UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: | Commission file number | |
January 21, 2004 | 1-5805 |
J.P. MORGAN CHASE & CO.
(Exact name of registrant as specified in its charter)
Delaware | 13-2624428 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
270 Park Avenue, New York, NY | 10017 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (212) 270-6000
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit Number | Description of Exhibit | |
12.1 |
Computation of Ratio of Earnings to Fixed Charges |
|
12.2 |
Computation of Ratio of Earnings to Fixed Charges and Preferred
Stock Dividend Requirements |
|
99.1 |
Press Release 2003 Fourth Quarter and Full Year Results |
|
99.2 |
Press Release Financial Supplement Fourth Quarter 2003 |
|
99.3 |
Analyst Presentation Slides Fourth Quarter and Full Year 2003 Financial Results |
Item 9. Regulation FD Disclosure
On January 21, 2004, J.P. Morgan Chase & Co. (JPMorgan Chase or the Firm) held an investor presentation to review 2003 fourth quarter and full year earnings.
Exhibit 99.3 is a copy of slides furnished at, and posted on the Firms website in connection with, the presentation. The slides are being furnished pursuant to Item 9, and the information contained therein shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities under that Section. Furthermore, the information in Exhibit 99.3 shall not be deemed to be incorporated by reference into the filings of the Firm under the Securities Act of 1933.
Item 12. Results of Operations and Financial Condition
On January 21, 2004, JPMorgan Chase reported 2003 fourth quarter net income of $1.86 billion, or $0.89 per share, compared to a net loss of $387 million, or ($0.20) per share, for the fourth quarter of 2002.
In 2002, results were provided on both a reported basis and an operating basis, which excluded merger and restructuring costs and special items. Operating earnings for the fourth quarter of 2002 were $730 million, or $0.36 per share.
For the full year, net income was $6.72 billion, or $3.24 per share, 304% above last years reported results of $1.66 billion, or $0.80 per share, and 99% higher than last years operating results of $3.38 billion, or $1.66 per share.
A copy of the 2003 fourth quarter earnings press release is attached hereto as Exhibit 99.1, and a copy of the press release financial supplement is attached hereto as Exhibit 99.2.
The earnings 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 Chases management and are subject to significant risks and
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uncertainties. These risk and uncertainties could cause JPMorgan Chases results to differ materially from those set forth in such forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the ability to obtain governmental approvals of the merger on the proposed terms and schedule; the failure of JPMorgan Chase and Bank One stockholders to approve the merger; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any revenue synergies from the merger may not be fully realized or may take longer to realize than expected. Additional risk and uncertainties are described in JPMorgan Chases Quarterly Report on Form 10-Q for the quarters ended September 30, 2003, June 30, 2003 and March 31, 2003, and in the 2002 Annual Report on Form 10-K, each filed with the Securities and Exchange Commission, which are available at the Securities and Exchange Commissions Internet site (http://www.sec.gov), and to which reference is hereby made.
Stockholders are urged to read the joint proxy statement/prospectus regarding the proposed transaction when it becomes available, because it will contain important information. Stockholders will be able to obtain a free coy of the joint proxy statement/prospectus, as well as other filings containing information about JPMorgan Chase, without charge, at the SECs Internet site (http://www.sec.gov).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
J.P. MORGAN CHASE & CO.
(Registrant)
By: /s/ Joseph L. Sclafani
Joseph L. Sclafani
Executive Vice President and Controller
[Principal Accounting Officer]
Dated: January 21, 2004
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EXHIBIT INDEX
Exhibit No. | Description | |
12.1 |
Computation of Ratio of Earnings to Fixed Charges |
|
12.2 |
Computation of Ratio of Earnings to Fixed Charges and Preferred
Stock Dividend Requirements |
|
99.1 |
Press Release 2003 Fourth Quarter and Full Year Results |
|
99.2 |
Press Release Financial Supplement Fourth Quarter 2003 |
|
99.3 |
Analyst Presentation Slides Fourth Quarter and Full Year 2003 Financial Results |
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EXHIBIT 12.1
J.P. MORGAN CHASE & CO.
Computation of Ratio of Earnings to Fixed Charges
Year ended December 31, (in millions, except ratios) | 2003 | |||
Excluding Interest on Deposits |
||||
Income before income taxes |
$ | 10,028 | ||
Fixed charges: |
||||
Interest expense |
7,503 | |||
One-third of rents, net of income from subleases (a) |
318 | |||
Total fixed charges |
7,821 | |||
Less: Equity in undistributed income of affiliates |
(102 | ) | ||
Earnings before taxes and fixed charges,
excluding capitalized interest |
$ | 17,747 | ||
Fixed charges, as above |
$ | 7,821 | ||
Ratio of earnings to fixed charges |
2.27 | |||
Including Interest on Deposits |
||||
Fixed charges, as above |
$ | 7,821 | ||
Add: Interest on deposits |
3,604 | |||
Total fixed charges and interest on deposits |
$ | 11,425 | ||
Earnings before taxes and fixed charges,
excluding capitalized interest, as above |
$ | 17,747 | ||
Add: Interest on deposits |
3,604 | |||
Total earnings before taxes,
fixed charges and interest on deposits |
$ | 21,351 | ||
Ratio of earnings to fixed charges |
1.87 | |||
(a) | The proportion deemed representative of the interest factor. |
EXHIBIT 12.2
J.P. MORGAN CHASE & CO.
Computation of Ratio of Earnings to Fixed Charges
and Preferred Stock Dividend Requirements
Year ended December 31, (in millions, except ratios) | 2003 | |||
Excluding Interest on Deposits |
||||
Income before income taxes |
$ | 10,028 | ||
Fixed charges: |
||||
Interest expense |
7,503 | |||
One-third of rents, net of income from subleases (a) |
318 | |||
Total fixed charges |
7,821 | |||
Less: Equity in undistributed income of affiliates |
(102 | ) | ||
Earnings before taxes and fixed charges,
excluding capitalized interest |
$ | 17,747 | ||
Fixed charges, as above |
$ | 7,821 | ||
Preferred stock dividends (pre-tax) |
76 | |||
Fixed charges including preferred stock dividends |
$ | 7,897 | ||
Ratio of earnings to fixed charges and
preferred stock dividend requirements |
2.25 | |||
Including Interest on Deposits |
||||
Fixed charges including preferred stock dividends, as above |
$ | 7,897 | ||
Add: Interest on deposits |
3,604 | |||
Total fixed charges including preferred stock
dividends and interest on deposits |
$ | 11,501 | ||
Earnings before taxes and fixed charges,
excluding capitalized interest, as above |
$ | 17,747 | ||
Add: Interest on deposits |
3,604 | |||
Total earnings before taxes, fixed charges
and interest on deposits |
$ | 21,351 | ||
Ratio of earnings to fixed charges
and preferred stock dividend requirements |
1.86 | |||
(a) | The proportion deemed representative of the interest factor. |
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 FOURTH QUARTER
AND FULL YEAR RESULTS
New York, January 21, 2004 J.P. Morgan Chase & Co. (NYSE: JPM) today reported 2003 fourth quarter net income of $1.86 billion, or $0.89 per share, compared to a net loss of $387 million, or ($0.20) per share, for the fourth quarter of 2002. Return on average common equity for the quarter was 17%.
Last year, results were provided on both a reported basis and an operating basis, which excluded merger and restructuring costs and special items. Operating earnings for the fourth quarter of 2002 were $730 million, or $0.36 per share.
For the full year, net income was $6.72 billion, or $3.24 per share, 304% above last years reported results of $1.66 billion, or $0.80 per share, and 99% higher than last years operating results of $3.38 billion, or $1.66 per share. Return on average common equity was 16% for 2003 compared with 8% on an operating basis for 2002.
William B. Harrison, Jr., Chairman and Chief Executive Officer, said In 2003, JPMorgan Chase delivered significantly improved performance executing well and achieving revenue growth in all major businesses. We had record annual earnings in both the Investment Bank and Chase Financial Services. We had our best quarterly performance since the merger in Investment Management & Private Banking. Our results also benefited from significantly reduced commercial credit costs.
Mr. Harrison added Our recently announced merger with Bank One will enable us to create a firm with a more balanced business mix, greater scale and leadership positions across our major businesses. Together with Jamie Dimon and his team, we will work hard on a successful integration while continuing to focus on our clients. We are confident that this merger will create significant value for our shareholders.
Highlights for the fourth quarter of 2003:
| The Investment Bank had a return on allocated capital of 20%.
Investment banking fees were 28% higher than the fourth quarter of 2002
driven by higher equity underwriting fees, which were at the highest
quarterly level in three years. |
| Chase Financial Services had a return on allocated capital of 25%.
The national consumer credit businesses (mortgage, card and auto)
produced double digit earnings growth compared to the fourth quarter of
2002. |
| Investment Management & Private Banking had its best quarterly
earnings since the merger of Chase and J.P. Morgan. |
Investor Contact: |
Ann Borowiec | Media Contact: | Joe Evangelisti | |||
(212) 270-7318 | (212) 270-7438 |
J.P. Morgan Chase & Co.
News Release
| JPMorgan Partners had net private equity gains of $159 million and
the second consecutive quarter of positive net operating earnings. |
| Treasury & Securities Services had a return on allocated capital of
21% and made two significant acquisitions. |
| Commercial credit quality continued to improve; commercial credit
costs were $753 million lower than in the fourth quarter of 2002. |
Highlights for the full year 2003:
| All businesses posted revenue growth in 2003 compared to 2002, with
significant improvement in the return on average common equity at 16%
for 2003. |
| The Investment Bank had record earnings of $3.7 billion for the full
year, up 183% from 2002, driven by strong growth in capital markets
revenues and equity underwriting fees and a significant decline in
credit costs. The return on allocated capital was 19% for the year. |
| The Investment Bank improved its ranking in Global Equity &
Equity-Related from #8 to #4 while maintaining its #1 ranking in Global
Syndicated Loans, #2 ranking in Global Investment Grade Bonds and #5
ranking in Global Announced M&A according to Thomson Financial. |
| Chase Financial Services posted record earnings of $2.5 billion and a
return on allocated capital of 28% for the year. Record revenues of
$14.6 billion were driven primarily by Home Finance revenues which were
up 38% from 2002. |
| JPMorgan Partners performance improved significantly with net
private equity gains of $27 million compared to net private equity
losses of $733 million for 2002. The carrying value of JPMorgan
Partners portfolio has decreased relative to the firms common equity,
consistent with the firms goal to reduce the capital committed to
private equity over time. |
| Commercial credit quality improved significantly with non performing
commercial assets down 42% from year-end 2002. Commercial credit costs
were $2.8 billion lower than in 2002. |
Investment Bank (IB)
Fourth Quarter 2003 versus Fourth Quarter 2002
Earnings were $860 million for the fourth quarter, compared to earnings of $341 million for the fourth quarter of 2002. Revenues of $3.0 billion were 8% lower than the fourth quarter of 2002 while expenses were down 19% over the same period. Earnings performance was driven by expense management and a significant improvement in commercial credit quality which resulted in lower credit costs. Return on allocated capital was 20% for the quarter, compared to 7% for the fourth quarter of 2002.
| Investment banking fees were $834 million, up 28% from the fourth
quarter of 2002, driven by strong equity and debt underwriting fees
partially offset by lower advisory fees. Equity underwriting fees of
$254 million represented the highest quarterly level in three years. |
| Capital markets and lending total return revenues were $2.4 billion,
down 4% from the fourth quarter of 2002, driven by a decline in Global
Treasury revenues partially offset by stronger performance in equity capital markets. Capital markets client revenues increased primarily
because of improved performance in equity derivatives. Capital markets and
lending total return revenues excluding Global Treasury were $2.2 billion, up
7% from last year. |
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J.P. Morgan Chase & Co.
News Release
| Expenses of $1.8 billion decreased 19% driven by
lower severance and related costs and compensation
expenses. |
| Credit costs were negative $241 million due to
restructurings of several non performing commercial
loans and improvement in the overall credit quality
of the portfolio. This is $730 million lower than
credit costs in the fourth quarter of 2002. |
Full Year 2003 versus Full Year 2002
Earnings were a record $3.7 billion for the full year, up 183% from 2002. Earnings growth was driven by 16% revenue growth and 6% expense growth combined with significantly lower credit costs. Return on allocated capital was 19% for the full year, compared to 6% for 2002.
| Investment banking fees of $2.9 billion increased 6%, driven by higher
equity and bond underwriting fees due to increases in market volumes
and equities market share. Partially offsetting this growth were
declines in advisory fees and loan syndication fees. |
| Capital markets and lending total return revenues of $11.6 billion
increased 22%, driven by fixed income and equity capital markets and
by Global Treasury. The increase in fixed income capital markets
revenue was due to growth in client revenues primarily in credit
markets, and higher portfolio management revenues in credit and
foreign exchange markets. Equity capital markets revenue growth
reflected improvement in equity derivatives. Global Treasurys record
performance was driven by portfolio positioning to benefit from the
interest rate movements throughout the year. Capital markets and
lending total return revenues excluding Global Treasury were $9.9
billion, up 25% from last year. |
| Expenses of $8.5 billion rose 6%, driven by higher incentives
resulting from improved financial performance. |
| Credit costs of negative $181 million reflected restructurings on
several non performing commercial loans and improvement in the overall
credit quality of the portfolio. |
Chase Financial Services (CFS)
Fourth Quarter 2003 versus Fourth Quarter 2002
Earnings were $560 million for the quarter, an increase of 23% from the fourth quarter of 2002. Return on allocated capital for the quarter was 25% compared to 21% for the fourth quarter of 2002.
| Revenues were $3.6 billion, up 8% from the fourth quarter of 2002,
driven by a 34% increase in Home Finance revenues. Auto Finance
revenues were up 11% from the fourth quarter of 2002 while Cardmember
Services revenues were up 4%. Regional Banking revenues declined due
to deposit spread compression. |
| Expenses of $1.9 billion for the quarter were up 8% from the fourth
quarter of 2002, reflecting higher business volumes resulting in
higher compensation costs, as well as increased severance and related
costs primarily due to the decline in mortgage refinance activity and
restructuring in Regional Banking. |
| Credit costs of $854 million were 2% lower than the fourth quarter of
2002 driven by lower net charge- offs in Middle Market, Home Finance
and Auto Finance. |
Full Year 2003 versus Full Year 2002
Earnings were a record $2.5 billion for the full year, an increase of 8% from 2002. Return on allocated capital was 28% for the full year compared to 27% in 2002.
| Revenues were a record $14.6 billion for the full year, up 9% from
2002, driven by record revenues in Home Finance of $4.0 billion, which
were up 38% from 2002. Auto Finance revenues were up 23% as market
share increased from 2002 while Cardmember Services revenues were up
4% compared to 2002 due to portfolio growth. Despite significant
deposit growth, Regional Banking revenues decreased 9% due to deposit
spread compression. |
| Expenses of $7.3 billion for the full year were up 10% from 2002
reflecting higher business volumes and higher compensation costs. |
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J.P. Morgan Chase & Co.
News Release
| Credit costs of $3.4 billion were 9% higher than 2002 as average
managed loans increased by 19% over the year. |
Treasury & Securities Services (T&SS)
Fourth Quarter 2003 versus Fourth Quarter 2002
Earnings were $147 million for the quarter, an increase of 15% from the fourth quarter of 2002. Return on allocated capital for the quarter was 21%, compared to 19% in the fourth quarter of 2002.
| Revenues were a record $1.1 billion for the quarter, up 14% from the
fourth quarter of 2002 and included a gain on sale of a non-strategic
business. Excluding this gain, revenues increased 10%. Institutional
Trust Services (ITS) revenues increased 13% from the prior year
reflecting the impact of acquisitions, which contributed about half of
the growth in the quarter. In addition, ITS revenues benefited from
increased activity in the asset servicing business and higher deposit
balances. Investor Services revenues increased 14% from the prior year
reflecting improved equity market conditions and gains in market
share. |
| Expenses of $845 million for the quarter increased 12% from the fourth
quarter of 2002, due to the impact of acquisitions, higher technology
expense and severance and related costs. |
Full Year 2003 versus Full Year 2002
Earnings were $520 million for the full year, reflecting a decrease of 16% from 2002. The decline in earnings for the year was driven primarily by lower earnings in Investor Services. Return on allocated capital for the full year was 19%, compared to 23% in 2002.
| Revenues were $4.0 billion for the full year, up 3% from 2002.
Revenues increased over the prior year in Institutional Trust Services
driven by increased activity in the debt and equities new issue
markets. Treasury Services revenues also increased primarily driven
by higher deposit balances and product revenue. With difficult market
conditions in the first half of the year, Investor Services revenues
declined year over year but showed an improving sequential trend over
the last four quarters. |
| Expenses of $3.2 billion for the full year increased 7% from 2002,
reflecting the impact of acquisitions and severance and related
costs, which included real estate write-offs. |
Investment Management & Private Banking (IMPB)
Fourth Quarter 2003 versus Fourth Quarter 2002
Earnings were $100 million for the quarter, up significantly from $12 million for the fourth quarter of 2002. The pre-tax margin in the quarter was 18%, compared to 2% in the fourth quarter of 2002. Return on tangible allocated capital was 31% compared to 4% in the fourth quarter of 2002.
| Revenues of $822 million were 26% above the same period last year
reflecting higher global equity valuations, the acquisition of
Retirement Plan Services (RPS), which closed earlier in the year,
and increased brokerage activity. |
| Expenses of $635 million were 2% above the fourth quarter of 2002
primarily as a result of the acquisition of RPS. |
| Credit costs were $36 million for the quarter compared to $13 million
for the fourth quarter of 2002. |
| Total assets under supervision were $758 billion, up 18% from December
31, 2002. Total assets under
management were $559 billion, up 9%. During the fourth quarter of 2003,
there were net inflows of assets under management from both retail and
private bank clients. Not reflected in assets under supervision is the
firms 44% interest in American Century Companies, Inc., which had assets
under management of $87 billion as of December 31, 2003. |
Full Year 2003 versus Full Year 2002
Earnings were $268 million for the full year, up 3% from 2002. The pre-tax margin for the full year was 14%, flat to the prior year. Return on tangible allocated capital was 20% in 2003 compared to 18% for 2002.
4
J.P. Morgan Chase & Co.
News Release
| Revenues of $2.9 billion were 1% above last year reflecting the acquisition of RPS, higher global equity valuations and
increased brokerage activity, mostly offset by the impact of institutional net outflows. |
| Expenses of $2.4 billion were 3% above 2002 primarily as a result of the RPS acquisition, higher incentive costs and real
estate and technology write-offs. |
| Credit costs were $35 million for the full year compared to $85 million for 2002. |
JPMorgan Partners (JPMP)
Fourth Quarter 2003 versus Fourth Quarter 2002
JPMorgan Partners had operating earnings of $22 million in the fourth quarter compared to an operating loss of $100 million in the fourth quarter of 2002. Total net private equity gains were $159 million, compared to a net loss of $53 million in the fourth quarter of 2002.
| Direct private equity investments recorded net gains of $198 million
compared to net gains of $27 million in the fourth quarter of 2002.
The fourth quarter 2003 results benefited from more active public and
private capital markets, which provided for more exit opportunities.
The net gains include $202 million in realized cash gains, $48 million
in mark-to-market gains on public investments, and negative net
valuation adjustments taken on private investments of $52 million. |
| JPMP recorded net losses of $39 million on its limited partner
interests in third party funds, compared to net losses of $80 million
in the fourth quarter of 2002. |
Full Year 2003 versus Full Year 2002
JPMorgan Partners had an operating loss of $293 million for the full year compared to an operating loss of $808 million for 2002. Total net private equity gains were $27 million, compared to a net loss of $733 million for 2002.
| Direct private equity investments recorded net
gains of $346 million compared to net losses of
$583 million for 2002. The net gains included
$535 million in realized cash gains, $215 million
in mark-to-market gains on public securities and
negative net valuation adjustments on private
investments of $404 million. |
| JPMP recorded net losses of $319 million on its
limited partner interests in third party funds,
compared to net losses of $150 million for 2002.
Net losses were primarily the result of JPMPs
continued program to divest third-party fund
participations. |
| The carrying value of JPMPs portfolio declined
during the year from $8.23 billion at December 31,
2002 to $7.25 billion at December 31, 2003,
reflecting an improved pace of sales, divestitures
of third-party fund participations, and a reduced
level of new investments. |
Expenses
| Operating Expenses in the fourth quarter were
$5.22 billion, down 5% from the fourth quarter of
2002. The decrease was primarily driven by lower
compensation expenses resulting from lower
severance and related costs and lower performance
related incentives. For the full year 2003,
expenses were $21.69 billion, an increase of 8%
from last year. The increase in expenses included
higher performance related incentives, $100
million added to litigation reserves, $630 million
in severance and related, including vacant real
estate charges, as well as approximately $360
million in higher pension and options related
compensation expenses. Operating expenses for the
full year 2002 included $890 million in severance
and related costs. |
Credit
Fourth Quarter 2003 versus Fourth Quarter 2002
Commercial net charge-offs for the quarter were $8 million compared to $646 million for the fourth quarter of 2002. The charge-off ratio for commercial loans was 0.04% for the quarter compared to 1.88% for the fourth quarter of 2002. The decline in the charge-off ratio reflects a decline in gross charge-offs and an increase in recoveries.
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J.P. Morgan Chase & Co.
News Release
| Consumer loan net charge-offs on a managed basis,
which include credit card securitizations, were
$828 million compared to $832 million for the
fourth quarter of 2002. On a managed basis, the
credit card net charge-off ratio was 5.74% for the
quarter compared to 5.70% for the fourth quarter
of 2002 and 5.80% for the third quarter of 2003. |
| Total credit costs on a managed basis were $601
million for the quarter including $850 million
related to managed consumer loans, negative $202
million related to commercial loans and
lending-related commitments and negative $47
million related to the residual component (leaving
the residual component at 20% of the total
allowance for loan losses). |
| The allowance for credit losses, which includes
the allowance for loan losses and lending-related
commitments, was $4.8 billion at December 31,
2003, compared to $5.7 billion at December 31,
2002. Total non performing assets were $3.1
billion at December 31, 2003, down 35% from
December 31, 2002. Commercial criticized exposure
was $8.9 billion as of December 31, 2003, a
decline of $7.7 billion, or 47%, from December 31,
2002. |
Full Year 2003 versus Full Year 2002
| Commercial net charge-offs for the full year were
$816 million compared to $2.1 billion for 2002.
The charge-off ratio for commercial loans was
0.91% for 2003 compared to 1.93% for 2002.
