, not over/under Net income of $619mm reflecting portfolio repositioning, BNY acquisition and insurance divestiture Average deposits ex. BNY up 7% YoY and 1% QoQ with continued shift to narrower-spread deposits Home equity originations u
Slide 9: Card Services (Managed)
Card Services (Managed) $ in millions 1 Actual numbers for all periods, not over/under Net income of $719mm up 138% YoY ROO of 3.04% Prior year included ($650)mm pre-tax impact related to new bankruptcy legislation Avg outstandings of $147bn up 6% YoY and 4% QoQ driven by strong new account openings
Slide 10: Commercial Banking
Commercial Banking $ in millions 1 Actual numbers for all periods, not over/under 2 Includes deposits and deposits swept to on-balance sheet liabilities Net income of $256mm Overhead ratio of 48% Results reflect BNY acquisition on October 1 Loans and liability balances up 15% YoY driven by organic g
Slide 11: Treasury & Securities Services
Treasury & Securities Services $ in millions Net income of $256mm up 1% YoY Pre-tax margin of 26% Liability balances up 19% YoY; Assets under custody up 30% YoY Revenue up 7% YoY driven by higher liability balances, new business, increased product usage by existing clients and market appreciation, p
Slide 12: Asset Management
Asset Management $ in millions 1 Actual numbers for all periods, not over/under 2 4Q05 include $2bn of avg loans and $2bn of avg deposits of BrownCo, which was sold on November 30, 2005 Record net income of $407mm up 19% YoY driven by increased AUM and higher performance fees, partially offset by hi
Slide 13: Other Corporate
Other Corporate ($ in millions) Corporate Total Corporate ($ in millions) Treasury ($ in millions) 1 Discontinued operations relate to the sale of select corporate trust businesses, with net income of $620mm in 4Q06, $65mm in 3Q06 and $56mm in 4Q05 2 Actual numbers for all periods, not over/under 3
Slide 14: Capital Strength
Capital Strength Repurchased 21.1mm shares for $1.0bn in 4Q063 Repurchased 90.7mm shares for $3.9bn in FY 20063 1 See note 1 on slide 20 2 Estimated for 4Q06 3 There is $5.2bn remaining capacity under the $8bn March 2006 Board authorization $ in billions
Slide 15: Agenda
Agenda FY 2006 and 4Q06 Results 2007 Outlook
Slide 16: 2007 Outlook
2007 Outlook Investment Bank Strong IB fee pipeline entering 2007 Credit costs trend to more normal levels Modest increase in expense (ex. incentive compensation) reflecting continued investments in growth areas Retail Financial Services Net interest income up slightly from 4Q run-rate with balance
Slide 17: 2007 Outlook
2007 Outlook Commercial Banking Expect continued business growth with some competitive and rate pressures Credit costs trend to more normal levels Treasury & Securities Services Expect improvement in pre-tax margin Continued revenue growth Modest expense growth from 2006 level Revenue up from 2006 b
Slide 18: 2007 Outlook
2007 Outlook Corporate Private Equity: $1.3bn in gains and $627mm in net income in 2006 Results will be market-driven and volatile Treasury and Other Corporate: Expect combined net loss to be ($50)mm - ($100)mm per quarter in 2007 Merger savings and costs: Expect to achieve final 7% of $3bn in merge
Slide 19: Notes on non-GAAP financial measures
Notes on non-GAAP financial measures This presentation includes non-GAAP financial measures. TCE as used on slides 3 and 4 for purposes of a return on tangible common equity and presented as Tangible Common Equity on slide 15 (line 1) is defined as common stockholders' equity less identifiable intan
Slide 20: Disclaimer
Disclaimer This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of JPMorgan Chase's management and are subject to significant risks and uncertainties. Actu