Consumer loan net charge-offs on a managed basis,
which include credit card securitizations, were
$3.3 billion compared to $3.2 billion for 2002. On
a managed basis, the credit card net charge-off
ratio was 5.87% for 2003, flat with 2002. Total
credit costs on a managed basis were $3.4 billion
for 2003, including $3.4 billion for managed
consumer loans, negative $77 million for
commercial loans and lending-related commitments
and $126 million for the residual component. |
Total assets and capital
| Total assets as of December 31, 2003 were $771
billion, compared with $759 billion as of December
31, 2002. Commercial loans were $83.1 billion,
including $5.8 billion related to variable
interest entities, primarily multi-seller
asset-backed commercial paper conduits
consolidated in accordance with FIN 46. Not
consolidated at December 31, 2003 were $5.4
billion of variable interest entities that were
restructured during the fourth quarter, and had
been previously consolidated in the third quarter
of 2003. Commercial loans, excluding the impact of
FIN 46, were $77.3 billion, $14.2 billion lower
than on December 31, 2002. Managed consumer loans
increased 10% from December 31, 2002. The Tier 1
capital ratio was 8.4% at December 31, 2003
compared to 8.2% at December 31, 2002. |
Other financial information
| The line of business results for the first three
quarters of 2003 and full year 2002 have been
restated to reflect the allocation of certain
revenues and expenses previously reported in
Support Units and Corporate. This restatement did
not affect the firms consolidated financial
results. |
| There were no items characterized by management
as non-operating in 2003, as restructuring costs
are now included in reported results. Special
items (on a pre-tax basis) in the fourth quarter
of 2002 included a $400 million charge in
connection with the Enron surety litigation
settlement and the establishment of litigation
reserves of $900 million, as well as $393 million
in merger and restructuring costs. For full year
2002, special items (on a pre-tax basis) included
$1.3 billion in charges related to the Enron
surety settlement and establishment of litigation
reserves, $98 million in real estate reserves and
$1.2 billion in merger and restructuring costs. |
J.P. Morgan Chase & Co. is a leading global financial services firm with assets of $771 billion and operations in more than 50 countries. The firm is a leader in investment banking, financial services for consumers and businesses, financial transaction processing, investment management, private banking and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase is headquartered in
6
J.P. Morgan Chase & Co.
News Release
New York and serves more than 30 million consumers nationwide, and many of the worlds 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, January 21, 2004 at 11:00 a.m. (Eastern Time) to review fourth quarter and full year 2003 financial results. The dial-in number is (973) 935-8505. 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. (Eastern Time) on January 21, 2004 and continuing through 6:00 p.m. (Eastern Time) on January 28, 2004 at (973) 341-3080 pin #4413929. The replay also will be available on www.jpmorganchase.com beginning at 1:30 p.m. (Eastern Time) on January 21, 2004. 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 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 Chases management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements.
The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the ability to obtain governmental approvals of the merger on the proposed terms and schedule; the failure of JPMorgan Chase and Bank One stockholders to approve the merger; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any revenue synergies from the merger may not be fully realized or may take longer to realize than expected; disruption from the merger making it more difficult to maintain relationships with clients, employees or suppliers; increased competition and its effect on pricing, spending, third-party relationships and revenues; the risk of new and changing regulation in the U.S. and internationally. Additional factors that could cause JPMorgan Chases results to differ materially from those described in the forward-looking statements can be found in the 2002 Annual Report on Form 10-K of JPMorgan Chase, and in the Quarterly Reports on Form 10-Q of JPMorgan Chase, filed with the Securities and Exchange Commission and available at the Securities and Exchange Commissions internet site (http://www.sec.gov).
Stockholders are urged to read the joint proxy statement/prospectus regarding the proposed transaction when it becomes available, because it will contain important information. Stockholders will be able to obtain a free copy of the joint proxy statement/prospectus, as well as other filings containing information about JPMorgan Chase and Bank One, without charge, at the Securities and Exchange Commissions internet site (http://www.sec.gov). Copies of the joint proxy statement/prospectus and the filings with the Securities and Exchange Commission that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to J.P. Morgan Chase & Co., 270 Park Avenue, New York, NY 10017, Attention: Office of the Secretary, 212-270-6000, or to Bank One Corporation, 1 Bank One Plaza IL1-0738, Chicago, IL 60670-0738, Attention: Investor Relations, 312-336-3013. The respective directors and executive officers of JPMorgan Chase and Bank One and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed merger. Information regarding JPMorgan Chases directors and executive officers is available in its proxy statement filed with the Securities and Exchange Commission by JPMorgan Chase on March 28, 2003, and information regarding Bank Ones directors and executive officers is available in its proxy statement filed with the Securities and Exchange Commission by Bank One on March 5, 2003. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy
7
J.P. Morgan Chase & Co.
News Release
statement/prospectus and other relevant materials to be filed with the Securities and Exchange Commission when they become available.
8
Exhibit 99.2
PRESS RELEASE FINANCIAL SUPPLEMENT
FOURTH QUARTER 2003
J.P. MORGAN CHASE & CO. TABLE OF CONTENTS |
Page | ||
JPMorgan Chase Consolidated |
||
Statement of Income Reported Basis |
3 | |
Consolidated Balance Sheet |
4 | |
Lines of Business Financial Highlights Summary |
5 | |
Statement of Income Operating Basis |
6 | |
Reconciliation from Reported to Operating Basis |
7 | |
Segment Detail |
||
Investment Bank |
8 | |
Business-Related Metrics |
9 | |
Treasury & Securities Services |
10 | |
Investment Management & Private Banking |
11 | |
JPMorgan Partners |
12 | |
Investment Portfolio Private and Public Securities |
13 | |
Chase Financial Services |
14 | |
Business Financial Highlights |
15 | |
Business-Related Metrics |
16 | |
Supplemental Detail |
||
Selected Noninterest Revenue and Noninterest Expense Detail |
17 | |
Condensed Average Balance Sheet and Annualized Yields |
18 | |
Credit-Related Information |
19-23 | |
Capital |
24 | |
Market Risk
Investment Bank Average Trading VAR |
25 | |
Glossary of Terms |
26 |
Note: Prior periods have been adjusted to conform with current methodologies.
Page 2
J.P. MORGAN CHASE & CO. STATEMENT OF INCOME REPORTED BASIS (in millions, except per share, ratio and employee data) |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | |||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
Investment Banking Fees |
$ | 846 | $ | 649 | $ | 779 | $ | 616 | $ | 678 | 30 | % | 25 | % | $ | 2,890 | $ | 2,763 | 5 | % | ||||||||||||||||||||
Trading Revenue |
754 | 829 | 1,546 | 1,298 | 586 | (9 | ) | 29 | 4,427 | 2,675 | 65 | |||||||||||||||||||||||||||||
Fees and Commissions |
2,871 | 2,742 | 2,551 | 2,488 | 2,595 | 5 | 11 | 10,652 | 10,387 | 3 | ||||||||||||||||||||||||||||||
Private Equity Gains (Losses) | 163 | 120 | (29 | ) | (221 | ) | (68 | ) | 36 | NM | 33 | (746 | ) | NM | ||||||||||||||||||||||||||
Securities Gains |
29 | 164 | 768 | 485 | 747 | (82 | ) | (96 | ) | 1,446 | 1,563 | (7 | ) | |||||||||||||||||||||||||||
Mortgage Fees and Related Income (a) | 140 | 8 | 311 | 433 | (118 | ) | NM | NM | 892 | 988 | (10 | ) | ||||||||||||||||||||||||||||
Other Revenue |
254 | 188 | 45 | 92 | 94 | 35 | 170 | 579 | 458 | 26 | ||||||||||||||||||||||||||||||
Total Noninterest Revenue |
5,057 | 4,700 | 5,971 | 5,191 | 4,514 | 8 | 12 | 20,919 | 18,088 | 16 | ||||||||||||||||||||||||||||||
Interest Income |
5,614 | 5,696 | 5,871 | 6,263 | 6,184 | (1 | ) | (9 | ) | 23,444 | 25,284 | (7 | ) | |||||||||||||||||||||||||||
Interest Expense |
2,603 | 2,648 | 2,808 | 3,048 | 3,203 | (2 | ) | (19 | ) | 11,107 | 13,758 | (19 | ) | |||||||||||||||||||||||||||
Net Interest Income |
3,011 | 3,048 | 3,063 | 3,215 | 2,981 | (1 | ) | 1 | 12,337 | 11,526 | 7 | |||||||||||||||||||||||||||||
Revenue before Provision for Credit Losses |
8,068 | 7,748 | 9,034 | 8,406 | 7,495 | 4 | 8 | 33,256 | 29,614 | 12 | ||||||||||||||||||||||||||||||
Provision for Credit Losses |
139 | 223 | 435 | 743 | 921 | (38 | ) | (85 | ) | 1,540 | 4,331 | (64 | ) | |||||||||||||||||||||||||||
TOTAL NET REVENUE |
7,929 | 7,525 | 8,599 | 7,663 | 6,574 | 5 | 21 | 31,716 | 25,283 | 25 | ||||||||||||||||||||||||||||||
EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation Expense |
2,577 | 2,713 | 3,231 | 3,174 | 3,032 | (5 | ) | (15 | ) | 11,695 | 10,983 | 6 | ||||||||||||||||||||||||||||
Occupancy Expense |
482 | 391 | 543 | 496 | 425 | 23 | 13 | 1,912 | 1,606 | 19 | ||||||||||||||||||||||||||||||
Technology and Communications Expense |
756 | 719 | 732 | 637 | 635 | 5 | 19 | 2,844 | 2,554 | 11 | ||||||||||||||||||||||||||||||
Other Expense |
1,405 | 1,272 | 1,226 | 1,234 | 1,376 | 10 | 2 | 5,137 | 5,111 | 1 | ||||||||||||||||||||||||||||||
Surety Settlement and Litigation Reserve (b) | | | 100 | | 1,300 | NM | NM | 100 | 1,300 | (92 | ) | |||||||||||||||||||||||||||||
Merger and Restructuring Costs | | | | | 393 | NM | NM | | 1,210 | NM | ||||||||||||||||||||||||||||||
TOTAL NONINTEREST EXPENSE |
5,220 | 5,095 | 5,832 | 5,541 | 7,161 | 2 | (27 | ) | 21,688 | 22,764 | (5 | ) | ||||||||||||||||||||||||||||
Income (Loss) before Income Tax Expense | 2,709 | 2,430 | 2,767 | 2,122 | (587 | ) | 11 | NM | 10,028 | 2,519 | 298 | |||||||||||||||||||||||||||||
Income Tax Expense (Benefit) | 845 | 802 | 940 | 722 | (200 | ) | 5 | NM | 3,309 | 856 | 287 | |||||||||||||||||||||||||||||
NET INCOME (LOSS) | $ | 1,864 | $ | 1,628 | $ | 1,827 | $ | 1,400 | $ | (387 | ) | 14 | NM | $ | 6,719 | $ | 1,663 | 304 | ||||||||||||||||||||||
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK | $ | 1,851 | $ | 1,615 | $ | 1,815 | $ | 1,387 | $ | (399 | ) | 15 | NM | $ | 6,668 | $ | 1,612 | 314 | ||||||||||||||||||||||
NET INCOME (LOSS) PER COMMON SHARE |
||||||||||||||||||||||||||||||||||||||||
Basic | $ | 0.92 | $ | 0.80 | $ | 0.90 | $ | 0.69 | $ | (0.20 | ) | 15 | NM | $ | 3.32 | $ | 0.81 | 310 | ||||||||||||||||||||||
Diluted | 0.89 | 0.78 | 0.89 | 0.69 | (0.20 | ) | 14 | NM | 3.24 | 0.80 | 305 | |||||||||||||||||||||||||||||
PERFORMANCE RATIOS (c) |
||||||||||||||||||||||||||||||||||||||||
Return on Average Assets | 0.95 | % | 0.83 | % | 0.96 | % | 0.73 | % | NM | 12 | bp | NM | 0.87 | % | 0.23 | % | 64 | bp | ||||||||||||||||||||||
Return on Average Common Equity | 17 | 15 | 17 | 13 | NM | 200 | NM | 16 | 4 | 1,200 | ||||||||||||||||||||||||||||||
FULL-TIME EQUIVALENT EMPLOYEES |
93,453 | 92,940 | 92,256 | 93,878 | 94,335 | 1 | % | (1 | )% |
(a) | Mortgage Fees and Related
Income of $140 million in the fourth quarter of 2003 consists of operating
noninterest revenue of $316 million and MSR hedging noninterest
revenue of $(176) million. The operating component of Mortgage Fees and Related Income includes net Mortgage Servicing Fees and
production-related noninterest revenue. |
|
(b) | Included in the second quarter of 2003 was a $100 million addition to the Enron-related litigation reserve. In the fourth quarter of 2002,
a $1,300 million (pre-tax) charge was recorded for the settlement of the Enron surety litigation and the establishment of a reserve for
certain material litigation, proceedings and investigations. |
|
(c) | Quarterly ratios are based on annualized amounts. |
Page 3
J.P. MORGAN CHASE & CO. CONSOLIDATED BALANCE SHEET (in millions) |
Dec 31, 2003 | ||||||||||||||||||||||||||||
Over (Under) | ||||||||||||||||||||||||||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Dec 31 | ||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 2003 | 2002 | ||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||||
Cash and Due from Banks |
$ | 20,268 | $ | 18,585 | $ | 23,398 | $ | 22,229 | $ | 19,218 | 9 | % | 5 | % | ||||||||||||||
Deposits with Banks |
10,175 | 10,601 | 10,393 | 6,896 | 8,942 | (4 | ) | 14 | ||||||||||||||||||||
Federal Funds Sold and Securities
Purchased under Resale Agreements |
76,868 | 88,752 | 69,748 | 69,764 | 65,809 | (13 | ) | 17 | ||||||||||||||||||||
Securities Borrowed |
41,834 | 37,096 | 41,067 | 39,188 | 34,143 | 13 | 23 | |||||||||||||||||||||
Trading Assets: |
||||||||||||||||||||||||||||
Debt and Equity Instruments |
169,120 | 146,731 | 139,275 | 146,783 | 165,199 | 15 | 2 | |||||||||||||||||||||
Derivative Receivables |
83,751 | 83,787 | 93,602 | 86,649 | 83,102 | | 1 | |||||||||||||||||||||
Securities |
60,244 | 65,152 | 82,549 | 85,178 | 84,463 | (8 | ) | (29 | ) | |||||||||||||||||||
Loans (Net of Allowance for Loan Losses) |
214,995 | 231,448 | 222,307 | 212,256 | 211,014 | (7 | ) | 2 | ||||||||||||||||||||
Private Equity Investments |
7,250 | 7,797 | 7,901 | 8,170 | 8,228 | (7 | ) | (12 | ) | |||||||||||||||||||
Goodwill |
8,511 | 8,134 | 8,132 | 8,122 | 8,096 | 5 | 5 | |||||||||||||||||||||
Other Intangibles: |
||||||||||||||||||||||||||||
Mortgage Servicing Rights |
4,781 | 4,007 | 2,967 | 3,235 | 3,230 | 19 | 48 | |||||||||||||||||||||
Purchased Credit Card Relationships |
1,014 | 1,078 | 1,141 | 1,205 | 1,269 | (6 | ) | (20 | ) | |||||||||||||||||||
All Other Intangibles |
685 | 311 | 320 | 294 | 307 | 120 | 123 | |||||||||||||||||||||
Other Assets |
71,416 | 89,221 | 99,803 | 65,187 | 65,780 | (20 | ) | 9 | ||||||||||||||||||||
TOTAL ASSETS (a) |
$ | 770,912 | $ | 792,700 | $ | 802,603 | $ | 755,156 | $ | 758,800 | (3 | ) | 2 | |||||||||||||||
LIABILITIES |
||||||||||||||||||||||||||||
Deposits: |
||||||||||||||||||||||||||||
Noninterest-Bearing |
$ | 79,465 | $ | 81,865 | $ | 88,096 | $ | 77,822 | $ | 82,029 | (3 | ) | (3 | ) | ||||||||||||||
Interest-Bearing |
247,027 | 231,761 | 230,152 | 222,845 | 222,724 | 7 | 11 | |||||||||||||||||||||
Total Deposits |
326,492 | 313,626 | 318,248 | 300,667 | 304,753 | 4 | 7 | |||||||||||||||||||||
Federal Funds Purchased and Securities
Sold under Repurchase Agreements |
113,466 | 131,959 | 155,330 | 160,221 | 169,483 | (14 | ) | (33 | ) | |||||||||||||||||||
Commercial Paper |
14,284 | 14,790 | 12,382 | 14,039 | 16,591 | (3 | ) | (14 | ) | |||||||||||||||||||
Other Borrowed Funds |
8,925 | 8,174 | 12,176 | 12,848 | 8,946 | 9 | | |||||||||||||||||||||
Trading Liabilities: |
||||||||||||||||||||||||||||
Debt and Equity Instruments |
78,222 | 87,516 | 72,825 | 64,427 | 66,864 | (11 | ) | 17 | ||||||||||||||||||||
Derivative Payables |
71,226 | 68,285 | 72,831 | 64,804 | 66,227 | 4 | 8 | |||||||||||||||||||||
Accounts Payable, Accrued Expenses and Other Liabilities
(including the Allowance for Lending-Related Commitments) |
45,066 | 54,333 | 64,072 | 46,776 | 38,440 | (17 | ) | 17 | ||||||||||||||||||||
Beneficial Interests of Consolidated Variable Interest Entities | 12,295 | 18,399 | | | | (33 | ) | NM | ||||||||||||||||||||
Long-Term Debt |
48,014 | 43,945 | 43,371 | 42,851 | 39,751 | 9 | 21 | |||||||||||||||||||||
Junior Subordinated Deferrable Interest Debentures Held by
Trusts that Issued Guaranteed Capital Debt Securities |
6,768 | 6,716 | 1,108 | | | 1 | NM | |||||||||||||||||||||
Guaranteed Preferred Beneficial Interests in Capital Debt
Securities Issued by Consolidated Trusts |
| | 5,439 | 5,439 | 5,439 | NM | NM | |||||||||||||||||||||
TOTAL LIABILITIES |
724,758 | 747,743 | 757,782 | 712,072 | 716,494 | (3 | ) | 1 | ||||||||||||||||||||
STOCKHOLDERS EQUITY |
||||||||||||||||||||||||||||
Preferred Stock |
1,009 | 1,009 | 1,009 | 1,009 | 1,009 | | | |||||||||||||||||||||
Common Stock |
2,044 | 2,041 | 2,036 | 2,032 | 2,024 | | 1 | |||||||||||||||||||||
Capital Surplus |
13,512 | 13,238 | 12,898 | 12,477 | 13,222 | 2 | 2 | |||||||||||||||||||||
Retained Earnings |
29,681 | 28,540 | 27,633 | 26,538 | 25,851 | 4 | 15 | |||||||||||||||||||||
Accumulated Other Comprehensive Income | (30 | ) | 187 | 1,293 | 1,113 | 1,227 | NM | NM | ||||||||||||||||||||
Treasury Stock, at Cost |
(62 | ) | (58 | ) | (48 | ) | (85 | ) | (1,027 | ) | (7 | ) | 94 | |||||||||||||||
TOTAL STOCKHOLDERS EQUITY |
46,154 | 44,957 | 44,821 | 43,084 | 42,306 | 3 | 9 | |||||||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |
$ | 770,912 | $ | 792,700 | $ | 802,603 | $ | 755,156 | $ | 758,800 | (3 | ) | 2 | |||||||||||||||
(a) | Includes an incremental $10 billion and $15 billion at December 31, 2003 and September 30, 2003, respectively, related to variable interest entities that were consolidated
during the third quarter of 2003 in accordance with FIN 46. Also includes approximately $2 billion at December 31, 2003 and $3 billion at September 30, 2003
related to variable interest entities consolidated prior to the third quarter of 2003 that continue to be consolidated in accordance with FIN 46. |
Page 4
J.P. MORGAN CHASE & CO. LINES OF BUSINESS FINANCIAL HIGHLIGHTS SUMMARY (in millions, except per share and ratio data) |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | |||||||||||||||||||||||||||||||
OPERATING REVENUE |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 3,044 | $ | 3,166 | $ | 4,208 | $ | 4,022 | $ | 3,317 | (4 | )% | (8 | )% | $ | 14,440 | $ | 12,498 | 16 | % | ||||||||||||||||||||
Treasury & Securities Services |
1,074 | 1,007 | 980 | 931 | 939 | 7 | 14 | 3,992 | 3,892 | 3 | ||||||||||||||||||||||||||||||
Investment Management & Private Banking |
822 | 737 | 678 | 641 | 652 | 12 | 26 | 2,878 | 2,839 | 1 | ||||||||||||||||||||||||||||||
JPMorgan Partners | 105 | 71 | (80 | ) | (286 | ) | (91 | ) | 48 | NM | (190 | ) | (976 | ) | 81 | |||||||||||||||||||||||||
Chase Financial Services |
3,609 | 3,356 | 3,975 | 3,692 | 3,331 | 8 | 8 | 14,632 | 13,426 | 9 | ||||||||||||||||||||||||||||||
Support Units and Corporate |
(124 | ) | (118 | ) | (247 | ) | (137 | ) | (223 | ) | (5 | ) | 44 | (626 | ) | (626 | ) | | ||||||||||||||||||||||
OPERATING REVENUE |
$ | 8,530 | $ | 8,219 | $ | 9,514 | $ | 8,863 | $ | 7,925 | 4 | 8 | $ | 35,126 | $ | 31,053 | 13 | |||||||||||||||||||||||
EARNINGS |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 860 | $ | 880 | $ | 1,041 | $ | 904 | $ | 341 | (2 | ) | 152 | $ | 3,685 | $ | 1,303 | 183 | ||||||||||||||||||||||
Treasury & Securities Services |
147 | 143 | 114 | 116 | 128 | 3 | 15 | 520 | 621 | (16 | ) | |||||||||||||||||||||||||||||
Investment Management & Private Banking | 100 | 81 | 59 | 28 | 12 | 23 | NM | 268 | 261 | 3 | ||||||||||||||||||||||||||||||
JPMorgan Partners | 22 | 5 | (97 | ) | (223 | ) | (100 | ) | 340 | NM | (293 | ) | (808 | ) | 64 | |||||||||||||||||||||||||
Chase Financial Services |
560 | 433 | 853 | 649 | 456 | 29 | 23 | 2,495 | 2,320 | 8 | ||||||||||||||||||||||||||||||
Support Units and Corporate (a) | 175 | 86 | (143 | ) | (74 | ) | (107 | ) | 103 | NM | 44 | (313 | ) | NM | ||||||||||||||||||||||||||
OPERATING EARNINGS |
1,864 | 1,628 | 1,827 | 1,400 | 730 | 14 | 155 | 6,719 | 3,384 | 99 | ||||||||||||||||||||||||||||||
Special Items (Net of Taxes): |
||||||||||||||||||||||||||||||||||||||||
Real Estate Charge |
| | | | | NM | NM | | (65 | ) | NM | |||||||||||||||||||||||||||||
Surety Settlement and Litigation Reserve |
| | | | (858 | ) | NM | NM | | (858 | ) | NM | ||||||||||||||||||||||||||||
Merger and Restructuring Costs |
| | | | (259 | ) | NM | NM | | (798 | ) | NM | ||||||||||||||||||||||||||||
NET INCOME (LOSS) |
$ | 1,864 | $ | 1,628 | $ | 1,827 | $ | 1,400 | $ | (387 | ) | 14 | NM | $ | 6,719 | $ | 1,663 | 304 | ||||||||||||||||||||||
AVERAGE ALLOCATED CAPITAL |
||||||||||||||||||||||||||||||||||||||||
Investment Bank |
$ | 16,864 | $ | 18,876 | $ | 20,059 | $ | 20,783 | $ | 20,320 | (11 | ) | (17 | ) | $ | 19,134 | $ | 19,915 | (4 | ) | ||||||||||||||||||||
Treasury & Securities Services |
2,719 | 2,603 | 2,765 | 2,757 | 2,720 | 4 | | 2,711 | 2,688 | 1 | ||||||||||||||||||||||||||||||
Investment Management & Private Banking |
5,413 | 5,485 | 5,481 | 5,438 | 5,540 | (1 | ) | (2 | ) | 5,454 | 5,643 | (3 | ) | |||||||||||||||||||||||||||
JPMorgan Partners |
5,541 | 5,721 | 5,916 | 5,985 | 6,102 | (3 | ) | (9 | ) | 5,789 | 6,293 | (8 | ) | |||||||||||||||||||||||||||
Chase Financial Services |
8,955 | 8,925 | 8,647 | 8,465 | 8,510 | | 5 | 8,750 | 8,612 | 2 | ||||||||||||||||||||||||||||||
Support Units and Corporate | 4,685 | 1,521 | (109 | ) | (1,570 | ) | (1,222 | ) | 208 | NM | 1,150 | (1,783 | ) | NM | ||||||||||||||||||||||||||
TOTAL ALLOCATED CAPITAL |
$ | 44,177 | $ | 43,131 | $ | 42,759 | $ | 41,858 | $ | 41,970 | 2 | 5 | $ | 42,988 | $ | 41,368 | 4 | |||||||||||||||||||||||
EARNINGS PER SHARE DILUTED |
||||||||||||||||||||||||||||||||||||||||
OPERATING EARNINGS |
$ | 0.89 | $ | 0.78 | $ | 0.89 | $ | 0.69 | $ | 0.36 | 14 | 147 | $ | 3.24 | $ | 1.66 | 95 | |||||||||||||||||||||||
Special Items (Net of Taxes): |
||||||||||||||||||||||||||||||||||||||||
Real Estate Charge |
| | | | | NM | NM | | (0.03 | ) | NM | |||||||||||||||||||||||||||||
Surety Settlement and Litigation Reserve |
| | | | (0.43 | ) | NM | NM | | (0.43 | ) | NM | ||||||||||||||||||||||||||||
Merger and Restructuring Costs |
| | | | (0.13 | ) | NM | NM | | (0.40 | ) | NM | ||||||||||||||||||||||||||||
NET INCOME (LOSS) | $ | 0.89 | $ | 0.78 | $ | 0.89 | $ | 0.69 | $ | (0.20 | ) | 14 | NM | $ | 3.24 | $ | 0.80 | 305 | ||||||||||||||||||||||
OPERATING RETURN ON ALLOCATED CAPITAL |
||||||||||||||||||||||||||||||||||||||||
Investment Bank | 20 | % | 18 | % | 21 | % | 18 | % | 7 | % | 200 | bp | 1,300 | bp | 19 | % | 6 | % | 1,300 | bp | ||||||||||||||||||||
Treasury & Securities Services |
21 | 22 | 16 | 17 | 19 | (100 | ) | 200 | 19 | 23 | (400 | ) | ||||||||||||||||||||||||||||
Investment Management & Private Banking |
7 | 6 | 4 | 2 | 1 | 100 | 600 | 5 | 5 | | ||||||||||||||||||||||||||||||
Chase Financial Services |
25 | 19 | 39 | 31 | 21 | 600 | 400 | 28 | 27 | 100 | ||||||||||||||||||||||||||||||
OPERATING
RETURN ON COMMON EQUITY |
17 | 15 | 17 | 13 | 7 | 200 | 1,000 | 16 | 8 | 800 |
Note: For a reconciliation from reported to operating basis, see page 7.
(a) | Line of business results for the first three quarters of 2003 and all of
2002 were restated to reflect the allocation of certain revenues and expenses
previously reported in Support Units and Corporate. The line of business
results were restated by $(245) million for the first three
quarters of 2003 and by $(166) million for the full year 2002.
There was no impact on the Firms overall earnings. |
Page 5
J.P. MORGAN CHASE & CO. STATEMENT OF INCOME OPERATING BASIS (in millions, except per share and ratio data) |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | |||||||||||||||||||||||||||||||
OPERATING REVENUE |
||||||||||||||||||||||||||||||||||||||||
Investment Banking Fees |
$ | 846 | $ | 649 | $ | 779 | $ | 616 | $ | 678 | 30 | % | 25 | % | $ | 2,890 | $ | 2,763 | 5 | % | ||||||||||||||||||||
Trading-Related Revenue (Includes Trading NII) |
1,272 | 1,278 | 2,025 | 1,981 | 1,254 | | 1 | 6,556 | 4,555 | 44 | ||||||||||||||||||||||||||||||
Fees and Commissions |
2,687 | 2,569 | 2,429 | 2,319 | 2,365 | 5 | 14 | 10,004 | 9,689 | 3 | ||||||||||||||||||||||||||||||
Private Equity Gains (Losses) | 163 | 120 | (29 | ) | (221 | ) | (68 | ) | 36 | NM | 33 | (746 | ) | NM | ||||||||||||||||||||||||||
Securities Gains |
29 | 164 | 768 | 485 | 747 | (82 | ) | (96 | ) | 1,446 | 1,563 | (7 | ) | |||||||||||||||||||||||||||
Mortgage Fees and Related Income | 140 | 8 | 311 | 433 | (118 | ) | NM | NM | 892 | 988 | (10 | ) | ||||||||||||||||||||||||||||
Other Revenue |
225 | 174 | 21 | 88 | 107 | 29 | 110 | 508 | 422 | 20 | ||||||||||||||||||||||||||||||
Net Interest Income (Excludes Trading NII) |
3,168 | 3,257 | 3,210 | 3,162 | 2,960 | (3 | ) | 7 | 12,797 | 11,819 | 8 | |||||||||||||||||||||||||||||
TOTAL OPERATING REVENUE |
8,530 | 8,219 | 9,514 | 8,863 | 7,925 | 4 | 8 | 35,126 | 31,053 | 13 | ||||||||||||||||||||||||||||||
OPERATING EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Compensation Expense (a) |
2,577 | 2,713 | 3,231 | 3,174 | 3,032 | (5 | ) | (15 | ) | 11,695 | 10,983 | 6 | ||||||||||||||||||||||||||||
Noncompensation Expense (a) (b) |
2,643 | 2,382 | 2,601 | 2,367 | 2,436 | 11 | 8 | 9,993 | 9,173 | 9 | ||||||||||||||||||||||||||||||
TOTAL OPERATING EXPENSE |
5,220 | 5,095 | 5,832 | 5,541 | 5,468 | 2 | (5 | ) | 21,688 | 20,156 | 8 | |||||||||||||||||||||||||||||
Credit Costs |
601 | 694 | 915 | 1,200 | 1,351 | (13 | ) | (56 | ) | 3,410 | 5,770 | (41 | ) | |||||||||||||||||||||||||||
Corporate Credit Allocation | | | | | | NM | NM | | | NM | ||||||||||||||||||||||||||||||
Operating Income before Income Tax Expense |
2,709 | 2,430 | 2,767 | 2,122 | 1,106 | 11 | 145 | 10,028 | 5,127 | 96 | ||||||||||||||||||||||||||||||
Income Tax Expense |
845 | 802 | 940 | 722 | 376 | 5 | 125 | 3,309 | 1,743 | 90 | ||||||||||||||||||||||||||||||
OPERATING EARNINGS |
$ | 1,864 | $ | 1,628 | $ | 1,827 | $ | 1,400 | $ | 730 | 14 | 155 | $ | 6,719 | $ | 3,384 | 99 | |||||||||||||||||||||||
OPERATING BASIS |
||||||||||||||||||||||||||||||||||||||||
Diluted Earnings per Share |
$ | 0.89 | $ | 0.78 | $ | 0.89 | $ | 0.69 | $ | 0.36 | 14 | 147 | $ | 3.24 | $ | 1.66 | 95 | |||||||||||||||||||||||
Shareholder Value Added (c) | 514 | 311 | 536 | 148 | (551 | ) | 65 | NM | 1,509 | (1,631 | ) | NM | ||||||||||||||||||||||||||||
Return on Average Managed Assets (d) | 0.91 | % | 0.79 | % | 0.92 | % | 0.70 | % | 0.37 | % | 12 | bp | 54 | bp | 0.83 | % | 0.45 | % | 38 | bp | ||||||||||||||||||||
Return on
Average Common Equity (d) |
17 | 15 | 17 | 13 | 7 | 200 | 1,000 | 16 | 8 | 800 | ||||||||||||||||||||||||||||||
Common Dividend Payout Ratio |
38 | 44 | 40 | 50 | 96 | (600 | ) | (5,800 | ) | 43 | 83 | (4,000 | ) | |||||||||||||||||||||||||||
Effective Income Tax Rate |
31 | 33 | 34 | 34 | 34 | (200 | ) | (300 | ) | 33 | 34 | (100 | ) | |||||||||||||||||||||||||||
Compensation Expense as a % of Operating Revenue |
30 | 33 | 34 | 36 | 38 | (300 | ) | (800 | ) | 33 | 35 | (200 | ) | |||||||||||||||||||||||||||
Noncompensation Expense as a % of Operating Revenue |
31 | 29 | 27 | 27 | 31 | 200 | | 28 | 30 | (200 | ) | |||||||||||||||||||||||||||||
Overhead Ratio |
61 | 62 | 61 | 63 | 69 | (100 | ) | (800 | ) | 62 | 65 | (300 | ) | |||||||||||||||||||||||||||
Shareholder Value Added: (c) |
||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) | $ | 1,864 | $ | 1,628 | $ | 1,827 | $ | 1,400 | $ | (387 | ) | 14 | % | NM | $ | 6,719 | $ | 1,663 | 304 | % | ||||||||||||||||||||
Special Items (Net of Taxes): |
||||||||||||||||||||||||||||||||||||||||
Real Estate Charge | | | | | | NM | NM | | 65 | NM | ||||||||||||||||||||||||||||||
Surety Settlement and Litigation Reserve | | | | | 858 | NM | NM | | 858 | NM | ||||||||||||||||||||||||||||||
Merger and Restructuring Costs | | | | | 259 | NM | NM | | 798 | NM | ||||||||||||||||||||||||||||||
Operating Earnings |
1,864 | 1,628 | 1,827 | 1,400 | 730 | 14 | 155 | % | 6,719 | 3,384 | 99 | |||||||||||||||||||||||||||||
Less: Preferred Dividends |
13 | 13 | 12 | 13 | 12 | | 8 | 51 | 51 | | ||||||||||||||||||||||||||||||
Adjusted Operating Earnings |
1,851 | 1,615 | 1,815 | 1,387 | 718 | 15 | 158 | 6,668 | 3,333 | 100 | ||||||||||||||||||||||||||||||
Less: Cost of Capital (e) |
1,337 | 1,304 | 1,279 | 1,239 | 1,269 | 3 | 5 | 5,159 | 4,964 | 4 | ||||||||||||||||||||||||||||||
Total Shareholder Value Added | $ | 514 | $ | 311 | $ | 536 | $ | 148 | $ | (551 | ) | 65 | NM | $ | 1,509 | $ | (1,631 | ) | NM | |||||||||||||||||||||
Return on Average Managed Assets: |
||||||||||||||||||||||||||||||||||||||||
Operating Earnings |
$ | 1,864 | $ | 1,628 | $ | 1,827 | $ | 1,400 | $ | 730 | 14 | 155 | $ | 6,719 | $ | 3,384 | 99 | |||||||||||||||||||||||
Average Managed Assets |
||||||||||||||||||||||||||||||||||||||||
Average Assets |
$ | 778,519 | $ | 782,426 | $ | 764,655 | $ | 778,238 | $ | 755,166 | | 3 | $ | 775,978 | $ | 733,357 | 6 | |||||||||||||||||||||||
Average Credit Card Securitizations |
33,445 | 32,497 | 31,665 | 31,834 | 30,556 | 3 | 9 | 32,365 | 26,519 | 22 | ||||||||||||||||||||||||||||||
Average Managed Assets |
$ | 811,964 | $ | 814,923 | $ | 796,320 | $ | 810,072 | $ | 785,722 | | 3 | $ | 808,343 | $ | 759,876 | 6 | |||||||||||||||||||||||
(a) | Includes severance and other related costs associated with expense
containment programs implemented in 2002. |
|
(b) | Includes
Occupancy Expense, Technology and Communications Expense, Other
Expense and, in the second quarter of 2003, Surety
Settlement and Litigation Reserve. |
|
(c) | The Firm uses the shareholder value added (SVA) framework to measure performance of its business segments. To derive SVA,
a non-GAAP financial measure,
the Firm applies a cost of capital to each business segment. The capital elements and resultant capital charges provide the
businesses with the financial framework
to evaluate the trade-off between the use of capital by each business unit versus its return to shareholders. The table
above provides a reconciliation of net income
on a consolidated basis to the Firms SVA. |
|
(d) | Quarterly ratios are based on annualized amounts. |
|
(e) | A 12% (after-tax) cost of capital, based on average economic capital, is used by the Firm. To derive shareholder value added
for the business segments, a 12% (after-tax)
cost of capital is applied for each business segment, except for JPMorgan Partners, which is
charged a 15% (after-tax) cost of capital. |
Page 6
J.P. MORGAN CHASE & CO. RECONCILIATION FROM REPORTED TO OPERATING BASIS (in millions) |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | |||||||||||||||||||||||||||||||
REVENUE |
||||||||||||||||||||||||||||||||||||||||
TRADING REVENUE |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 754 | $ | 829 | $ | 1,546 | $ | 1,298 | $ | 586 | (9 | )% | 29 | % | $ | 4,427 | $ | 2,675 | 65 | % | ||||||||||||||||||||
Trading-Related NII |
518 | 449 | 479 | 683 | 668 | 15 | (22 | ) | 2,129 | 1,880 | 13 | |||||||||||||||||||||||||||||
Operating |
$ | 1,272 | $ | 1,278 | $ | 2,025 | $ | 1,981 | $ | 1,254 | | 1 | $ | 6,556 | $ | 4,555 | 44 | |||||||||||||||||||||||
CREDIT
CARD FEES (a) |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 825 | $ | 756 | $ | 698 | $ | 692 | $ | 807 | 9 | 2 | $ | 2,971 | $ | 2,869 | 4 | |||||||||||||||||||||||
Credit Card Securitizations |
(184 | ) | (173 | ) | (122 | ) | (169 | ) | (230 | ) | (6 | ) | 20 | (648 | ) | (698 | ) | 7 | ||||||||||||||||||||||
Operating |
$ | 641 | $ | 583 | $ | 576 | $ | 523 | $ | 577 | 10 | 11 | $ | 2,323 | $ | 2,171 | 7 | |||||||||||||||||||||||
OTHER REVENUE |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 254 | $ | 188 | $ | 45 | $ | 92 | $ | 94 | 35 | 170 | $ | 579 | $ | 458 | 26 | |||||||||||||||||||||||
Credit Card Securitizations |
(29 | ) | (14 | ) | (24 | ) | (4 | ) | 13 | (107 | ) | NM | (71 | ) | (36 | ) | (97 | ) | ||||||||||||||||||||||
Operating |
$ | 225 | $ | 174 | $ | 21 | $ | 88 | $ | 107 | 29 | 110 | $ | 508 | $ | 422 | 20 | |||||||||||||||||||||||
NET INTEREST INCOME |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 3,011 | $ | 3,048 | $ | 3,063 | $ | 3,215 | $ | 2,981 | (1 | ) | 1 | $ | 12,337 | $ | 11,526 | 7 | ||||||||||||||||||||||
Credit Card Securitizations |
675 | 658 | 626 | 630 | 647 | 3 | 4 | 2,589 | 2,173 | 19 | ||||||||||||||||||||||||||||||
Trading-Related NII |
(518 | ) | (449 | ) | (479 | ) | (683 | ) | (668 | ) | (15 | ) | 22 | (2,129 | ) | (1,880 | ) | (13 | ) | |||||||||||||||||||||
Operating |
$ | 3,168 | $ | 3,257 | $ | 3,210 | $ | 3,162 | $ | 2,960 | (3 | ) | 7 | $ | 12,797 | $ | 11,819 | 8 | ||||||||||||||||||||||
TOTAL REVENUE |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 8,068 | $ | 7,748 | $ | 9,034 | $ | 8,406 | $ | 7,495 | 4 | 8 | $ | 33,256 | $ | 29,614 | 12 | |||||||||||||||||||||||
Credit Card Securitizations |
462 | 471 | 480 | 457 | 430 | (2 | ) | 7 | 1,870 | 1,439 | 30 | |||||||||||||||||||||||||||||
Total Operating Revenue |
$ | 8,530 | $ | 8,219 | $ | 9,514 | $ | 8,863 | $ | 7,925 | 4 | 8 | $ | 35,126 | $ | 31,053 | 13 | |||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Reported |
$ | 5,220 | $ | 5,095 | $ | 5,832 | $ | 5,541 | $ | 7,161 | 2 | (27 | ) | $ | 21,688 | $ | 22,764 | (5 | ) | |||||||||||||||||||||
Real Estate Reserves |
| | | | | NM | NM | | (98 | ) | NM | |||||||||||||||||||||||||||||
Surety Settlement and Litigation Reserve |
| | | | (1,300 | ) | NM | NM | | (1,300 | ) | NM | ||||||||||||||||||||||||||||
Merger and Restructuring Costs |
| | | | (393 | ) | NM | NM | | (1,210 | ) | NM | ||||||||||||||||||||||||||||
Total Operating Expense |
$ | 5,220 | $ | 5,095 | $ | 5,832 | $ | 5,541 | $ | 5,468 | 2 | (5 | ) | $ | 21,688 | $ | 20,156 | 8 | ||||||||||||||||||||||
CREDIT COSTS |
||||||||||||||||||||||||||||||||||||||||
Provision for Credit Losses Reported |
$ | 139 | $ | 223 | $ | 435 | $ | 743 | $ | 921 | (38 | ) | (85 | ) | $ | 1,540 | $ | 4,331 | (64 | ) | ||||||||||||||||||||
Credit Card Securitizations |
462 | 471 | 480 | 457 | 430 | (2 | ) | 7 | 1,870 | 1,439 | 30 | |||||||||||||||||||||||||||||
Credit Costs Operating |
$ | 601 | $ | 694 | $ | 915 | $ | 1,200 | $ | 1,351 | (13 | ) | (56 | ) | $ | 3,410 | $ | 5,770 | (41 | ) | ||||||||||||||||||||
(a) | Included in Fees and Commissions. |
Page 7
SEGMENT DETAIL
J.P. MORGAN CHASE & CO. INVESTMENT BANK FINANCIAL HIGHLIGHTS (in millions, except ratios and employees) |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | |||||||||||||||||||||||||||||||
OPERATING INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE: |
||||||||||||||||||||||||||||||||||||||||
Trading Revenue (Includes Trading NII): |
||||||||||||||||||||||||||||||||||||||||
Fixed Income and Other |
$ | 1,110 | $ | 1,160 | $ | 1,868 | $ | 1,732 | $ | 1,299 | (4 | )% | (15 | )% | $ | 5,870 | $ | 4,468 | 31 | % | ||||||||||||||||||||
Equities |
94 | 95 | 160 | 199 | (31 | ) | (1 | ) | NM | 548 | 11 | NM | ||||||||||||||||||||||||||||
1,204 | 1,255 | 2,028 | 1,931 | 1,268 | (4 | ) | (5 | ) | 6,418 | 4,479 | 43 | |||||||||||||||||||||||||||||
Investment Banking Fees |
834 | 636 | 765 | 620 | 650 | 31 | 28 | 2,855 | 2,696 | 6 | ||||||||||||||||||||||||||||||
Net Interest Income |
463 | 539 | 586 | 689 | 635 | (14 | ) | (27 | ) | 2,277 | 2,642 | (14 | ) | |||||||||||||||||||||||||||
Fees and Commissions |
437 | 426 | 403 | 380 | 370 | 3 | 18 | 1,646 | 1,619 | 2 | ||||||||||||||||||||||||||||||
Securities Gains |
13 | 225 | 445 | 382 | 376 | (94 | ) | (97 | ) | 1,065 | 1,076 | (1 | ) | |||||||||||||||||||||||||||
All Other Revenue | 93 | 85 | (19 | ) | 20 | 18 | 9 | 417 | 179 | (14 | ) | NM | ||||||||||||||||||||||||||||
TOTAL OPERATING REVENUE |
3,044 | 3,166 | 4,208 | 4,022 | 3,317 | (4 | ) | (8 | ) | 14,440 | 12,498 | 16 | ||||||||||||||||||||||||||||
EXPENSE: |
||||||||||||||||||||||||||||||||||||||||
Compensation Expense |
836 | 977 | 1,392 | 1,322 | 1,064 | (14 | ) | (21 | ) | 4,527 | 3,974 | 14 | ||||||||||||||||||||||||||||
Noncompensation Expense |
937 | 853 | 945 | 861 | 881 | 10 | 6 | 3,596 | 3,451 | 4 | ||||||||||||||||||||||||||||||
Operating Expense (Excl. Severance and Related Costs) |
1,773 | 1,830 | 2,337 | 2,183 | 1,945 | (3 | ) | (9 | ) | 8,123 | 7,425 | 9 | ||||||||||||||||||||||||||||
Severance and Related Costs | 67 | 26 | 150 | 104 | 338 | 158 | (80 | ) | 347 | 587 | (41 | ) | ||||||||||||||||||||||||||||
TOTAL OPERATING EXPENSE |
1,840 | 1,856 | 2,487 | 2,287 | 2,283 | (1 | ) | (19 | ) | 8,470 | 8,012 | 6 | ||||||||||||||||||||||||||||
Operating Margin |
1,204 | 1,310 | 1,721 | 1,735 | 1,034 | (8 | ) | 16 | 5,970 | 4,486 | 33 | |||||||||||||||||||||||||||||
Credit Costs | (241 | ) | (181 | ) | (5 | ) | 246 | 489 | (33 | ) | NM | (181 | ) | 2,393 | NM | |||||||||||||||||||||||||
Corporate Credit Allocation |
(5 | ) | (10 | ) | (9 | ) | (12 | ) | (18 | ) | 50 | 72 | (36 | ) | (82 | ) | 56 | |||||||||||||||||||||||
Operating Income Before Income Tax Expense |
1,440 | 1,481 | 1,717 | 1,477 | 527 | (3 | ) | 173 | 6,115 | 2,011 | 204 | |||||||||||||||||||||||||||||
Income Tax Expense |
580 | 601 | 676 | 573 | 186 | (3 | ) | 212 | 2,430 | 708 | 243 | |||||||||||||||||||||||||||||
OPERATING EARNINGS |
$ | 860 | $ | 880 | $ | 1,041 | $ | 904 | $ | 341 | (2 | ) | 152 | $ | 3,685 | $ | 1,303 | 183 | ||||||||||||||||||||||
Average Allocated Capital |
$ | 16,864 | $ | 18,876 | $ | 20,059 | $ | 20,783 | $ | 20,320 | (11 | ) | (17 | ) | $ | 19,134 | $ | 19,915 | (4 | ) | ||||||||||||||||||||
Average Assets |
510,874 | 512,030 | 495,113 | 525,708 | 515,668 | | (1 | ) | 510,894 | 495,464 | 3 | |||||||||||||||||||||||||||||
Shareholder Value Added | 344 | 304 | 436 | 284 | (279 | ) | 13 | NM | 1,368 | (1,109 | ) | NM | ||||||||||||||||||||||||||||
Return on Allocated Capital | 20 | % | 18 | % | 21 | % | 18 | % | 7 | % | 200bp | 1,300bp | 19 | % | 6 | % | 1,300bp | |||||||||||||||||||||||
Overhead Ratio |
60 | 59 | 59 | 57 | 69 | 100 | (900 | ) | 59 | 64 | (500 | ) | ||||||||||||||||||||||||||||
Overhead Ratio Excl. Severance and Related Costs |
58 | 58 | 56 | 54 | 59 | | (100 | ) | 56 | 59 | (300 | ) | ||||||||||||||||||||||||||||
Compensation Expense as a % of Operating Revenue Excl. Severance and Related Costs |
27 | 31 | 33 | 33 | 32 | (400 | ) | (500 | ) | 31 | 32 | (100 | ) | |||||||||||||||||||||||||||
FULL-TIME EQUIVALENT EMPLOYEES |
14,772 | 14,491 | 14,464 | 14,619 | 15,145 | 2 | % | (2 | )% | |||||||||||||||||||||||||||||||
Shareholder Value Added: |
||||||||||||||||||||||||||||||||||||||||
Operating Earnings |
$ | 860 | $ | 880 | $ | 1,041 | $ | 904 | $ | 341 | (2 | ) | 152 | $ | 3,685 | $ | 1,303 | 183 | % | |||||||||||||||||||||
Less: Preferred Dividends |
6 | 5 | 5 | 6 | 5 | 20 | 20 | 22 | 22 | | ||||||||||||||||||||||||||||||
Adjusted Operating Earnings |
854 | 875 | 1,036 | 898 | 336 | (2 | ) | 154 | 3,663 | 1,281 | 186 | |||||||||||||||||||||||||||||
Less: Cost of Capital |
510 | 571 | 600 | 614 | 615 | (11 | ) | (17 | ) | 2,295 | 2,390 | (4 | ) | |||||||||||||||||||||||||||
Total Shareholder Value Added | $ | 344 | $ | 304 | $ | 436 | $ | 284 | $ | (279 | ) | 13 | NM | $ | 1,368 | $ | (1,109 | ) | NM | |||||||||||||||||||||
Page 8
J.P. MORGAN CHASE & CO. INVESTMENT BANK BUSINESS-RELATED METRICS (in millions) |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | |||||||||||||||||||||||||||||||
BUSINESS REVENUE: |
||||||||||||||||||||||||||||||||||||||||
INVESTMENT BANKING FEES |
||||||||||||||||||||||||||||||||||||||||
Advisory |
$ | 157 | $ | 161 | $ | 162 | $ | 160 | $ | 216 | (2 | )% | (27 | )% | $ | 640 | $ | 743 | (14 | )% | ||||||||||||||||||||
Equity Underwriting |
254 | 173 | 163 | 107 | 88 | 47 | 189 | 697 | 470 | 48 | ||||||||||||||||||||||||||||||
Debt Underwriting |
423 | 302 | 440 | 353 | 346 | 40 | 22 | 1,518 | 1,483 | 2 | ||||||||||||||||||||||||||||||
TOTAL |
834 | 636 | 765 | 620 | 650 | 31 | 28 | 2,855 | 2,696 | 6 | ||||||||||||||||||||||||||||||
CAPITAL MARKETS & LENDING |
||||||||||||||||||||||||||||||||||||||||
Fixed Income |
1,365 | 1,437 | 2,160 | 1,977 | 1,568 | (5 | ) | (13 | ) | 6,939 | 5,487 | 26 | ||||||||||||||||||||||||||||
Global Treasury |
142 | 365 | 620 | 599 | 571 | (61 | ) | (75 | ) | 1,726 | 1,815 | (5 | ) | |||||||||||||||||||||||||||
Credit Portfolio |
362 | 389 | 275 | 395 | 339 | (7 | ) | 7 | 1,421 | 1,506 | (6 | ) | ||||||||||||||||||||||||||||
Equities |
341 | 339 | 388 | 431 | 189 | 1 | 80 | 1,499 | 994 | 51 | ||||||||||||||||||||||||||||||
TOTAL |
2,210 | 2,530 | 3,443 | 3,402 | 2,667 | (13 | ) | (17 | ) | 11,585 | 9,802 | 18 | ||||||||||||||||||||||||||||
TOTAL OPERATING REVENUE |
$ | 3,044 | $ | 3,166 | $ | 4,208 | $ | 4,022 | $ | 3,317 | (4 | ) | (8 | ) | $ | 14,440 | $ | 12,498 | 16 | |||||||||||||||||||||
MEMO: |
||||||||||||||||||||||||||||||||||||||||
CAPITAL MARKETS & LENDING TOTAL RETURN REVENUE (a) |
||||||||||||||||||||||||||||||||||||||||
Fixed Income |
$ | 1,454 | $ | 1,512 | $ | 2,096 | $ | 1,939 | $ | 1,484 | (4 | ) | (2 | ) | $ | 7,001 | $ | 5,466 | 28 | |||||||||||||||||||||
Global Treasury |
221 | 491 | 437 | 535 | 467 | (55 | ) | (53 | ) | 1,684 | 1,513 | 11 | ||||||||||||||||||||||||||||
Credit Portfolio |
362 | 389 | 275 | 395 | 339 | (7 | ) | 7 | 1,421 | 1,506 | (6 | ) | ||||||||||||||||||||||||||||
Equities |
341 | 339 | 388 | 431 | 189 | 1 | 80 | 1,499 | 994 | 51 | ||||||||||||||||||||||||||||||
TOTAL |
$ | 2,378 | $ | 2,731 | $ | 3,196 | $ | 3,300 | $ | 2,479 | (13 | ) | (4 | ) | $ | 11,605 | $ | 9,479 | 22 | |||||||||||||||||||||
MARKET
SHARE / RANKINGS: (b) |
||||||||||||||||||||||||||||||||||||||||
Global Syndicated Loans |
17% / #1 | 14% / #1 | 23% / #1 | 14% / #1 | 20% / #1 | 18% / #1 | 23% / #1 | |||||||||||||||||||||||||||||||||
Global Investment-Grade Bonds |
8% / #2 | 8% / #2 | 8% / #2 | 8% / #2 | 8% / #2 | 8% / #2 | 9% / #2 | |||||||||||||||||||||||||||||||||
Euro-Denominated Corporate International Bonds |
5% / #8 | 7% / #3 | 5% / #7 | 4% / #10 | 7% / #4 | 5% / #6 | 6% / #4 | |||||||||||||||||||||||||||||||||
Global Equity and Equity-Related |
7% / #6 | 9% / #4 | 9% / #4 | 10% / #3 | 3% / #9 | 9% / #4 | 4% / #8 | |||||||||||||||||||||||||||||||||
U.S. Equity and Equity-Related |
10% / #4 | 7% / #6 | 12% / #4 | 16% / #1 | 5% / #7 | 11% / #4 | 6% / #6 | |||||||||||||||||||||||||||||||||
Global Announced M&A |
11% / #9 | 17% / #3 | 14% / #6 | 22% / #2 | 16% / #5 | 16% / #5 | 14% / #5 |
(a) | Total return revenue, a non-GAAP financial measure, represents operating revenue plus the change in unrealized gains or losses on investment securities and hedges (included in comprehensive income)
and internally transfer-priced assets and liabilities. |
|
(b) | Derived from Thomson Financial Securities Data, which reflects subsequent updates to prior-period information. Global announced M&A is based on rank value; all other
rankings are based on proceeds, with full credit to each book manager/equal if joint. |
Page 9
J.P. MORGAN CHASE & CO. TREASURY & SECURITIES SERVICES FINANCIAL HIGHLIGHTS (in millions, except ratios and employees) |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | |||||||||||||||||||||||||||||||
OPERATING INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE: |
||||||||||||||||||||||||||||||||||||||||
Fees and Commissions |
$ | 676 | $ | 655 | $ | 632 | $ | 599 | $ | 581 | 3 | % | 16 | % | $ | 2,562 | $ | 2,412 | 6 | % | ||||||||||||||||||||
Net Interest Income |
307 | 311 | 307 | 294 | 311 | (1 | ) | (1 | ) | 1,219 | 1,224 | | ||||||||||||||||||||||||||||
All Other Revenue |
91 | 41 | 41 | 38 | 47 | 122 | 94 | 211 | 256 | (18 | ) | |||||||||||||||||||||||||||||
TOTAL OPERATING REVENUE |
1,074 | 1,007 | 980 | 931 | 939 | 7 | 14 | 3,992 | 3,892 | 3 | ||||||||||||||||||||||||||||||
EXPENSE: |
||||||||||||||||||||||||||||||||||||||||
Compensation Expense |
323 | 312 | 312 | 314 | 279 | 4 | 16 | 1,261 | 1,163 | 8 | ||||||||||||||||||||||||||||||
Noncompensation Expense |
499 | 474 | 477 | 445 | 468 | 5 | 7 | 1,895 | 1,814 | 4 | ||||||||||||||||||||||||||||||
Operating Expense (Excl. Severance and Related Costs) |
822 | 786 | 789 | 759 | 747 | 5 | 10 | 3,156 | 2,977 | 6 | ||||||||||||||||||||||||||||||
Severance and Related Costs |
23 | 10 | 24 | 4 | 5 | 130 | 360 | 61 | 17 | 259 | ||||||||||||||||||||||||||||||
TOTAL OPERATING EXPENSE |
845 | 796 | 813 | 763 | 752 | 6 | 12 | 3,217 | 2,994 | 7 | ||||||||||||||||||||||||||||||
Operating Margin |
229 | 211 | 167 | 168 | 187 | 9 | 22 | 775 | 898 | (14 | ) | |||||||||||||||||||||||||||||
Credit Costs | | (1 | ) | 1 | 1 | 2 | NM | NM | 1 | 1 | | |||||||||||||||||||||||||||||
Corporate Credit Allocation |
5 | 10 | 9 | 12 | 18 | (50 | ) | (72 | ) | 36 | 82 | (56 | ) | |||||||||||||||||||||||||||
Operating Income Before Income Tax Expense |
234 | 222 | 175 | 179 | 203 | 5 | 15 | 810 | 979 | (17 | ) | |||||||||||||||||||||||||||||
Income Tax Expense |
87 | 79 | 61 | 63 | 75 | 10 | 16 | 290 | 358 | (19 | ) | |||||||||||||||||||||||||||||
OPERATING EARNINGS |
$ | 147 | $ | 143 | $ | 114 | $ | 116 | $ | 128 | 3 | 15 | $ | 520 | $ | 621 | (16 | ) | ||||||||||||||||||||||
Average Allocated Capital |
$ | 2,719 | $ | 2,603 | $ | 2,765 | $ | 2,757 | $ | 2,720 | 4 | | $ | 2,711 | $ | 2,688 | 1 | |||||||||||||||||||||||
Average Assets |
20,925 | 18,078 | 19,381 | 17,562 | 19,279 | 16 | 9 | 18,993 | 17,780 | 7 | ||||||||||||||||||||||||||||||
Shareholder Value Added |
64 | 63 | 30 | 35 | 45 | 2 | 42 | 192 | 296 | (35 | ) | |||||||||||||||||||||||||||||
Return on Allocated Capital | 21 | % | 22 | % | 16 | % | 17 | % | 19 | % | (100 | )bp | 200 | bp | 19 | % | 23 | % | (400 | )bp | ||||||||||||||||||||
Overhead Ratio |
79 | 79 | 83 | 82 | 80 | | (100 | ) | 81 | 77 | 400 | |||||||||||||||||||||||||||||
Assets under Custody (in billions) |
$ | 7,597 | $ | 6,926 | $ | 6,777 | $ | 6,269 | $ | 6,336 | 10 | % | 20 | % | ||||||||||||||||||||||||||
FULL-TIME EQUIVALENT EMPLOYEES |
14,616 | 14,294 | 14,393 | 14,349 | 14,440 | 2 | 1 | |||||||||||||||||||||||||||||||||
Shareholder Value Added: |
||||||||||||||||||||||||||||||||||||||||
Operating Earnings |
$ | 147 | $ | 143 | $ | 114 | $ | 116 | $ | 128 | 3 | 15 | $ | 520 | $ | 621 | (16 | )% | ||||||||||||||||||||||
Less: Preferred Dividends | 1 | 1 | | 1 | | | NM | 3 | 2 | 50 | ||||||||||||||||||||||||||||||
Adjusted Operating Earnings |
146 | 142 | 114 | 115 | 128 | 3 | 14 | 517 | 619 | (16 | ) | |||||||||||||||||||||||||||||
Less: Cost of Capital |
82 | 79 | 84 | 80 | 83 | 4 | (1 | ) | 325 | 323 | 1 | |||||||||||||||||||||||||||||
Total Shareholder Value Added |
$ | 64 | $ | 63 | $ | 30 | $ | 35 | $ | 45 | 2 | 42 | $ | 192 | $ | 296 | (35 | ) | ||||||||||||||||||||||
OPERATING REVENUE BY BUSINESS: |
||||||||||||||||||||||||||||||||||||||||
Treasury Services |
$ | 487 | $ | 497 | $ | 468 | $ | 475 | $ | 469 | (2 | ) | 4 | $ | 1,927 | $ | 1,818 | 6 | ||||||||||||||||||||||
Investor Services |
381 | 370 | 360 | 338 | 334 | 3 | 14 | 1,449 | 1,513 | (4 | ) | |||||||||||||||||||||||||||||
Institutional Trust Services |
253 | 234 | 238 | 203 | 224 | 8 | 13 | 928 | 864 | 7 | ||||||||||||||||||||||||||||||
Other |
(47 | ) | (94 | ) | (86 | ) | (85 | ) | (88 | ) | 50 | 47 | (312 | ) | (303 | ) | (3 | ) | ||||||||||||||||||||||
Total Treasury & Securities Services |
$ | 1,074 | $ | 1,007 | $ | 980 | $ | 931 | $ | 939 | 7 | 14 | $ | 3,992 | $ | 3,892 | 3 | |||||||||||||||||||||||
Page 10
J.P. MORGAN CHASE & CO. INVESTMENT MANAGEMENT & PRIVATE BANKING FINANCIAL HIGHLIGHTS (in millions, except ratios and employees) |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | |||||||||||||||||||||||||||||||||||||||||||
OPERATING INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE: |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Fees and Commissions |
$ | 617 | $ | 572 | $ | 508 | $ | 510 | $ | 506 | 8 | % | 22 | % | $ | 2,207 | $ | 2,176 | 1 | % | ||||||||||||||||||||||||||||||||
Net Interest Income |
119 | 116 | 117 | 115 | 107 | 3 | 11 | 467 | 446 | 5 | ||||||||||||||||||||||||||||||||||||||||||
All Other Revenue |
86 | 49 | 53 | 16 | 39 | 76 | 121 | 204 | 217 | (6 | ) | |||||||||||||||||||||||||||||||||||||||||
TOTAL OPERATING REVENUE |
822 | 737 | 678 | 641 | 652 | 12 | 26 | 2,878 | 2,839 | 1 | ||||||||||||||||||||||||||||||||||||||||||
EXPENSE: |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation Expense |
305 | 313 | 290 | 285 | 311 | (3 | ) | (2 | ) | 1,193 | 1,125 | 6 | ||||||||||||||||||||||||||||||||||||||||
Noncompensation Expense |
330 | 307 | 299 | 299 | 314 | 7 | 5 | 1,235 | 1,221 | 1 | ||||||||||||||||||||||||||||||||||||||||||
TOTAL OPERATING EXPENSE |
635 | 620 | 589 | 584 | 625 | 2 | 2 | 2,428 | 2,346 | 3 | ||||||||||||||||||||||||||||||||||||||||||
Operating Margin | 187 | 117 | 89 | 57 | 27 | 60 | NM | 450 | 493 | (9 | ) | |||||||||||||||||||||||||||||||||||||||||
Credit Costs | 36 | (7 | ) | | 6 | 13 | NM | 177 | 35 | 85 | (59 | ) | ||||||||||||||||||||||||||||||||||||||||
Operating Income Before Income Tax Expense | 151 | 124 | 89 | 51 | 14 | 22 | NM | 415 | 408 | 2 | ||||||||||||||||||||||||||||||||||||||||||
Income Tax Expense | 51 | 43 | 30 | 23 | 2 | 19 | NM | 147 | 147 | | ||||||||||||||||||||||||||||||||||||||||||
OPERATING EARNINGS | $ | 100 | $ | 81 | $ | 59 | $ | 28 | $ | 12 | 23 | NM | $ | 268 | $ | 261 | 3 | |||||||||||||||||||||||||||||||||||
Average Allocated Capital |
$ | 5,413 | $ | 5,485 | $ | 5,481 | $ | 5,438 | $ | 5,540 | (1 | ) | (2 | ) | $ | 5,454 | $ | 5,643 | (3 | ) | ||||||||||||||||||||||||||||||||
Average Goodwill Capital |
4,095 | 4,097 | 4,096 | 4,101 | 4,115 | | | 4,097 | 4,116 | | ||||||||||||||||||||||||||||||||||||||||||
Average Assets |
34,032 | 33,198 | 33,929 | 33,582 | 33,522 | 3 | 2 | 33,685 | 35,729 | (6 | ) | |||||||||||||||||||||||||||||||||||||||||
Shareholder Value Added |
(66 | ) | (87 | ) | (107 | ) | (134 | ) | (157 | ) | 24 | 58 | (394 | ) | (423 | ) | 7 | |||||||||||||||||||||||||||||||||||
Tangible Shareholder Value Added | 62 | 40 | 18 | (12 | ) | (30 | ) | 55 | NM | 108 | 84 | 29 | ||||||||||||||||||||||||||||||||||||||||
Return on Allocated Capital | 7 | % | 6 | % | 4 | % | 2 | % | 1 | % | 100 | bp | 600 | bp | 5 | % | 5 | % | | bp | ||||||||||||||||||||||||||||||||
Return on Tangible Allocated
Capital |
31 | 23 | 17 | 8 | 4 | 800 | 2,700 | 20 | 18 | 200 | ||||||||||||||||||||||||||||||||||||||||||
Overhead Ratio |
77 | 84 | 87 | 91 | 96 | (700 | ) | (1,900 | ) | 84 | 83 | 100 | ||||||||||||||||||||||||||||||||||||||||
Pre-Tax Margin Ratio |
18 | 17 | 13 | 8 | 2 | 100 | 1,600 | 14 | 14 | | ||||||||||||||||||||||||||||||||||||||||||
FULL-TIME EQUIVALENT
EMPLOYEES |
7,756 | 7,716 | 7,884 | 7,510 | 7,827 | 1 | % | (1 | )% | |||||||||||||||||||||||||||||||||||||||||||
Shareholder Value Added: |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Earnings | $ | 100 | $ | 81 | $ | 59 | $ | 28 | $ | 12 | 23 | NM | $ | 268 | $ | 261 | 3 | % | ||||||||||||||||||||||||||||||||||
Less: Preferred Dividends |
2 | 2 | 1 | 2 | 1 | | 100 | 7 | 7 | | ||||||||||||||||||||||||||||||||||||||||||
Adjusted Operating Earnings | 98 | 79 | 58 | 26 | 11 | 24 | NM | 261 | 254 | 3 | ||||||||||||||||||||||||||||||||||||||||||
Less: Cost of Capital |
164 | 166 | 165 | 160 | 168 | (1 | ) | (2 | ) | 655 | 677 | (3 | ) | |||||||||||||||||||||||||||||||||||||||
Total Shareholder Value
Added |
(66 | ) | (87 | ) | (107 | ) | (134 | ) | (157 | ) | 24 | 58 | (394 | ) | (423 | ) | 7 | |||||||||||||||||||||||||||||||||||
Add: Goodwill Exclusion
Impact |
128 | 127 | 125 | 122 | 127 | 1 | 1 | 502 | 507 | (1 | ) | |||||||||||||||||||||||||||||||||||||||||
Tangible SVA (a) | $ | 62 | $ | 40 | $ | 18 | $ | (12 | ) | $ | (30 | ) | 55 | NM | $ | 108 | $ | 84 | 29 | |||||||||||||||||||||||||||||||||
ASSETS UNDER SUPERVISION
(in billions) |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Client Segment: |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Retail |
$ | 101 | (b) | $ | 88 | $ | 84 | $ | 72 | $ | 80 | 15 | 26 | |||||||||||||||||||||||||||||||||||||||
Private Banking |
138 | (b) | 132 | 130 | 125 | 130 | 5 | 6 | ||||||||||||||||||||||||||||||||||||||||||||
Institutional |
320 | (b) | 307 | 298 | 298 | 305 | 4 | 5 | ||||||||||||||||||||||||||||||||||||||||||||
Assets under Management |
559 | (b) | 527 | 512 | 495 | 515 | 6 | 9 | ||||||||||||||||||||||||||||||||||||||||||||
Custody / Brokerage /
Administration /Deposits |
199 | (b) | 193 | 182 | 127 | 129 | 3 | 54 | ||||||||||||||||||||||||||||||||||||||||||||
Assets under Supervision |
$ | 758 | (b) | $ | 720 | $ | 694 | $ | 622 | $ | 644 | 5 | 18 | |||||||||||||||||||||||||||||||||||||||
Geographic Region: |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Americas |
$ | 360 | (b) | $ | 348 | $ | 348 | $ | 350 | $ | 362 | 3 | (1 | ) | ||||||||||||||||||||||||||||||||||||||
Europe and Asia |
199 | (b) | 179 | 164 | 145 | 153 | 11 | 30 | ||||||||||||||||||||||||||||||||||||||||||||
Assets under Management |
559 | (b) | 527 | 512 | 495 | 515 | 6 | 9 | ||||||||||||||||||||||||||||||||||||||||||||
Custody /Brokerage /
Administration /Deposits |
199 | (b) | 193 | 182 | 127 | 129 | 3 | 54 | ||||||||||||||||||||||||||||||||||||||||||||
Assets under Supervision |
$ | 758 | (b) | $ | 720 | $ | 694 | $ | 622 | $ | 644 | 5 | 18 | |||||||||||||||||||||||||||||||||||||||
Product Class: |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Liquidity |
$ | 160 | (b) | $ | 149 | $ | 140 | $ | 144 | $ | 144 | 7 | 11 | |||||||||||||||||||||||||||||||||||||||
Fixed Income |
144 | (b) | 146 | 150 | 144 | 149 | (1 | ) | (3 | ) | ||||||||||||||||||||||||||||||||||||||||||
Equities and Other |
255 | (b) | 232 | 222 | 207 | 222 | 10 | 15 | ||||||||||||||||||||||||||||||||||||||||||||
Assets under Management |
559 | (b) | 527 | 512 | 495 | 515 | 6 | 9 | ||||||||||||||||||||||||||||||||||||||||||||
Custody /Brokerage /
Administration /Deposits |
199 | (b) | 193 | 182 | 127 | 129 | 3 | 54 | ||||||||||||||||||||||||||||||||||||||||||||
Assets under Supervision |
$ | 758 | (b) | $ | 720 | $ | 694 | $ | 622 | $ | 644 | 5 | 18 | |||||||||||||||||||||||||||||||||||||||
(a) | In addition to shareholder value added (SVA), the Firm uses tangible SVA, a non-GAAP financial measure, as an additional measure of the
economics of the IMPB business segment. To derive tangible SVA, the impact of goodwill is
excluded. |
|
(b) | Estimated |
Page 11
J.P. MORGAN CHASE & CO. JPMORGAN PARTNERS FINANCIAL HIGHLIGHTS (in millions, except employees) |
4QTR 2003 | 2003 | ||||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | ||||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | ||||||||||||||||||||||||||||||||
OPERATING INCOME STATEMENT |
|||||||||||||||||||||||||||||||||||||||||
REVENUE: |
|||||||||||||||||||||||||||||||||||||||||
Direct Investments: |
|||||||||||||||||||||||||||||||||||||||||
Realized Cash Gains (Net) |
$ | 202 | $ | 134 | $ | 153 | $ | 46 | $ | 144 | 51 | % | 40 | % | $ | 535 | $ | 452 | 18 | % | |||||||||||||||||||||
Write-downs / Write-offs |
(52 | ) | 1 | (177 | ) | (176 | ) | (225 | ) | NM | 77 | (404 | ) | (825 | ) | 51 | |||||||||||||||||||||||||
Mark-to-Market Gains (Losses) (a) |
48 | 26 | 147 | (6 | ) | 108 | 85 | (56 | ) | 215 | (210 | ) | NM | ||||||||||||||||||||||||||||
Total Direct Investments |
198 | 161 | 123 | (136 | ) | 27 | 23 | NM | 346 | (583 | ) | NM | |||||||||||||||||||||||||||||
Private Third-Party Fund Investments (Net) | (39 | ) | (41 | ) | (145 | ) | (94 | ) | (80 | ) | 5 | 51 | (319 | ) | (150 | ) | (113 | ) | |||||||||||||||||||||||
Total Private Equity Gains (Losses) (b) | 159 | 120 | (22 | ) | (230 | ) | (53 | ) | 33 | NM | 27 | (733 | ) | NM | |||||||||||||||||||||||||||
Net Interest Income (Loss) | (64 | ) | (61 | ) | (67 | ) | (72 | ) | (66 | ) | (5 | ) | 3 | (264 | ) | (302 | ) | 13 | |||||||||||||||||||||||
Fees and Other Revenue | 10 | 12 | 9 | 16 | 28 | (17 | ) | (64 | ) | 47 | 59 | (20 | ) | ||||||||||||||||||||||||||||
TOTAL OPERATING REVENUE |
105 | 71 | (80 | ) | (286 | ) | (91 | ) | 48 | NM | (190 | ) | (976 | ) | 81 | ||||||||||||||||||||||||||
EXPENSE: |
|||||||||||||||||||||||||||||||||||||||||
Compensation Expense | 34 | 32 | 35 | 34 | 23 | 6 | 48 | 135 | 128 | 5 | |||||||||||||||||||||||||||||||
Noncompensation Expense | 38 | 33 | 38 | 31 | 46 | 15 | (17 | ) | 140 | 171 | (18 | ) | |||||||||||||||||||||||||||||
TOTAL OPERATING EXPENSE |
72 | 65 | 73 | 65 | 69 | 11 | 4 | 275 | 299 | (8 | ) | ||||||||||||||||||||||||||||||
Operating Income (Loss) Before Income Tax Expense | 33 | 6 | (153 | ) | (351 | ) | (160 | ) | 450 | NM | (465 | ) | (1,275 | ) | 64 | ||||||||||||||||||||||||||
Income Tax Expense (Benefit) | 11 | 1 | (56 | ) | (128 | ) | (60 | ) | NM | NM | (172 | ) | (467 | ) | 63 | ||||||||||||||||||||||||||
OPERATING EARNINGS (LOSS) | $ | 22 | $ | 5 | $ | (97 | ) | $ | (223 | ) | $ | (100 | ) | 340 | NM | $ | (293) | $ | (808 | ) | 64 | ||||||||||||||||||||
Average Allocated Capital |
$ | 5,541 | $ | 5,721 | $ | 5,916 | $ | 5,985 | $ | 6,102 | (3 | ) | (9 | ) | $ | 5,789 | $ | 6,293 | (8 | ) | |||||||||||||||||||||
Average Assets |
8,199 | 8,653 | 9,008 | 9,428 | 9,629 | (5 | ) | (15 | ) | 8,818 | 9,677 | (9 | ) | ||||||||||||||||||||||||||||
Shareholder Value Added |
(189 | ) | (213 | ) | (320 | ) | (447 | ) | (333 | ) | 11 | 43 | (1,169 | ) | (1,759 | ) | 34 | ||||||||||||||||||||||||
FULL-TIME EQUIVALENT EMPLOYEES |
316 | 325 | 329 | 342 | 357 | (3 | ) | (11 | ) | ||||||||||||||||||||||||||||||||
Shareholder Value Added: | |||||||||||||||||||||||||||||||||||||||||
Operating Earnings | $ | 22 | $ | 5 | $ | (97 | ) | $ | (223 | ) | $ | (100 | ) | 340 | NM | $ | (293) | $ | (808 | ) | 64 | ||||||||||||||||||||
Less: Preferred Dividends | 2 | 2 | 1 | 2 | 2 | | | 7 | 7 | | |||||||||||||||||||||||||||||||
Adjusted Operating Earnings | 20 | 3 | (98 | ) | (225 | ) | (102 | ) | NM | NM | (300 | ) | (815 | ) | 63 | ||||||||||||||||||||||||||
Less: Cost of Capital | 209 | 216 | 222 | 222 | 231 | (3 | ) | (10 | ) | 869 | 944 | (8 | ) | ||||||||||||||||||||||||||||
Total Shareholder Value Added | $ | (189 | ) | $ | (213 | ) | $ | (320 | ) | $ | (447 | ) | $ | (333 | ) | 11 | 43 | $ | (1,169 | ) | $ | (1,759 | ) | 34 | |||||||||||||||||
(a) | Includes mark-to-market gains (losses) and reversals of mark-to-market gains (losses) due to public securities sales. |
|
(b) | Includes the impact of portfolio hedging activities. |
Page 12
J.P. MORGAN CHASE & CO. JPMORGAN PARTNERS INVESTMENT PORTFOLIO PRIVATE AND PUBLIC SECURITIES (in millions, except ratios) |
Dec 31, 2003 | ||||||||||||||||||||||||||||
Over (Under) | ||||||||||||||||||||||||||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Dec 31 | ||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 2003 | 2002 | ||||||||||||||||||||||
PORTFOLIO INFORMATION |
||||||||||||||||||||||||||||
Public Securities (51 companies) (a)(b) |
||||||||||||||||||||||||||||
Carrying Value |
$ | 643 | $ | 705 | $ | 591 | $ | 478 | $ | 520 | (9 | )% | 24 | % | ||||||||||||||
Cost |
451 | 560 | 531 | 624 | 663 | (19 | ) | (32 | ) | |||||||||||||||||||
Private Direct Securities (822 companies) (b) |
||||||||||||||||||||||||||||
Carrying Value |
5,508 | 5,686 | 5,766 | 5,912 | 5,865 | (3 | ) | (6 | ) | |||||||||||||||||||
Cost |
6,960 | 7,188 | 7,351 | 7,439 | 7,316 | (3 | ) | (5 | ) | |||||||||||||||||||
Private Third-Party Fund Investments (252 funds) (b)(c)
|
||||||||||||||||||||||||||||
Carrying Value |
1,099 | 1,406 | 1,544 | 1,780 | 1,843 | (22 | ) | (40 | ) | |||||||||||||||||||
Cost |
1,736 | 2,020 | 2,121 | 2,360 | 2,333 | (14 | ) | (26 | ) | |||||||||||||||||||
Total Investment Portfolio Carrying Value |
$ | 7,250 | $ | 7,797 | $ | 7,901 | $ | 8,170 | $ | 8,228 | (7 | ) | (12 | ) | ||||||||||||||
Total Investment Portfolio Cost |
$ | 9,147 | $ | 9,768 | $ | 10,003 | $ | 10,423 | $ | 10,312 | (6 | ) | (11 | ) | ||||||||||||||
% of Portfolio to the Firms Common Equity (d) | 15 | % | 17 | % | 18 | % | 20 | % | 20 | % | (200) | bp | (500) | bp | ||||||||||||||
(a) | The quoted public value was $1.0 billion at December 31, 2003. |
|
(b) | Represents the number of companies and funds at December 31, 2003. |
|
(c) | Unfunded commitments to private third-party equity funds were $1.3 billion at December 31, 2003. |
|
(d) | For purposes of calculating this ratio, the JPMP carrying value excludes the post-December 31, 2002 impact of public mark-to-market
valuation adjustments, and the Firms common equity excludes SFAS 115 equity balances. |
Page 13
J.P. MORGAN CHASE & CO. CHASE FINANCIAL SERVICES FINANCIAL HIGHLIGHTS (in millions, except ratios and employees) |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | |||||||||||||||||||||||||||||||
OPERATING INCOME STATEMENT |
||||||||||||||||||||||||||||||||||||||||
REVENUE: |
||||||||||||||||||||||||||||||||||||||||
Net Interest Income |
$ | 2,447 | $ | 2,471 | $ | 2,402 | $ | 2,300 | $ | 2,111 | (1 | )% | 16 | % | $ | 9,620 | $ | 8,225 | 17 | % | ||||||||||||||||||||
Fees and Commissions |
947 | 897 | 892 | 825 | 917 | 6 | 3 | 3,561 | 3,489 | 2 | ||||||||||||||||||||||||||||||
Securities Gains (Losses) | 18 | (62 | ) | 323 | 103 | 375 | NM | (95 | ) | 382 | 493 | (23 | ) | |||||||||||||||||||||||||||
Mortgage Fees and Related Income (a) | 140 | 8 | 311 | 433 | (118 | ) | NM | NM | 892 | 988 | (10 | ) | ||||||||||||||||||||||||||||
All Other Revenue |
57 | 42 | 47 | 31 | 46 | 36 | 24 | 177 | 231 | (23 | ) | |||||||||||||||||||||||||||||
TOTAL OPERATING REVENUE |
3,609 | 3,356 | 3,975 | 3,692 | 3,331 | 8 | 8 | 14,632 | 13,426 | 9 | ||||||||||||||||||||||||||||||
EXPENSE: |
||||||||||||||||||||||||||||||||||||||||
Compensation Expense |
700 | 692 | 757 | 721 | 610 | 1 | 15 | 2,870 | 2,536 | 13 | ||||||||||||||||||||||||||||||
Noncompensation Expense |
1,111 | 1,073 | 1,053 | 1,062 | 1,092 | 4 | 2 | 4,299 | 3,943 | 9 | ||||||||||||||||||||||||||||||
Operating Expense (Excl. Severance and Related Costs) |
1,811 | 1,765 | 1,810 | 1,783 | 1,702 | 3 | 6 | 7,169 | 6,479 | 11 | ||||||||||||||||||||||||||||||
Severance and Related Costs |
53 | 27 | 2 | 13 | 25 | 96 | 112 | 95 | 99 | (4 | ) | |||||||||||||||||||||||||||||
TOTAL OPERATING EXPENSE |
1,864 | 1,792 | 1,812 | 1,796 | 1,727 | 4 | 8 | 7,264 | 6,578 | 10 | ||||||||||||||||||||||||||||||
Operating Margin |
1,745 | 1,564 | 2,163 | 1,896 | 1,604 | 12 | 9 | 7,368 | 6,848 | 8 | ||||||||||||||||||||||||||||||
Credit Costs |
854 | 883 | 817 | 877 | 874 | (3 | ) | (2 | ) | 3,431 | 3,159 | 9 | ||||||||||||||||||||||||||||
Operating Income Before Income Tax Expense |
891 | 681 | 1,346 | 1,019 | 730 | 31 | 22 | 3,937 | 3,689 | 7 | ||||||||||||||||||||||||||||||
Income Tax Expense |
331 | 248 | 493 | 370 | 274 | 33 | 21 | 1,442 | 1,369 | 5 | ||||||||||||||||||||||||||||||
OPERATING EARNINGS |
$ | 560 | $ | 433 | $ | 853 | $ | 649 | $ | 456 | 29 | 23 | $ | 2,495 | $ | 2,320 | 8 | |||||||||||||||||||||||
Average Allocated Capital |
$ | 8,955 | $ | 8,925 | $ | 8,647 | $ | 8,465 | $ | 8,510 | | 5 | $ | 8,750 | $ | 8,612 | 2 | |||||||||||||||||||||||
Average
Managed Loans |
192,383 | 192,819 | 183,525 | 174,040 | 165,176 | | 16 | 185,761 | 155,926 | 19 | ||||||||||||||||||||||||||||||
Average Managed Assets (b) |
217,633 | 223,370 | 217,275 | 202,328 | 188,466 | (3 | ) | 15 | 215,216 | 179,635 | 20 | |||||||||||||||||||||||||||||
Shareholder Value Added |
286 | 160 | 592 | 396 | 197 | 79 | 45 | 1,434 | 1,276 | 12 | ||||||||||||||||||||||||||||||
Return on Allocated Capital | 25 | % | 19 | % | 39 | % | 31 | % | 21 | % | 600 | bp | 400 | bp | 28 | % | 27 | % | 100 | bp | ||||||||||||||||||||
Overhead Ratio |
52 | 53 | 46 | 49 | 52 | (100 | ) | | 50 | 49 | 100 | |||||||||||||||||||||||||||||
FULL-TIME EQUIVALENT EMPLOYEES |
46,155 | 46,231 | 45,268 | 44,312 | 43,543 | | % | 6 | % | |||||||||||||||||||||||||||||||
Shareholder Value Added: |
||||||||||||||||||||||||||||||||||||||||
Operating Earnings |
$ | 560 | $ | 433 | $ | 853 | $ | 649 | $ | 456 | 29 | 23 | $ | 2,495 | $ | 2,320 | 8 | % | ||||||||||||||||||||||
Less: Preferred Dividends |
3 | 3 | 2 | 3 | 2 | | 50 | 11 | 10 | 10 | ||||||||||||||||||||||||||||||
Adjusted Operating Earnings |
557 | 430 | 851 | 646 | 454 | 30 | 23 | 2,484 | 2,310 | 8 | ||||||||||||||||||||||||||||||
Less: Cost of Capital |
271 | 270 | 259 | 250 | 257 | | 5 | 1,050 | 1,034 | 2 | ||||||||||||||||||||||||||||||
Total Shareholder Value Added |
$ | 286 | $ | 160 | $ | 592 | $ | 396 | $ | 197 | 79 | 45 | $ | 1,434 | $ | 1,276 | 12 | |||||||||||||||||||||||
(a) | Mortgage Fees
and Related Income of $140 million in the fourth quarter of 2003 consists of operating noninterest revenue of $316 million and MSR hedging noninterest
revenue of $(176) million. The operating component of Mortgage Fees and Related Income includes net Mortgage Servicing Fees and
production-related noninterest revenue. |
|
(b) | Includes credit card receivables that have been securitized. |
Page 14
J.P. MORGAN CHASE & CO. CHASE FINANCIAL SERVICES BUSINESS FINANCIAL HIGHLIGHTS (in millions) |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | |||||||||||||||||||||||||||||||
CHASE FINANCIAL SERVICES BUSINESSES |
||||||||||||||||||||||||||||||||||||||||
CHASE HOME FINANCE: |
||||||||||||||||||||||||||||||||||||||||
Operating Revenue: |
||||||||||||||||||||||||||||||||||||||||
Operating Revenue (Excl. MSR Hedging Revenue) (a) |
$ | 950 | $ | 688 | $ | 1,100 | $ | 1,062 | $ | 731 | 38 | % | 30 | % | $ | 3,800 | $ | 2,751 | 38 | % | ||||||||||||||||||||
MSR Hedging Revenue (a) |
(83 | ) | (6 | ) | 233 | 86 | (84 | ) | NM | 1 | 230 | 177 | 30 | |||||||||||||||||||||||||||
Total |
$ | 867 | $ | 682 | $ | 1,333 | $ | 1,148 | $ | 647 | 27 | 34 | $ | 4,030 | $ | 2,928 | 38 | |||||||||||||||||||||||
Operating Expense |
484 | 445 | 400 | 382 | 394 | 9 | 23 | 1,711 | 1,341 | 28 | ||||||||||||||||||||||||||||||
Operating Earnings |
238 | 118 | 562 | 423 | 143 | 102 | 66 | 1,341 | 908 | 48 | ||||||||||||||||||||||||||||||
CHASE CARDMEMBER SERVICES: |
||||||||||||||||||||||||||||||||||||||||
Operating Revenue |
$ | 1,620 | $ | 1,570 | $ | 1,512 | $ | 1,460 | $ | 1,565 | 3 | 4 | $ | 6,162 | $ | 5,939 | 4 | |||||||||||||||||||||||
Operating Expense |
561 | 557 | 544 | 540 | 608 | 1 | (8 | ) | 2,202 | 2,156 | 2 | |||||||||||||||||||||||||||||
Operating Earnings |
171 | 198 | 165 | 145 | 137 | (14 | ) | 25 | 679 | 662 | 3 | |||||||||||||||||||||||||||||
CHASE AUTO FINANCE: |
||||||||||||||||||||||||||||||||||||||||
Operating Revenue |
$ | 207 | $ | 216 | $ | 221 | $ | 198 | $ | 186 | (4 | ) | 11 | $ | 842 | $ | 683 | 23 | ||||||||||||||||||||||
Operating Expense |
77 | 74 | 73 | 68 | 65 | 4 | 18 | 292 | 248 | 18 | ||||||||||||||||||||||||||||||
Operating Earnings |
53 | 49 | 67 | 36 | 35 | 8 | 51 | 205 | 166 | 23 | ||||||||||||||||||||||||||||||
CHASE REGIONAL BANKING: |
||||||||||||||||||||||||||||||||||||||||
Operating Revenue |
$ | 653 | $ | 636 | $ | 656 | $ | 631 | $ | 693 | 3 | (6 | ) | $ | 2,576 | $ | 2,828 | (9 | ) | |||||||||||||||||||||
Operating Expense |
645 | 580 | 583 | 575 | 567 | 11 | 14 | 2,383 | 2,229 | 7 | ||||||||||||||||||||||||||||||
Operating Earnings | (5 | ) | 12 | 35 | 28 | 77 | NM | NM | 70 | 354 | (80 | ) | ||||||||||||||||||||||||||||
CHASE MIDDLE MARKET: |
||||||||||||||||||||||||||||||||||||||||
Operating Revenue |
$ | 358 | $ | 362 | $ | 351 | $ | 359 | $ | 355 | (1 | ) | 1 | $ | 1,430 | $ | 1,451 | (1 | ) | |||||||||||||||||||||
Operating Expense |
209 | 228 | 221 | 213 | 225 | (8 | ) | (7 | ) | 871 | 841 | 4 | ||||||||||||||||||||||||||||
Operating Earnings |
93 | 66 | 78 | 87 | 54 | 41 | 72 | 324 | 315 | 3 |
(a) | MSR represents Mortgage Servicing Rights. |
Page 15
J.P. MORGAN CHASE & CO. CHASE FINANCIAL SERVICES BUSINESS-RELATED METRICS (in billions, except ratios and where otherwise noted) |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | |||||||||||||||||||||||||||||||
Chase Home Finance |
||||||||||||||||||||||||||||||||||||||||
Origination Volume by Channel: |
||||||||||||||||||||||||||||||||||||||||
Retail, Wholesale and Correspondent |
$ | 37 | $ | 68 | $ | 55 | $ | 41 | $ | 40 | (46 | )% | (8 | )% | $ | 201 | $ | 113 | 78 | % | ||||||||||||||||||||
Correspondent Negotiated Transactions |
14 | 25 | 23 | 21 | 21 | (44 | ) | (33 | ) | 83 | 43 | 93 | ||||||||||||||||||||||||||||
Origination Volume by Product: |
||||||||||||||||||||||||||||||||||||||||
First Mortgage |
44 | 86 | 72 | 58 | 57 | (49 | ) | (23 | ) | 260 | 142 | 83 | ||||||||||||||||||||||||||||
Home Equity |
7 | 7 | 6 | 4 | 4 | | 75 | 24 | 14 | 71 | ||||||||||||||||||||||||||||||
Loans Serviced (EOP) |
470 | 455 | 437 | 432 | 426 | 3 | 10 | 470 | 426 | 10 | ||||||||||||||||||||||||||||||
End-of-Period Outstandings |
73.7 | 85.8 | 74.5 | 67.3 | 63.6 | (14 | ) | 16 | 73.7 | 63.6 | 16 | |||||||||||||||||||||||||||||
Total Average Loans Owned |
79.4 | 80.6 | 71.2 | 64.4 | 59.7 | (1 | ) | 33 | 74.1 | 56.2 | 32 | |||||||||||||||||||||||||||||
Number of Customers (in millions) |
4.1 | 4.0 | 3.9 | 4.0 | 4.0 | 2 | 2 | 4.1 | 4.0 | 2 | ||||||||||||||||||||||||||||||
MSR Carrying Value |
4.8 | 4.0 | 3.0 | 3.2 | 3.2 | 20 | 50 | 4.8 | 3.2 | 50 | ||||||||||||||||||||||||||||||
30+ Day Delinquency Rate | 1.81 | % | 2.05 | % | 2.23 | % | 2.31 | % | 3.07 | % | (24 | ) bp | (126 | ) bp | 1.81 | % | 3.07 | % | (126 | ) bp | ||||||||||||||||||||
Net Charge-Off Ratio |
0.19 | 0.15 | 0.18 | 0.20 | 0.27 | 4 | (8 | ) | 0.18 | 0.25 | (7 | ) | ||||||||||||||||||||||||||||
Overhead Ratio |
56 | 65 | 30 | 33 | 61 | (900 | ) | (500 | ) | 42 | 46 | (400 | ) | |||||||||||||||||||||||||||
Chase Cardmember Services Managed Basis |
||||||||||||||||||||||||||||||||||||||||
End-of-Period Outstandings |
$ | 52.3 | $ | 50.9 | $ | 51.0 | $ | 50.6 | $ | 51.1 | 3 | % | 2 | % | $ | 52.3 | $ | 51.1 | 2 | % | ||||||||||||||||||||
Average Outstandings |
51.1 | 50.9 | 50.7 | 50.9 | 50.7 | | 1 | 50.9 | 49.1 | 4 | ||||||||||||||||||||||||||||||
Total Volume (a) |
23.9 | 22.9 | 22.2 | 20.7 | 21.2 | 4 | 13 | 89.7 | 84.0 | 7 | ||||||||||||||||||||||||||||||
New Accounts (in millions) |
1.0 | 1.1 | 1.0 | 1.1 | 1.0 | (9 | ) | | 4.2 | 3.7 | 14 | |||||||||||||||||||||||||||||
Active Accounts (in millions) |
16.5 | 16.3 | 16.4 | 16.5 | 16.5 | 1 | | 16.5 | 16.5 | | ||||||||||||||||||||||||||||||
Total Accounts (in millions) |
30.8 | 30.6 | 30.3 | 29.8 | 29.2 | 1 | 5 | 30.8 | 29.2 | 5 | ||||||||||||||||||||||||||||||
30+ Day Delinquency Rate |
4.68 | % | 4.62 | % | 4.40 | % | 4.59 | % | 4.67 | % | 6 | bp | 1 | bp | 4.68 | % | 4.67 | % | 1 | bp | ||||||||||||||||||||
Net Charge-Off Ratio | 5.76 | 5.83 | 6.02 | 5.95 | 5.71 | (7 | ) | 5 | 5.89 | 5.89 | | |||||||||||||||||||||||||||||
Overhead Ratio |
35 | 35 | 36 | 37 | 39 | | (400 | ) | 36 | 36 | | |||||||||||||||||||||||||||||
Chase Auto Finance |
||||||||||||||||||||||||||||||||||||||||
Loan and Lease Receivables |
$ | 43.2 | $ | 42.8 | $ | 41.7 | $ | 41.1 | $ | 37.4 | 1 | % | 16 | % | $ | 43.2 | $ | 37.4 | 16 | % | ||||||||||||||||||||
Average Loan and Lease Receivables |
43.5 | 42.1 | 41.7 | 39.6 | 35.8 | 3 | 22 | 41.7 | 31.7 | 32 | ||||||||||||||||||||||||||||||
Automobile Origination Volume (b) |
5.5 | 7.0 | 7.9 | 7.4 | 6.8 | (21 | ) | (19 | ) | 27.8 | 25.3 | 10 | ||||||||||||||||||||||||||||
Automobile Market Share (Year-to-date) | 6.3 | %(d) | 6.6 | % | 6.8 | % | 6.7 | % | 5.7 | % | (30 | ) bp | 60 | bp | 6.3 | %(d) | 5.7 | % | 60 | bp | ||||||||||||||||||||
30+ Day Delinquency Rate |
1.46 | 1.16 | 1.14 | 1.27 | 1.54 | 30 | (8 | ) | 1.46 | 1.54 | (8 | ) | ||||||||||||||||||||||||||||
Net Charge-Off Ratio |
0.39 | 0.41 | 0.37 | 0.48 | 0.53 | (2 | ) | (14 | ) | 0.41 | 0.51 | (10 | ) | |||||||||||||||||||||||||||
Overhead Ratio |
37 | 34 | 33 | 34 | 35 | 300 | 200 | 35 | 36 | (100 | ) | |||||||||||||||||||||||||||||
Chase Regional Banking |
||||||||||||||||||||||||||||||||||||||||
Total Average Deposits |
$ | 77.1 | $ | 76.0 | $ | 74.5 | $ | 72.6 | $ | 70.1 | 1 | % | 10 | % | $ | 75.1 | $ | 69.8 | 8 | % | ||||||||||||||||||||
Total Client Assets (c) |
111.1 | (d) | 109.5 | 108.1 | 105.3 | 102.6 | 1 | 8 | 108.7 | 103.6 | 5 | |||||||||||||||||||||||||||||
Number of Branches |
529 | 528 | 527 | 527 | 528 | | | 529 | 528 | | ||||||||||||||||||||||||||||||
Number of ATMs |
1,730 | 1,740 | 1,735 | 1,870 | 1,876 | (1 | ) | (8 | ) | 1,730 | 1,876 | (8 | ) | |||||||||||||||||||||||||||
Overhead Ratio | 99 | % | 91 | % | 89 | % | 91 | % | 82 | % | 800 | bp | 1,700 | bp | 93 | % | 79 | % | 1,400 | bp | ||||||||||||||||||||
Chase Middle Market |
||||||||||||||||||||||||||||||||||||||||
Total Average Loans |
$ | 13.5 | $ | 14.3 | $ | 14.3 | $ | 14.3 | $ | 14.1 | (6 | )% | (4 | )% | $ | 14.1 | $ | 13.7 | 3 | % | ||||||||||||||||||||
Total Average Deposits |
28.7 | 28.9 | 26.9 | 28.0 | 25.8 | (1 | ) | 11 | 28.2 | 24.1 | 17 | |||||||||||||||||||||||||||||
Nonperforming Average Loans as a
% of Total Average Loans |
1.00 | % | 1.12 | % | 1.24 | % | 1.41 | % | 1.51 | % | (12 | ) bp | (51 | ) bp | 1.19 | % | 1.89 | % | (70 | ) bp | ||||||||||||||||||||
Net Charge-Off Ratio |
0.16 | 0.61 | 0.40 | 0.75 | 1.22 | (45 | ) | (106 | ) | 0.49 | 0.78 | (29 | ) | |||||||||||||||||||||||||||
Overhead Ratio |
58 | 63 | 63 | 59 | 63 | (500 | ) | (500 | ) | 61 | 58 | 300 |
(a) | Sum of total customer purchases, cash advances and balance transfers. |
|
(b) | Excludes amounts related to Chase Education Finance. |
|
(c) | Deposits, money market funds, and/or investment assets (including annuities). |
|
(d) | Estimated |
Page 16
SUPPLEMENTAL DETAIL
J.P. MORGAN CHASE & CO SELECTED NONINTEREST REVENUE AND NONINTEREST EXPENSE DETAIL ON A REPORTED BASIS (in millions) |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | |||||||||||||||||||||||||||||||
NONINTEREST REVENUE |
||||||||||||||||||||||||||||||||||||||||
Investment Banking Fees: |
||||||||||||||||||||||||||||||||||||||||
Underwriting and Other: |
||||||||||||||||||||||||||||||||||||||||
Equity |
$ | 255 | $ | 173 | $ | 163 | $ | 108 | $ | 84 | 47 | % | 204 | % | $ | 699 | $ | 464 | 51 | % | ||||||||||||||||||||
Debt |
430 | 317 | 460 | 342 | 361 | 36 | 19 | 1,549 | 1,543 | | ||||||||||||||||||||||||||||||
Total Underwriting and Other |
685 | 490 | 623 | 450 | 445 | 40 | 54 | 2,248 | 2,007 | 12 | ||||||||||||||||||||||||||||||
Advisory |
161 | 159 | 156 | 166 | 233 | 1 | (31 | ) | 642 | 756 | (15 | ) | ||||||||||||||||||||||||||||
Total |
$ | 846 | $ | 649 | $ | 779 | $ | 616 | $ | 678 | 30 | 25 | $ | 2,890 | $ | 2,763 | 5 | |||||||||||||||||||||||
Trading-Related Revenue: (a) |
||||||||||||||||||||||||||||||||||||||||
Equities |
$ | 141 | $ | 108 | $ | 151 | $ | 194 | $ | (20 | ) | 31 | NM | $ | 594 | $ | 112 | 430 | ||||||||||||||||||||||
Fixed Income and Other |
1,131 | 1,170 | 1,874 | 1,787 | 1,274 | (3 | ) | (11 | ) | 5,962 | 4,443 | 34 | ||||||||||||||||||||||||||||
Total |
$ | 1,272 | $ | 1,278 | $ | 2,025 | $ | 1,981 | $ | 1,254 | | 1 | $ | 6,556 | $ | 4,555 | 44 | |||||||||||||||||||||||
Fees and Commissions: |
||||||||||||||||||||||||||||||||||||||||
Investment Management and Service Fees |
$ | 618 | $ | 573 | $ | 508 | $ | 545 | $ | 534 | 8 | 16 | $ | 2,244 | $ | 2,322 | (3 | ) | ||||||||||||||||||||||
Custody and Institutional Trust Service Fees |
431 | 404 | 408 | 358 | 352 | 7 | 22 | 1,601 | 1,529 | 5 | ||||||||||||||||||||||||||||||
Credit Card Fees |
825 | 756 | 698 | 692 | 807 | 9 | 2 | 2,971 | 2,869 | 4 | ||||||||||||||||||||||||||||||
Brokerage Commissions |
316 | 310 | 296 | 259 | 250 | 2 | 26 | 1,181 | 1,139 | 4 | ||||||||||||||||||||||||||||||
Lending-Related Service Fees |
172 | 157 | 127 | 124 | 160 | 10 | 8 | 580 | 546 | 6 | ||||||||||||||||||||||||||||||
Deposit Service Fees |
279 | 298 | 284 | 285 | 277 | (6 | ) | 1 | 1,146 | 1,128 | 2 | |||||||||||||||||||||||||||||
Other Fees |
230 | 244 | 230 | 225 | 215 | (6 | ) | 7 | 929 | 854 | 9 | |||||||||||||||||||||||||||||
Total |
$ | 2,871 | $ | 2,742 | $ | 2,551 | $ | 2,488 | $ | 2,595 | 5 | 11 | $ | 10,652 | $ | 10,387 | 3 | |||||||||||||||||||||||
NONINTEREST EXPENSE |
||||||||||||||||||||||||||||||||||||||||
Other Expense: |
||||||||||||||||||||||||||||||||||||||||
Professional Services |
$ | 394 | $ | 325 | $ | 324 | $ | 325 | $ | 378 | 21 | 4 | $ | 1,368 | $ | 1,303 | 5 | |||||||||||||||||||||||
Outside Services |
311 | 294 | 310 | 272 | 249 | 6 | 25 | 1,187 | 994 | 19 | ||||||||||||||||||||||||||||||
Marketing |
200 | 179 | 167 | 164 | 220 | 12 | (9 | ) | 710 | 689 | 3 | |||||||||||||||||||||||||||||
Travel and Entertainment |
128 | 103 | 102 | 89 | 96 | 24 | 33 | 422 | 411 | 3 | ||||||||||||||||||||||||||||||
Amortization of Intangibles |
74 | 73 | 73 | 74 | 82 | 1 | (10 | ) | 294 | 323 | (9 | ) | ||||||||||||||||||||||||||||
All Other |
298 | 298 | 250 | 310 | 351 | | (15 | ) | 1,156 | 1,391 | (17 | ) | ||||||||||||||||||||||||||||
Total |
$ | 1,405 | $ | 1,272 | $ | 1,226 | $ | 1,234 | $ | 1,376 | 10 | 2 | $ | 5,137 | $ | 5,111 | 1 | |||||||||||||||||||||||
(a) | Includes trading-related net interest income. See reconciliation from
reported to operating basis on page 7. |
Page 17
J.P. MORGAN CHASE & CO. CONDENSED AVERAGE BALANCE SHEET AND ANNUALIZED YIELDS |
||
(in millions, except rates) |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | |||||||||||||||||||||||||||||||
AVERAGE BALANCES |
||||||||||||||||||||||||||||||||||||||||
ASSETS |
||||||||||||||||||||||||||||||||||||||||
Deposits with Banks |
$ | 11,724 | $ | 10,163 | $ | 7,061 | $ | 9,998 | $ | 13,074 | 15 | % | (10 | )% | $ | 9,742 | $ | 11,945 | (18 | )% | ||||||||||||||||||||
Federal Funds Sold and Securities Purchased
under Resale Agreements |
94,773 | 89,865 | 76,690 | 87,657 | 88,974 | 5 | 7 | 87,273 | 84,194 | 4 | ||||||||||||||||||||||||||||||
Securities Borrowed |
40,371 | 40,019 | 42,160 | 38,654 | 40,673 | 1 | (1 | ) | 40,305 | 42,703 | (6 | ) | ||||||||||||||||||||||||||||
Trading Assets |
156,958 | 138,829 | 138,503 | 161,753 | 151,994 | 13 | 3 | 148,970 | 137,272 | 9 | ||||||||||||||||||||||||||||||
Securities |
63,903 | 75,032 | 86,830 | 84,254 | 77,126 | (15 | ) | (17 | ) | 77,442 | 67,065 | 15 | ||||||||||||||||||||||||||||
Loans |
230,795 | 237,508 | 219,950 | 215,882 | 211,489 | (3 | ) | 9 | 226,106 | 211,432 | 7 | |||||||||||||||||||||||||||||
Total Interest-Earning Assets |
598,524 | 591,416 | 571,194 | 598,198 | 583,330 | 1 | 3 | 589,838 | 554,611 | 6 | ||||||||||||||||||||||||||||||
Noninterest-Earning Assets |
179,995 | 191,010 | 193,461 | 180,040 | 171,836 | (6 | ) | 5 | 186,140 | 178,746 | 4 | |||||||||||||||||||||||||||||
TOTAL ASSETS |
$ | 778,519 | $ | 782,426 | $ | 764,655 | $ | 778,238 | $ | 755,166 | | 3 | $ | 775,978 | $ | 733,357 | 6 | |||||||||||||||||||||||
LIABILITIES |
||||||||||||||||||||||||||||||||||||||||
Interest-Bearing Deposits |
$ | 237,636 | $ | 221,539 | $ | 225,950 | $ | 225,389 | $ | 215,061 | 7 | 10 | $ | 227,645 | $ | 217,417 | 5 | |||||||||||||||||||||||
Federal Funds Purchased and Securities Sold
under Repurchase Agreements |
141,089 | 148,132 | 164,386 | 191,163 | 182,526 | (5 | ) | (23 | ) | 161,020 | 168,428 | (4 | ) | |||||||||||||||||||||||||||
Commercial Paper |
13,293 | 13,088 | 12,929 | 14,254 | 13,469 | 2 | (1 | ) | 13,387 | 16,134 | (17 | ) | ||||||||||||||||||||||||||||
Other Borrowings (a) |
74,551 | 72,191 | 63,524 | 68,453 | 65,591 | 3 | 14 | 69,703 | 69,393 | | ||||||||||||||||||||||||||||||
Beneficial Interests of Consolidated Variable Interest Entities |
17,585 | 19,791 | | | | (11 | ) | NM | 9,421 | | NM | |||||||||||||||||||||||||||||
Long-Term Debt |
52,408 | 48,685 | 49,219 | 46,001 | 44,621 | 8 | 17 | 49,095 | 43,927 | 12 | ||||||||||||||||||||||||||||||
Total Interest-Bearing Liabilities |
536,562 | 523,426 | 516,008 | 545,260 | 521,268 | 3 | 3 | 530,271 | 515,299 | 3 | ||||||||||||||||||||||||||||||
Noninterest-Bearing Liabilities |
196,771 | 214,860 | 204,879 | 190,111 | 190,919 | (8 | ) | 3 | 201,710 | 175,594 | 15 | |||||||||||||||||||||||||||||
TOTAL LIABILITIES |
733,333 | 738,286 | 720,887 | 735,371 | 712,187 | (1 | ) | 3 | 731,981 | 690,893 | 6 | |||||||||||||||||||||||||||||
PREFERRED STOCK OF SUBSIDIARY (b) | | | | | | NM | NM | | 87 | NM | ||||||||||||||||||||||||||||||
Preferred Stock |
1,009 | 1,009 | 1,009 | 1,009 | 1,009 | | | 1,009 | 1,009 | | ||||||||||||||||||||||||||||||
Common Stockholders Equity |
44,177 | 43,131 | 42,759 | 41,858 | 41,970 | 2 | 5 | 42,988 | 41,368 | 4 | ||||||||||||||||||||||||||||||
TOTAL STOCKHOLDERS EQUITY |
45,186 | 44,140 | 43,768 | 42,867 | 42,979 | 2 | 5 | 43,997 | 42,377 | 4 | ||||||||||||||||||||||||||||||
TOTAL LIABILITIES, PREFERRED STOCK OF SUBSIDIARY
AND STOCKHOLDERS EQUITY |
$ | 778,519 | $ | 782,426 | $ | 764,655 | $ | 778,238 | $ | 755,166 | | 3 | $ | 775,978 | $ | 733,357 | 6 | |||||||||||||||||||||||
AVERAGE RATES |
||||||||||||||||||||||||||||||||||||||||
INTEREST-EARNING ASSETS |
||||||||||||||||||||||||||||||||||||||||
Deposits with Banks | 2.88 | % | 0.93 | % | 2.39 | % | 2.58 | % | 1.48 | % | 195 | bp | 140 | bp | 2.20 | % | 2.54 | % | (34 | )bp | ||||||||||||||||||||
Federal Funds Sold and Securities Purchased
under Resale Agreements |
1.36 | 1.52 | 1.85 | 2.19 | 2.33 | (16 | ) | (97 | ) | 1.72 | 2.47 | (75 | ) | |||||||||||||||||||||||||||
Securities Borrowed |
0.74 | 0.71 | 0.75 | 1.02 | 1.42 | 3 | (68 | ) | 0.80 | 1.59 | (79 | ) | ||||||||||||||||||||||||||||
Trading Assets |
4.19 | 4.27 | 4.65 | 4.64 | 4.64 | (8 | ) | (45 | ) | 4.44 | 4.96 | (52 | ) | |||||||||||||||||||||||||||
Securities |
4.49 | 4.69 | 4.62 | 4.64 | 4.58 | (20 | ) | (9 | ) | 4.62 | 5.10 | (48 | ) | |||||||||||||||||||||||||||
Loans |
4.74 | 4.83 | 5.12 | 5.32 | 5.29 | (9 | ) | (55 | ) | 4.99 | 5.71 | (72 | ) | |||||||||||||||||||||||||||
Total Interest-Earning Assets |
3.73 | 3.83 | 4.13 | 4.26 | 4.22 | (10 | ) | (49 | ) | 3.98 | 4.57 | (59 | ) | |||||||||||||||||||||||||||
INTEREST-BEARING LIABILITIES |
||||||||||||||||||||||||||||||||||||||||
Interest-Bearing Deposits |
1.33 | 1.41 | 1.69 | 1.92 | 2.17 | (8 | ) | (84 | ) | 1.58 | 2.42 | (84 | ) | |||||||||||||||||||||||||||
Federal Funds Purchased and Securities Sold
under Repurchase Agreements |
1.16 | 1.29 | 1.41 | 1.54 | 1.71 | (13 | ) | (55 | ) | 1.37 | 1.97 | (60 | ) | |||||||||||||||||||||||||||
Commercial Paper |
0.98 | 1.00 | 1.22 | 1.30 | 1.53 | (2 | ) | (55 | ) | 1.13 | 1.74 | (61 | ) | |||||||||||||||||||||||||||
Other Borrowings |
4.91 | 5.12 | 5.39 | 4.99 | 4.69 | (21 | ) | 22 | 5.09 | 4.96 | 13 | |||||||||||||||||||||||||||||
Beneficial Interests of Consolidated Variable Interest Entities |
1.36 | 0.92 | | | | 44 | 136 | 1.13 | | 113 | ||||||||||||||||||||||||||||||
Long-Term Debt |
2.86 | 3.01 | 3.14 | 3.23 | 3.68 | (15 | ) | (82 | ) | 3.05 | 3.34 | (29 | ) | |||||||||||||||||||||||||||
Total Interest-Bearing Liabilities |
1.92 | 2.01 | 2.18 | 2.27 | 2.44 | (9 | ) | (52 | ) | 2.09 | 2.67 | (58 | ) | |||||||||||||||||||||||||||
INTEREST RATE SPREAD |
1.81 | % | 1.82 | % | 1.95 | % | 1.99 | % | 1.78 | % | (1 | ) | 3 | 1.89 | % | 1.90 | % | (1 | ) | |||||||||||||||||||||
NET INTEREST MARGIN |
2.00 | % | 2.05 | % | 2.16 | % | 2.19 | % | 2.04 | % | (5 | ) | (4 | ) | 2.10 | % | 2.09 | % | 1 | |||||||||||||||||||||
NET INTEREST MARGIN ADJUSTED FOR SECURITIZATIONS |
2.32 | % | 2.36 | % | 2.47 | % | 2.49 | % | 2.36 | % | (4 | ) | (4 | ) | 2.41 | % | 2.37 | % | 4 | |||||||||||||||||||||
(a) | Includes securities sold but not yet purchased. |
(b) | On February 28, 2002, all outstanding shares were redeemed. |
Page 18
J.P. MORGAN CHASE & CO. CREDIT-RELATED INFORMATION (in millions) |
December 31, 2003 | ||||||||||||||||||||||||||||
Over (Under) | ||||||||||||||||||||||||||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Dec 31 | ||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 2003 | 2002 | ||||||||||||||||||||||
CREDIT EXPOSURE |
||||||||||||||||||||||||||||
COMMERCIAL |
||||||||||||||||||||||||||||
Loans U.S. (a) |
$ | 52,024 | $ | 58,082 | $ | 55,693 | $ | 54,156 | $ | 56,667 | (10 | )% | (8 | )% | ||||||||||||||
Loans Non-U.S |
31,073 | 30,326 | 35,363 | 34,290 | 34,881 | 2 | (11 | ) | ||||||||||||||||||||
Total Commercial Loans |
83,097 | 88,408 | 91,056 | 88,446 | 91,548 | (6 | ) | (9 | ) | |||||||||||||||||||
Derivative Receivables |
83,751 | 83,787 | 93,602 | 86,649 | 83,102 | | 1 | |||||||||||||||||||||
Other Receivables |
108 | 108 | 108 | 108 | 108 | | | |||||||||||||||||||||
TOTAL COMMERCIAL CREDIT-RELATED ASSETS |
166,956 | 172,303 | 184,766 | 175,203 | 174,758 | (3 | ) | (4 | ) | |||||||||||||||||||
Lending-Related Commitments (b) |
215,758 | (d) | 209,042 | (e) | 229,119 | 230,698 | 238,120 | 3 | (9 | ) | ||||||||||||||||||
TOTAL COMMERCIAL CREDIT EXPOSURE |
382,714 | 381,345 | 413,885 | 405,901 | 412,878 | | (7 | ) | ||||||||||||||||||||
CONSUMER |
||||||||||||||||||||||||||||
1-4 Family Residential Mortgages First Liens |
54,460 | 68,873 | 57,593 | 51,711 | 49,357 | (21 | ) | 10 | ||||||||||||||||||||
Home Equity |
19,252 | 16,981 | 17,327 | 15,363 | 14,643 | 13 | 31 | |||||||||||||||||||||
1-4 Family Residential Mortgages |
73,712 | 85,854 | 74,920 | 67,074 | 64,000 | (14 | ) | 15 | ||||||||||||||||||||
Credit Card Reported (c) |
16,793 | 16,015 | 16,578 | 17,509 | 19,677 | 5 | (15 | ) | ||||||||||||||||||||
Credit Card Securitizations (c) |
34,856 | 34,315 | 33,789 | 32,377 | 30,722 | 2 | 13 | |||||||||||||||||||||
Credit Card Managed |
51,649 | 50,330 | 50,367 | 49,886 | 50,399 | 3 | 2 | |||||||||||||||||||||
Automobile Financings |
38,695 | 38,867 | 38,151 | 36,865 | 33,615 | | 15 | |||||||||||||||||||||
Other Consumer |
7,221 | 7,057 | 6,689 | 7,577 | 7,524 | 2 | (4 | ) | ||||||||||||||||||||
TOTAL MANAGED CONSUMER LOANS |
171,277 | 182,108 | 170,127 | 161,402 | 155,538 | (6 | ) | 10 | ||||||||||||||||||||
TOTAL CREDIT PORTFOLIO |
$ | 553,991 | $ | 563,453 | $ | 584,012 | $ | 567,303 | $ | 568,416 | (2 | ) | (3 | ) | ||||||||||||||
(a) | Includes $5.8 billion and $10.9 billion at December 31, 2003 and
September 30, 2003, respectively, of exposure related to consolidated variable
interest entities in accordance with FIN 46, of which $4.8 billion and $10.4
billion, respectively, is associated with multi-seller asset-backed commercial
paper conduits. |
(b) | Includes unused advised lines of credit of $19 billion at December 31,
2003. |
(c) | At December 31, 2003, credit card securitizations includes $1.1
billion of accrued interest and fees on securitized credit card loans that were
classified in Other Assets, consistent with the FASB Staff Position, Accounting
for Accrued Interest Receivable Related to Securitized and Sold Receivables
under SFAS 140. Prior to March 31, 2003, these balances were classified in
Credit Card Loans. |
(d) | Total commitments related to asset-backed commercial paper conduits
consolidated in accordance with FIN 46 are $9.8 billion at December 31, 2003,
of which $3.5 billion is included in Lending-Related Commitments. The remaining
$6.3 billion of commitments to these variable interest entities were excluded
as their underlying assets are reported as follows: $4.8 billion in Loans-U.S.,
and $1.5 billion in Available-for-Sale Securities. |
(e) | Total commitments related to asset-backed commercial paper conduits
consolidated in accordance with FIN 46 are $18.7 billion at September 30, 2003,
of which $6.8 billion is included in Lending-Related Commitments. The remaining
$11.9 billion of commitments to these variable interest entities were excluded
as their underlying assets are reported as follows: $10.4 billion in
Loans-U.S., and $1.5 billion in Available-for-Sale Securities. |
Page 19
J.P. MORGAN CHASE & CO. CREDIT-RELATED INFORMATION (CONT.) (in millions, except ratios) |
Dec 31, 2003 | ||||||||||||||||||||||||||||||||||||||||||||||||
Over (Under) | ||||||||||||||||||||||||||||||||||||||||||||||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Dec 31 | ||||||||||||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 2003 | 2002 | ||||||||||||||||||||||||||||||||||||||||||
COMMERCIAL CREDIT EXPOSURE |
||||||||||||||||||||||||||||||||||||||||||||||||
Credit Exposure (a) |
$ | 382,714 | 100 | % | $ | 381,345 | 100 | % | $ | 413,885 | 100 | % | $ | 405,901 | 100 | % | $ | 412,878 | 100 | % | | % | (7 | )% | ||||||||||||||||||||||||
Risk Profile of Credit Exposure: |
||||||||||||||||||||||||||||||||||||||||||||||||
Investment-Grade |
316,075 | 83 | %(c) | 316,544 | 83 | %(c) | 345,331 | 83 | % | 332,602 | 82 | % | 331,319 | 80 | % | | (5 | ) | ||||||||||||||||||||||||||||||
Noninvestment-Grade: |
||||||||||||||||||||||||||||||||||||||||||||||||
Noncriticized |
57,782 | 15 | % | 53,457 | 14 | % | 55,711 | 14 | % | 58,731 | 14 | % | 64,981 | 16 | % | 8 | (11 | ) | ||||||||||||||||||||||||||||||
Criticized Performing |
6,487 | 1 | % | 8,378 | 2 | % | 9,496 | 2 | % | 10,897 | 3 | % | 12,509 | 3 | % | (23 | ) | (48 | ) | |||||||||||||||||||||||||||||
Criticized Nonperforming (b) |
2,370 | 1 | % | 2,966 | 1 | % | 3,347 | 1 | % | 3,671 | 1 | % | 4,069 | 1 | % | (20 | ) | (42 | ) |
Note: The risk profile is based on JPMorgan Chases internal risk ratings, which generally correspond to the following ratings as defined by Standard & Poors / Moodys:
(a) | Credit exposure is net of risk participations and does not reflect the
benefit of credit derivative hedges or liquid collateral held against
derivatives contracts. |
(b) | Nonperforming assets exclude nonaccrual HFS loans; HFS loans are carried at
the lower of cost or market and declines in value are recorded in Other
Revenue. |
(c) | Investment-Grade includes $5.8 billion and $10.9 billion at December 31,
2003 and September 30, 2003, respectively, of loan exposure related to
consolidated variable interest entities in accordance with FIN 46. |
Page 20
J.P. MORGAN CHASE & CO. CREDIT-RELATED INFORMATION (CONT.) (in millions, except ratios) |
Dec 31, 2003 | ||||||||||||||||||||||||||||
Over (Under) | ||||||||||||||||||||||||||||
Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Dec 31 | ||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 2003 | 2002 | ||||||||||||||||||||||
NONPERFORMING ASSETS AND RATIOS |
||||||||||||||||||||||||||||
COMMERCIAL |
||||||||||||||||||||||||||||
Loans U.S. |
$ | 1,085 | $ | 1,360 | $ | 1,810 | $ | 2,029 | $ | 2,059 | (20) | % | (47) | % | ||||||||||||||
Loans Non-U.S. |
924 | 1,238 | 1,153 | 1,257 | 1,613 | (25 | ) | (43 | ) | |||||||||||||||||||
Total Commercial Loans |
2,009 | 2,598 | 2,963 | 3,286 | 3,672 | (23 | ) | (45 | ) | |||||||||||||||||||
Derivative Receivables |
253 | 260 | 276 | 277 | 289 | (3 | ) | (12 | ) | |||||||||||||||||||
Other Receivables |
108 | 108 | 108 | 108 | 108 | | | |||||||||||||||||||||
TOTAL COMMERCIAL CREDIT EXPOSURE |
2,370 | 2,966 | 3,347 | 3,671 | 4,069 | (20 | ) | (42 | ) | |||||||||||||||||||
CONSUMER |
||||||||||||||||||||||||||||
1-4 Family Residential Mortgages First Liens |
249 | 263 | 251 | 249 | 259 | (5 | ) | (4 | ) | |||||||||||||||||||
Home Equity |
55 | 54 | 52 | 54 | 53 | 2 | 4 | |||||||||||||||||||||
1-4 Family Residential Mortgages |
304 | 317 | 303 | 303 | 312 | (4 | ) | (3 | ) | |||||||||||||||||||
Credit Card Reported |
11 | 13 | 13 | 14 | 15 | (15 | ) | (27 | ) | |||||||||||||||||||
Credit Card Securitizations | | | | | | NM | NM | |||||||||||||||||||||
Credit Card Managed |
11 | 13 | 13 | 14 | 15 | (15 | ) | (27 | ) | |||||||||||||||||||
Automobile Financings |
119 | 113 | 111 | 112 | 118 | 5 | 1 | |||||||||||||||||||||
Other Consumer |
66 | 70 | 66 | 66 | 76 | (6 | ) | (13 | ) | |||||||||||||||||||
TOTAL MANAGED CONSUMER LOANS |
500 | 513 | 493 | 495 | 521 | (3 | ) | (4 | ) | |||||||||||||||||||
Assets Acquired in Loan Satisfactions |
216 | 203 | 227 | 225 | 190 | 6 | 14 | |||||||||||||||||||||
TOTAL CREDIT PORTFOLIO (a) |
$ | 3,086 | $ | 3,682 | $ | 4,067 | $ | 4,391 | $ | 4,780 | (16 | ) | (35 | ) | ||||||||||||||
TOTAL NONPERFORMING ASSETS TO TOTAL ASSETS | 0.40 | % | 0.46 | % | 0.51 | % | 0.58 | % | 0.63 | % | (6 | )bp | (23 | )bp | ||||||||||||||
PAST DUE 90 DAYS AND OVER AND ACCRUING |
||||||||||||||||||||||||||||
COMMERCIAL |
||||||||||||||||||||||||||||
Loans U.S. |
$ | 41 | $ | 35 | $ | 35 | $ | 37 | $ | 57 | 17 | % | (28) | % | ||||||||||||||
Loans Non-U.S. | 5 | 2 | | 2 | | 150 | NM | |||||||||||||||||||||
Derivative Receivables | | | | | | NM | NM | |||||||||||||||||||||
TOTAL COMMERCIAL CREDIT EXPOSURE |
46 | 37 | 35 | 39 | 57 | 24 | (19 | ) | ||||||||||||||||||||
CONSUMER |
||||||||||||||||||||||||||||
1-4 Family Residential Mortgages First Liens | | | | | | NM | NM | |||||||||||||||||||||
Home Equity | | | | | | NM | NM | |||||||||||||||||||||
1-4 Family Residential Mortgages |
| | | | | NM | NM | |||||||||||||||||||||
Credit Card Reported (b) |
248 | 229 | 229 | 269 | 451 | 8 | (45 | ) | ||||||||||||||||||||
Credit Card Securitizations (b) |
879 | 814 | 792 | 808 | 630 | 8 | 40 | |||||||||||||||||||||
Credit Card Managed |
1,127 | 1,043 | 1,021 | 1,077 | 1,081 | 8 | 4 | |||||||||||||||||||||
Automobile Financings | | | | | | NM | NM | |||||||||||||||||||||
Other Consumer |
21 | 21 | 21 | 22 | 22 | | (5 | ) | ||||||||||||||||||||
TOTAL MANAGED CONSUMER LOANS |
1,148 | 1,064 | 1,042 | 1,099 | 1,103 | 8 | 4 | |||||||||||||||||||||
TOTAL CREDIT PORTFOLIO |
$ | 1,194 | $ | 1,101 | $ | 1,077 | $ | 1,138 | $ | 1,160 | 8 | 3 | ||||||||||||||||
(a) | Nonperforming assets exclude nonaccrual loans held for sale (HFS) of $97 million at December 31, 2003. HFS loans are carried at the lower of cost or market, and declines in value are recorded in Other Revenue. |
(b) | At December 31, 2003, credit card securitizations includes $166 million of accrued interest and fees on securitized credit card loans past due 90 days and over and accruing that were classified in Other Assets,
consistent with the FASB Staff Position, Accounting for Accrued Interest Receivable Related to Securitized and Sold Receivables under SFAS 140. Prior to March 31, 2003, these balances were classified in Credit Card Loans. |
Page 21
J.P. MORGAN CHASE & CO. CREDIT-RELATED INFORMATION (CONT.) (in millions, except rates) |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | |||||||||||||||||||||||||||||||
NET CHARGE-OFFS |
||||||||||||||||||||||||||||||||||||||||
COMMERCIAL |
||||||||||||||||||||||||||||||||||||||||
Loans U.S |
$ | 1 | $ | 194 | $ | 185 | $ | 118 | $ | 226 | (99) | % | (100) | % | $ | 498 | $ | 921 | (46) | % | ||||||||||||||||||||
Loans Non-U.S |
7 | 65 | 72 | 174 | 208 | (89 | ) | (97 | ) | 318 | 960 | (67 | ) | |||||||||||||||||||||||||||
Total Commercial Loans |
8 | 259 | 257 | 292 | 434 | (97 | ) | (98 | ) | 816 | 1,881 | (57 | ) | |||||||||||||||||||||||||||
Lending-Related Commitments | | | | | 212 | NM | NM | | 212 | NM | ||||||||||||||||||||||||||||||
TOTAL COMMERCIAL CREDIT EXPOSURE |
8 | 259 | 257 | 292 | 646 | (97 | ) | (99 | ) | 816 | 2,093 | (61 | ) | |||||||||||||||||||||||||||
CONSUMER |
||||||||||||||||||||||||||||||||||||||||
1-4 Family Residential Mortgages First Liens |
9 | 4 | 5 | 5 | 11 | 125 | (18 | ) | 23 | 49 | (53 | ) | ||||||||||||||||||||||||||||
Home Equity |
1 | 1 | 6 | 2 | 4 | | (75 | ) | 10 | 7 | 43 | |||||||||||||||||||||||||||||
1-4 Family Residential Mortgages |
10 | 5 | 11 | 7 | 15 | 100 | (33 | ) | 33 | 56 | (41 | ) | ||||||||||||||||||||||||||||
Credit Card Reported |
266 | 263 | 268 | 275 | 286 | 1 | (7 | ) | 1,072 | 1,389 | (23 | ) | ||||||||||||||||||||||||||||
Credit Card Securitizations |
462 | 471 | 480 | 457 | 430 | (2 | ) | 7 | 1,870 | 1,439 | 30 | |||||||||||||||||||||||||||||
Credit Card Managed |
728 | 734 | 748 | 732 | 716 | (1 | ) | 2 | 2,942 | 2,828 | 4 | |||||||||||||||||||||||||||||
Automobile Financings |
43 | 43 | 39 | 46 | 47 | | (9 | ) | 171 | 161 | 6 | |||||||||||||||||||||||||||||
Other Consumer |
47 | 44 | 39 | 50 | 54 | 7 | (13 | ) | 180 | 189 | (5 | ) | ||||||||||||||||||||||||||||
TOTAL MANAGED CONSUMER LOANS |
828 | 826 | 837 | 835 | 832 | | | 3,326 | 3,234 | 3 | ||||||||||||||||||||||||||||||
TOTAL CREDIT PORTFOLIO |
$ | 836 | $ | 1,085 | $ | 1,094 | $ | 1,127 | $ | 1,478 | (23 | ) | (43 | ) | $ | 4,142 | $ | 5,327 | (22 | ) | ||||||||||||||||||||
NET CHARGE-OFF RATES ANNUALIZED |
||||||||||||||||||||||||||||||||||||||||
COMMERCIAL |
||||||||||||||||||||||||||||||||||||||||
Loans U.S. (a) | 0.01 | % | 1.21 | % | 1.40 | % | 0.86 | % | 1.61 | % | (120 | )bp | (160 | )bp | 0.87 | % | 1.52 | % | (65 | )bp | ||||||||||||||||||||
Loans Non-U.S |
0.09 | 0.84 | 0.88 | 2.07 | 2.30 | (75 | ) | (221 | ) | 0.99 | 2.63 | (164 | ) | |||||||||||||||||||||||||||
Total Commercial Loans (a) |
0.04 | 1.09 | 1.20 | 1.32 | 1.88 | (105 | ) | (184 | ) | 0.91 | 1.93 | (102 | ) | |||||||||||||||||||||||||||
Lending-Related Commitments |
| | | | 0.35 | | (35 | ) | | 0.09 | (9 | ) | ||||||||||||||||||||||||||||
TOTAL COMMERCIAL CREDIT EXPOSURE |
0.01 | 0.33 | 0.33 | 0.37 | 0.78 | (32 | ) | (77 | ) | 0.26 | 0.62 | (36 | ) | |||||||||||||||||||||||||||
CONSUMER |
||||||||||||||||||||||||||||||||||||||||
1-4 Family Residential
Mortgages First Liens |
0.06 | 0.02 | 0.04 | 0.04 | 0.09 | 4 | (3 | ) | 0.04 | 0.11 | (7 | ) | ||||||||||||||||||||||||||||
Home Equity |
0.02 | 0.02 | 0.15 | 0.05 | 0.11 | | (9 | ) | 0.06 | 0.05 | 1 | |||||||||||||||||||||||||||||
1-4 Family Residential Mortgages |
0.05 | 0.02 | 0.06 | 0.04 | 0.10 | 3 | (5 | ) | 0.04 | 0.10 | (6 | ) | ||||||||||||||||||||||||||||
Credit Card Reported |
6.66 | 6.26 | 6.22 | 6.17 | 5.90 | 40 | 76 | 6.32 | 6.42 | (10 | ) | |||||||||||||||||||||||||||||
Credit Card Securitizations |
5.31 | 5.57 | 5.90 | 5.82 | 5.58 | (26 | ) | (27 | ) | 5.64 | 5.43 | 21 | ||||||||||||||||||||||||||||
Credit Card Managed |
5.74 | 5.80 | 6.01 | 5.95 | 5.70 | (6 | ) | 4 | 5.87 | 5.87 | | |||||||||||||||||||||||||||||
Automobile Financings |
0.43 | 0.45 | 0.41 | 0.53 | 0.58 | (2 | ) | (15 | ) | 0.45 | 0.57 | (12 | ) | |||||||||||||||||||||||||||
Other Consumer |
2.56 | 2.53 | 2.15 | 2.54 | 2.77 | 3 | (21 | ) | 2.45 | 2.41 | 4 | |||||||||||||||||||||||||||||
TOTAL MANAGED CONSUMER LOANS |
1.85 | 1.86 | 2.01 | 2.14 | 2.20 | (1 | ) | (35 | ) | 1.96 | 2.30 | (34 | ) | |||||||||||||||||||||||||||
TOTAL MANAGED LOANS |
1.25 | 1.59 | 1.74 | 1.85 | 2.08 | (34 | ) | (83 | ) | 1.60 | 2.15 | (55 | ) | |||||||||||||||||||||||||||
TOTAL CREDIT PORTFOLIO |
0.69 | 0.88 | 0.91 | 0.95 | 1.22 | (19 | ) | (53 | ) | 0.86 | 1.11 | (25 | ) | |||||||||||||||||||||||||||
(a) | Reflects the impact of consolidated variable
interest entities in accordance with FIN 46. Excluding the exposures related to the
FIN 46 adoption, the net charge-off rate would have been
unchanged for the fourth quarter of
2003, and 1.49% for Loans-U.S. and 1.24% for Total Commercial Loans
for the third quarter of 2003. |
Page 22
J.P. MORGAN CHASE & CO. CREDIT-RELATED INFORMATION (CONT.) (in millions, except ratios) |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | |||||||||||||||||||||||||||||||
SUMMARY OF CHANGES IN THE ALLOWANCE |
||||||||||||||||||||||||||||||||||||||||
LOANS: |
||||||||||||||||||||||||||||||||||||||||
Beginning Balance |
$ | 4,753 | $ | 5,087 | $ | 5,215 | $ | 5,350 | $ | 5,263 | (7 | )% | (10 | )% | $ | 5,350 | $ | 4,524 | 18 | % | ||||||||||||||||||||
Net Charge-Offs |
(374 | ) | (614 | ) | (614 | ) | (670 | ) | (836 | ) | 39 | 55 | (2,272 | ) | (3,676 | ) | 38 | |||||||||||||||||||||||
Provision for Loan Losses |
144 | 278 | 487 | 670 | 921 | (48 | ) | (84 | ) | 1,579 | 4,039 | (61 | ) | |||||||||||||||||||||||||||
Other |
| 2 | (1 | ) | (135 | ) | 2 | NM | NM | (134 | ) | 463 | NM | |||||||||||||||||||||||||||
Ending Balance |
$ | 4,523 | $ | 4,753 | $ | 5,087 | $ | 5,215 | $ | 5,350 | (5 | ) | (15 | ) | $ | 4,523 | $ | 5,350 | (15 | ) | ||||||||||||||||||||
LENDING-RELATED COMMITMENTS: |
||||||||||||||||||||||||||||||||||||||||
Beginning Balance |
$ | 329 | $ | 384 | $ | 436 | $ | 363 | $ | 573 | (14 | ) | (43 | ) | $ | 363 | $ | 282 | 29 | |||||||||||||||||||||
Net Charge-Offs |
| | | | (212 | ) | NM | NM | | (212 | ) | NM | ||||||||||||||||||||||||||||
Provision for Lending-Related Commitments |
(5 | ) | (55 | ) | (52 | ) | 73 | | 91 | NM | (39 | ) | 292 | NM | ||||||||||||||||||||||||||
Other |
| | | | 2 | NM | NM | | 1 | NM | ||||||||||||||||||||||||||||||
Ending Balance |
$ | 324 | $ | 329 | $ | 384 | $ | 436 | $ | 363 | (2 | ) | (11 | ) | $ | 324 | $ | 363 | (11 | ) | ||||||||||||||||||||
ALLOWANCE COMPONENTS AND RATIOS |
||||||||||||||||||||||||||||||||||||||||
LOANS: |
||||||||||||||||||||||||||||||||||||||||
Commercial Specific |
$ | 917 | $ | 1,096 | $ | 1,371 | $ | 1,528 | $ | 1,603 | (16 | ) | (43 | ) | ||||||||||||||||||||||||||
Commercial Expected |
454 | 481 | 548 | 590 | 613 | (6 | ) | (26 | ) | |||||||||||||||||||||||||||||||
Total Commercial |
1,371 | 1,577 | 1,919 | 2,118 | 2,216 | (13 | ) | (38 | ) | |||||||||||||||||||||||||||||||
Consumer Expected |
2,257 | 2,234 | 2,226 | 2,255 | 2,360 | 1 | (4 | ) | ||||||||||||||||||||||||||||||||
Total Specific and Expected |
3,628 | 3,811 | 4,145 | 4,373 | 4,576 | (5 | ) | (21 | ) | |||||||||||||||||||||||||||||||
Residual Component |
895 | 942 | 942 | 842 | 774 | (5 | ) | 16 | ||||||||||||||||||||||||||||||||
Total Allowance for Loan Losses |
$ | 4,523 | $ | 4,753 | $ | 5,087 | $ | 5,215 | $ | 5,350 | (5 | ) | (15 | ) | ||||||||||||||||||||||||||
LENDING-RELATED COMMITMENTS: |
||||||||||||||||||||||||||||||||||||||||
Commercial Specific |
$ | 172 | $ | 187 | $ | 252 | $ | 305 | $ | 237 | (8 | ) | (27 | ) | ||||||||||||||||||||||||||
Commercial Expected |
105 | 95 | 85 | 84 | 87 | 11 | 21 | |||||||||||||||||||||||||||||||||
Total Specific and Expected |
277 | 282 | 337 | 389 | 324 | (2 | ) | (15 | ) | |||||||||||||||||||||||||||||||
Residual Component |
47 | 47 | 47 | 47 | 39 | | 21 | |||||||||||||||||||||||||||||||||
Total Allowance for Lending-Related Commitments |
$ | 324 | $ | 329 | $ | 384 | $ | 436 | $ | 363 | (2 | ) | (11 | ) | ||||||||||||||||||||||||||
Total Allowance for Credit Losses |
$ | 4,847 | $ | 5,082 | $ | 5,471 | $ | 5,651 | $ | 5,713 | (5 | ) | (15 | ) | ||||||||||||||||||||||||||
Allowance for Loan Losses to Total Loans |
2.06 | %(a) | 2.01 | %(a) | 2.24 | % | 2.40 | % | 2.47 | % | 5 | bp | (41 | )bp | ||||||||||||||||||||||||||
Allowance for Loan Losses to Total Nonperforming Loans |
180 | 153 | 147 | 138 | 128 | 2,700 | 5,200 | |||||||||||||||||||||||||||||||||
Allowance for Loan Losses to Total Nonperforming Assets |
147 | 129 | 125 | 119 | 112 | 1,800 | 3,500 | |||||||||||||||||||||||||||||||||
CREDIT COSTS |
||||||||||||||||||||||||||||||||||||||||
Loans: |
||||||||||||||||||||||||||||||||||||||||
Commercial |
$ | (197 | ) | $ | (85 | ) | $ | 58 | $ | 194 | $ | 526 | (132 | )% | NM | $ | (30 | ) | $ | 2,371 | NM | |||||||||||||||||||
Consumer |
388 | 363 | 329 | 411 | 395 | 7 | (2 | )% | 1,491 | 1,589 | (6 | ) | ||||||||||||||||||||||||||||
Total Specific and Expected |
191 | 278 | 387 | 605 | 921 | (31 | ) | (79 | ) | 1,461 | 3,960 | (63 | ) | |||||||||||||||||||||||||||
Residual Component | (47 | ) | | 100 | 65 | | NM | NM | 118 | 79 | 49 | |||||||||||||||||||||||||||||
Total Provision for Loan Losses |
144 | 278 | 487 | 670 | 921 | (48 | ) | (84 | ) | 1,579 | 4,039 | (61 | ) | |||||||||||||||||||||||||||
Lending-Related Commitments: |
||||||||||||||||||||||||||||||||||||||||
Commercial |
(5 | ) | (55 | ) | (52 | ) | 65 | 25 | 91 | NM | (47 | ) | 309 | NM | ||||||||||||||||||||||||||
Residual Component |
| | | 8 | (25 | ) | NM | NM | 8 | (17 | ) | NM | ||||||||||||||||||||||||||||
Total Provision for Lending-Related Commitments |
(5 | ) | (55 | ) | (52 | ) | 73 | | 91 | NM | (39 | ) | 292 | NM | ||||||||||||||||||||||||||
Provision for Credit Losses |
139 | 223 | 435 | 743 | 921 | (38 | ) | (85 | ) | 1,540 | 4,331 | (64 | ) | |||||||||||||||||||||||||||
Securitized Credit Losses |
462 | 471 | 480 | 457 | 430 | (2 | ) | 7 | 1,870 | 1,439 | 30 | |||||||||||||||||||||||||||||
Total Managed Credit Costs |
$ | 601 | $ | 694 | $ | 915 | $ | 1,200 | $ | 1,351 | (13 | ) | (56 | ) | $ | 3,410 | $ | 5,770 | (41 | ) | ||||||||||||||||||||
(a) | Reflects the impact of consolidated variable interest entities in accordance with FIN 46. Excluding the exposures related to the
FIN 46 adoption, the ratio would have been 2.12% and 2.11% at December 31, 2003 and September 30, 2003, respectively. |
Page 23
J.P. MORGAN CHASE & CO. CAPITAL |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||
2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | |||||||||||||||||||||||||||||||
AVAILABLE VERSUS REQUIRED AVERAGE CAPITAL |
||||||||||||||||||||||||||||||||||||||||
(in billions) |
||||||||||||||||||||||||||||||||||||||||
Common Stockholders Equity |
$ | 44.2 | (a) | $ | 43.1 | $ | 42.8 | $ | 41.9 | $ | 42.0 | 3 | % | 5 | % | $ | 43.0 | (a) | $ | 41.4 | 4 | % | ||||||||||||||||||
Economic Risk Capital |
||||||||||||||||||||||||||||||||||||||||
Credit Risk |
10.6 | (a) | 12.6 | 14.4 | 15.1 | 14.7 | (16 | ) | (28 | ) | 13.1 | (a) | 14.0 | (6 | ) | |||||||||||||||||||||||||
Market Risk |
4.6 | (a) | 5.0 | 4.3 | 4.2 | 4.1 | (8 | ) | 12 | 4.5 | (a) | 4.7 | (4 | ) | ||||||||||||||||||||||||||
Operational Risk |
3.5 | (a) | 3.4 | 3.5 | 3.5 | 3.5 | 3 | | 3.5 | (a) | 3.5 | | ||||||||||||||||||||||||||||
Business Risk |
1.7 | (a) | 1.7 | 1.7 | 1.7 | 1.8 | | (6 | ) | 1.7 | (a) | 1.8 | (6 | ) | ||||||||||||||||||||||||||
Private Equity Risk |
5.2 | (a) | 5.4 | 5.4 | 5.4 | 5.5 | (4 | ) | (5 | ) | 5.4 | (a) | 5.8 | (7 | ) | |||||||||||||||||||||||||
Economic Risk Capital |
25.6 | (a) | 28.1 | 29.3 | 29.9 | 29.6 | (9 | ) | (14 | ) | 28.2 | (a) | 29.8 | (5 | ) | |||||||||||||||||||||||||
Goodwill / Intangibles |
9.1 | (a) | 8.8 | 8.9 | 8.9 | 8.9 | 3 | 2 | 8.9 | (a) | 8.8 | 1 | ||||||||||||||||||||||||||||
Asset Capital Tax |
4.0 | (a) | 4.1 | 3.9 | 4.0 | 3.9 | (2 | ) | 3 | 4.1 | (a) | 3.9 | 5 | |||||||||||||||||||||||||||
Capital Against Nonrisk Factors |
13.1 | (a) | 12.9 | 12.8 | 12.9 | 12.8 | 2 | 2 | 13.0 | (a) | 12.7 | 2 | ||||||||||||||||||||||||||||
Total Capital Allocated to Business Activities |
38.7 | 41.0 | 42.1 | 42.8 | 42.4 | (6 | ) | (9 | ) | 41.2 | 42.5 | (3 | ) | |||||||||||||||||||||||||||
Diversification Effect |
(5.0 | )(a) | (5.3 | ) | (5.0 | ) | (5.0 | ) | (4.9 | ) | 6 | (2 | ) | (5.1 | )(a) | (5.3 | ) | 4 | ||||||||||||||||||||||
Total Required Internal Capital |
33.7 | (a) | 35.7 | 37.1 | 37.8 | 37.5 | (6 | ) | (10 | ) | 36.1 | (a) | 37.2 | (3 | ) | |||||||||||||||||||||||||
Firm Capital in Excess of Required Capital |
$ | 10.5 | (a) | $ | 7.4 | $ | 5.7 | $ | 4.1 | $ | 4.5 | 42 | 133 | $ | 6.9 | (a) | $ | 4.2 | 64 | |||||||||||||||||||||
COMMON SHARES OUTSTANDING |
||||||||||||||||||||||||||||||||||||||||
(in millions) |
||||||||||||||||||||||||||||||||||||||||
Basic Weighted Average Shares Outstanding |
2,016.2 | 2,012.2 | 2,005.6 | 1,999.8 | 1,990.0 | | 1 | 2,008.6 | 1,984.3 | 1 | ||||||||||||||||||||||||||||||
Diluted Weighted Average Shares Outstanding |
2,079.3 | 2,068.2 | 2,050.6 | 2,021.9 | 2,008.5 | 1 | 4 | 2,055.1 | 2,009.1 | 2 | ||||||||||||||||||||||||||||||
Common Shares Outstanding at Period End |
2,042.6 | 2,039.2 | 2,035.1 | 2,030.0 | 1,998.7 | | 2 | |||||||||||||||||||||||||||||||||
CASH DIVIDENDS DECLARED PER SHARE |
$ | 0.34 | $ | 0.34 | $ | 0.34 | $ | 0.34 | $ | 0.34 | | | $ | 1.36 | $ | 1.36 | | |||||||||||||||||||||||
BOOK VALUE PER SHARE |
22.10 | 21.55 | 21.53 | 20.73 | 20.66 | 3 | 7 | |||||||||||||||||||||||||||||||||
SHARE PRICE |
||||||||||||||||||||||||||||||||||||||||
High |
$ | 36.99 | $ | 38.26 | $ | 36.52 | $ | 28.29 | $ | 26.14 | (3 | ) | 42 | $ | 38.26 | $ | 39.68 | (4 | ) | |||||||||||||||||||||
Low |
34.45 | 32.40 | 23.75 | 20.13 | 15.26 | 6 | 126 | 20.13 | 15.26 | 32 | ||||||||||||||||||||||||||||||
Close |
36.73 | 34.33 | 34.18 | 23.71 | 24.00 | 7 | 53 | |||||||||||||||||||||||||||||||||
CAPITAL RATIOS |
||||||||||||||||||||||||||||||||||||||||
(in millions, except ratios) |
||||||||||||||||||||||||||||||||||||||||
Tier 1 Capital |
$ | 43,139 | (a) | $ | 42,533 | $ | 41,115 | $ | 38,442 | $ | 37,570 | 1 | 15 | |||||||||||||||||||||||||||
Total Capital |
59,761 | (a) | 59,455 | 58,848 | 55,702 | 54,495 | 1 | 10 | ||||||||||||||||||||||||||||||||
Risk-Weighted Assets |
511,896 | (a) | 490,590 | 491,500 | (b) | 455,549 | 455,948 | 4 | 12 | |||||||||||||||||||||||||||||||
Adjusted Average Assets |
765,541 | (a) | 770,707 | 751,376 | 764,677 | 741,862 | (1 | ) | 3 | |||||||||||||||||||||||||||||||
Tier 1 Capital Ratio | 8.4 | %(a) | 8.7 | % | 8.4 | %(b) | 8.4 | % | 8.2 | % | (30 | )bp | 20 | bp | ||||||||||||||||||||||||||
Total Capital Ratio |
11.7 | (a) | 12.1 | 12.0 | (b) | 12.2 | 12.0 | (40 | ) | (30 | ) | |||||||||||||||||||||||||||||
Tier 1 Leverage Ratio |
5.6 | (a) | 5.5 | 5.5 | 5.0 | 5.1 | 10 | 50 |
(a) | Estimated |
|
(b) | The Firm changed the way it calculates risk-weighted assets during the third quarter of 2003. The June 30, 2003 Tier 1 and Total Capital ratios of 8.4% and 12.0%, respectively, are calculated
on the same basis as for September 30, 2003. The June 30, 2003 Tier 1 and Total Capital ratios were previously reported as 8.7% and 12.4%, respectively. Prior quarters have not been restated. |
Page 24
J.P. MORGAN CHASE & CO. MARKET RISK INVESTMENT BANK AVERAGE TRADING VAR |
4QTR 2003 | 2003 | |||||||||||||||||||||||||||||||||||||||
4QTR | 3QTR | 2QTR | 1QTR | 4QTR | Over (Under) | FULL YEAR | Over (Under) | |||||||||||||||||||||||||||||||||
(in millions) | 2003 | 2003 | 2003 | 2003 | 2002 | 3Q 2003 | 4Q 2002 | 2003 | 2002 | 2002 | ||||||||||||||||||||||||||||||
IB Trading Portfolio: |
||||||||||||||||||||||||||||||||||||||||
Interest Rate |
$ | 75.8 | $ | 65.8 | $ | 60.5 | $ | 53.5 | $ | 66.4 | 15 | % | 14 | % | $ | 63.9 | $ | 67.6 | (5 | )% | ||||||||||||||||||||
Foreign Exchange |
20.3 | 14.8 | 15.2 | 17.3 | 14.0 | 37 | 45 | 16.8 | 11.6 | 45 | ||||||||||||||||||||||||||||||
Equities |
40.9 | 12.0 | 9.2 | 11.0 | 8.5 | 241 | 381 | 18.2 | 14.4 | 26 | ||||||||||||||||||||||||||||||
Commodities |
2.7 | 3.5 | 3.1 | 2.2 | 2.1 | (23 | ) | 29 | 2.9 | 3.6 | (19 | ) | ||||||||||||||||||||||||||||
Hedge Fund Investment |
5.4 | 5.9 | 4.5 | 3.5 | 3.4 | (8 | ) | 59 | 4.8 | 3.2 | 50 | |||||||||||||||||||||||||||||
Less: Portfolio
Diversification |
(50.6 | ) | (33.5 | ) | (34.3 | ) | (34.1 | ) | (27.8 | ) | (51 | ) | (82 | ) | (38.0 | ) | (28.8 | ) | (32 | ) | ||||||||||||||||||||
Total Investment Bank
Trading VAR |
$ | 94.5 | $ | 68.5 | $ | 58.2 | $ | 53.4 | $ | 66.6 | 38 | 42 | $ | 68.6 | $ | 71.6 | (4 | ) | ||||||||||||||||||||||
Page 25
J.P. MORGAN CHASE & CO. Glossary of Terms |
Assets Under Management: Represent assets actively managed by Investment Management & Private Banking on behalf of institutional, retail and private banking clients. Excludes assets managed at American Century Companies, Inc., in which the Firm has a 44% ownership interest.
Assets Under Supervision: Represent assets under management as well as custody, brokerage, administration and deposit accounts.
Average Allocated Capital: Represents the portion of average common stockholders equity allocated to the business segments, based on their respective risks. The total average allocated capital of all business segments equals the total average common stockholders equity of the Firm.
Average Goodwill Capital: The Firm allocates capital to businesses equal to 100% of the carrying value of goodwill. Average goodwill capital is equal to the average carrying value of goodwill.
Average Managed Assets: Includes credit card receivables that have been securitized.
bp: Denotes basis points; 100 bp equals 1%.
Corporate: Includes Support Units and the effect remaining at the corporate level after the implementation of management accounting policies.
FIN 46: FASB Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51.
JPMorgan Partners (JPMP): JPMorgan Chases private equity business. The fair value of public investments held by JPMP are marked-to-market at the quoted public value. To determine the carrying values of these investments, JPMP incorporates the use of liquidity discounts to take into account the fact that it cannot immediately realize or hedge the quoted public values as a result of regulatory, corporate and/or contractual sales restrictions imposed on these holdings. Private investments are initially valued based on cost. The carrying values of private investments are adjusted from cost to reflect both positive and negative changes evidenced by financing events with third-party capital providers. In addition, these investments are subject to ongoing impairment reviews by JPMPs senior investment professionals. A variety of factors are reviewed and monitored to assess impairment including, but not limited to, operating performance and future expectations, comparable industry valuations of public companies, changes in market outlook and changes in the third-party financing environment.
Managed Credit Card Receivables or Managed Basis: Refers to credit card receivables on the Firms balance sheet plus credit card receivables that have been securitized.
NM: Not meaningful
Operating Basis or Operating Earnings: Reported results excluding the impact of merger and restructuring costs, special items and credit card securitizations.
Other Consumer Loans: Consists of manufactured housing loans, installment loans (direct and indirect types of consumer finance), student loans, unsecured revolving lines of credit and non-U.S. consumer loans.
Overhead Ratio: Operating expense (excluding merger and restructuring costs and special items) as a percentage of operating revenue.
Reported Basis: Financial statements prepared under accounting principles generally accepted in the United States of America (U.S. GAAP). The reported basis includes the impact of credit card securitizations, merger and restructuring costs and special items.
Return on Tangible Allocated Capital: Operating earnings less preferred dividends as a percentage of average allocated capital, excluding the impact of goodwill.
Segment Results: All periods are on a comparable basis, although restatements may occur in future periods to reflect further alignment of management accounting policies or changes in organizational structures between businesses.
Shareholder Value Added (SVA): Represents operating earnings minus preferred dividends and an explicit charge for capital.
Special Items: Includes merger and restructuring costs and other special items.
Tangible Shareholder Value Added: SVA less the impact of goodwill on operating earnings and capital charges.
Unaudited: The financial statements and information included throughout this document are unaudited.
Value-at-Risk (VAR): A measure of the dollar amount of potential loss from adverse market moves in an ordinary market environment.
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Exhibit 99.3
FOURTH QUARTER AND FULL YEAR 2003 J A N U A R Y 2 1, 2 0 0 4 Financial results |
Significant earnings rebound driven by: Revenue growth across all businesses -- record earnings at CFS and IB Much lower commercial credit costs Lowered risk concentrations, increased capital levels FY03: Delivering on performance and execution |
$ in billions Operating results 1 Actual ROE for all periods, not over/under. $ per share |
2003 revenue growth Growth comparisons versus FY 2002 on an operating basis $ in billions 1 Includes Support units & Corporate sector |
Commercial Credit ($ in millions) Critized 12/31/2002 16.6 Q103 14.6 Q203 12.8 9/30/2003 11.3 12/31/2003 8.9 Criticized Exposure ($ in billions) NPA2 $4.1 $3.0 $2.4 1 Includes commercial & residual 2 Commercial Nonperforming Assets Commercial credit |
12/31/2001 12/31/2002 12/31/2003 Commercial Credit Risk Exposure (1) 75 65 50 CDS Hedges (2) 19 24 35.2 Commercial Credit Risk Capital (3) 12 12 7 Lowered risk exposures 1 Includes notional spot balances of lending-related commitments, loans, other assets and MTM-derivative receivables (net of collateral). 2 Single name credit default swaps (excludes portfolio credit derivatives). Reflects spot balances. 3 Reflects month-end average balances. Commercial credit risk exposure1 CDS hedges2 Commercial credit risk capital3 Commercial credit portfolio trends ($BN) Private equity portfolio trends |
$ in billions Dividend payout ratio of 43% in 03 compared to 83% in 02 on operating basis Growth in risk weighted assets and portfolio acquisitions Balance sheet and capital |
Portfolio management revenues relate to both market-making and proprietary risk-taking activities. Other includes fees and commissions, credit portfolio and other revenues. Investment Bank revenue $ in billions |
Note: Y-Axix is set to 16.5. Update scale when updating data 2000 0.029 2001 0.035 2002 0.044 2003 0.085 Investment banking fees and market share $ in millions Global Equity & Equity Related Very strong quarter; increase for full year Doubled market share in equity and increased share in M&A1 Maintained #1 or #2 in fixed income - loans and bonds1 Source: Thomson Financial. Percentages represent market share. #9 #9 #8 #4 1 Source: Thomson Financial - 2003 Full year rankings |
$ in billions Chase Financial Services 1Actual ROE for all periods, not over/under. Revenue breakdown by business ($ in millions) |
Operating Earnings ($ in millions) Investment Management & Private Banking Pre-tax margin 2% 17% 18% ROTE1 4% 23% 31% 1Return on tangible equity |
Treasury & Securities Services Revenue ($ in millions) Earnings $128 $116 $114 $143 $147 ROE 19% 17% 16% 22% 21% Record revenues in Q4 include gain on sale of non-strategic business Investor Services trending better in 2H03, driving revenue and income rebound in Q4 Full year ROE of 19%, earnings down 16% mostly from Investor Services; growth in Treasury Services Acquisitions and recovery in Investor Services drive '04 growth |
JPMorgan Partners $ in millions Direct portfolio: Over $900MM swing in 03; higher realized gains; writedowns trending favorably Significant reductions in 3rd party funds, moderating losses In 2004, looking for improvement but still low returns; lower book value as "harvesting" exceeds new investments |
Summary of 2003, outlook for 2004 Record earnings since merger Lower risk concentrations and increased capital 2004 outlook - different mix of earnings IB: Higher client revenue but lower securities gains and NII Lower mortgage offsets growth in other CFS businesses Improved equity markets and merger activity drive: Private equity Investment management and private banking Securities services Stable consumer credit; low commercial credit costs |
2004 outlook JPMC -- stand alone Headwinds from impact of rising rates on mortgage and global treasury. Tailwinds from gains in market share and rise in equity values and market activity. Combined with Bank One Short-term cautious: Cost savings in '04 more than offset by estimate of amortization Spotlight on merger execution Long-term lower earnings volatility and accretive |
Regulation MA Disclosure This investor 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. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the ability to obtain governmental approvals of the merger on the proposed terms and schedule; the failure of JPMorgan Chase and Bank One stockholders to approve the merger; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any revenue synergies from the merger may not be fully realized or may take longer to realize than expected; disruption from the merger making it more difficult to maintain relationships with clients, employees or suppliers; increased competition and its effect on pricing, spending, third-party relationships and revenues; the risk of new and changing regulation in the U.S. and internationally. Additional factors that could cause JPMorgan Chase's results to differ materially from those described in the forward-looking statements can be found in the 2002 Annual Report on Form 10-K of JPMorgan Chase, and in the Quarterly Reports on Form 10-Q of JPMorgan Chase, filed with the Securities and Exchange Commission and available at the Securities and Exchange Commission's internet site (http://www.sec.gov). Stockholders are urged to read the joint proxy statement/prospectus regarding the proposed transaction when it becomes available, because it will contain important information. Stockholders will be able to obtain a free copy of the joint proxy statement/prospectus, as well as other filings containing information about JPMorgan Chase and Bank One, without charge, at the Securities and Exchange Commission's internet site (http://www.sec.gov). Copies of the joint proxy statement/prospectus and the filings with the Securities and Exchange Commission that will be incorporated by reference in the joint proxy statement/prospectus can also be obtained, without charge, by directing a request to J.P. Morgan Chase & Co., 270 Park Avenue, New York, NY 10017, Attention: Office of the Secretary, 212-270-6000, or to Bank One Corporation, 1 Bank One Plaza IL1-0738, Chicago, IL 60670-0738, Attention: Investor Relations, 312-336-3013. The respective directors and executive officers of JPMorgan Chase and Bank One and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed merger. Information regarding JPMorgan Chase's directors and executive officers is available in its proxy statement filed with the Securities and Exchange Commission by JPMorgan Chase on March 28, 2003, and information regarding Bank One's directors and executive officers is available in its proxy statement filed with the Securities and Exchange Commission by Bank One on March 5, 2003. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the Securities and Exchange Commission when they become available. |