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
July 16, 2003		1-5805

J.P. MORGAN CHASE & CO.

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Delaware		13-2624428
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

270 Park Avenue, New York, NY		10017
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (212) 270-6000

 

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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 Second Quarter Earnings
99.2		Press Release Financial Supplement — Second Quarter 2003

Item 9. Regulation FD Disclosure (and Item 12. Results of Operations and Financial Condition)

On July 16, 2003, J.P. Morgan Chase & Co. (“JPMorgan Chase” or the “Firm”) reported second quarter 2003 net income of $1.83 billion, or $0.89 per share. Net income for the second quarter of 2002 was $1.03 billion, or $0.50 per share, and net income for the first quarter of 2003 was $1.40 billion, or $0.69 per share. A copy of the 2003 second quarter earnings press release is attached hereto as Exhibit 99.1, and a copy of the supplemental financial schedules 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 Chase’s management and are subject to significant risks and uncertainties. These risks and uncertainties could cause our results to differ materially from those set forth in such forward-looking statements. Such risks and uncertainties are described in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 and in the 2002 Annual Report on Form 10-K filed with the Securities and Exchange Commission and available at the Securities and Exchange Commission’s internet site (www.sec.gov), to which reference is hereby made.

The information included in this section and the exhibits attached hereto are intended to be furnished under “Item 12. Results of Operations and Financial Condition” and is included under Item 9 in accordance with SEC Release No. 33-8216.

2

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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: July 16, 2003

3

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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 Second Quarter Earnings
99.2		Press Release Financial Supplement – Second Quarter 2003

4

 

EXHIBIT 12.1

J.P. MORGAN CHASE & CO.

Computation of Ratio of Earnings to Fixed Charges
(in millions, except ratios)

			Six Months Ended
			June 30, 2003
Excluding Interest on Deposits
Income before income taxes			$	4,889
Fixed charges:
	Interest expense			3,838
	One-third of rents, net of income from subleases (a)			160
Total fixed charges				3,998
Less: Equity in undistributed income of affiliates				(23	)
Earnings before taxes and fixed charges, excluding capitalized interest			$	8,864
Fixed charges, as above			$	3,998
Ratio of earnings to fixed charges				2.22
Including Interest on Deposits
Fixed charges, as above			$	3,998
Add: Interest on deposits				2,018
Total fixed charges and interest on deposits			$	6,016
Earnings before taxes and fixed charges, excluding capitalized interest, as above			$	8,864
Add: Interest on deposits				2,018
Total earnings before taxes, fixed charges and interest on deposits			$	10,882
Ratio of earnings to fixed charges				1.81

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(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
(in millions, except ratios)

			Six Months Ended
			June 30, 2003
Excluding Interest on Deposits
Income before income taxes			$	4,889
Fixed charges:
	Interest expense			3,838
	One-third of rents, net of income from subleases (a)			160
Total fixed charges				3,998
Less: Equity in undistributed income of affiliates				(23	)
Earnings before taxes and fixed charges, excluding capitalized interest			$	8,864
Fixed charges, as above			$	3,998
Preferred stock dividends (pre-tax)				38
Fixed charges including preferred stock dividends			$	4,036
Ratio of earnings to fixed charges and preferred stock dividend requirements				2.20
Including Interest on Deposits
Fixed charges including preferred stock dividends, as above			$	4,036
Add: Interest on deposits				2,018
Total fixed charges including preferred stock dividends and interest on deposits			$	6,054
Earnings before taxes and fixed charges, excluding capitalized interest, as above			$	8,864
Add: Interest on deposits				2,018
Total earnings before taxes, fixed charges and interest on deposits			$	10,882
Ratio of earnings to fixed charges and preferred stock dividend requirements				1.80

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(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

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JPMORGAN CHASE REPORTS 2003 SECOND QUARTER RESULTS
78% HIGHER THAN PRIOR YEAR

New York, July 16, 2003 – J.P. Morgan Chase & Co. (NYSE: JPM) today reported second quarter 2003 net income of $1.83 billion, or $0.89 per share, 78% higher than reported results for the second quarter of 2002. The return on average common equity for the quarter was 17%. Net income for the second quarter of 2002 was $1.03 billion, or $0.50 per share, and net income for the first quarter of 2003 was $1.40 billion, or $0.69 per share.

Last year, reported results were lower than results stated on an operating basis, which excluded merger and restructuring costs. Net income for the second quarter of 2003 was 55% higher than 2002 second quarter operating earnings. Operating earnings for the second quarter of 2002 were $1.18 billion, or $0.58 per share, with a return on common equity of 11%.

For the first six months of 2003, reported net income was $3.23 billion, or $1.57 per share, 61% higher than the prior year’s reported results and 39% higher than the prior year’s operating results. Reported net income for the first six months of 2002 was $2.01 billion, or $0.99 per share. Operating results for the first six months of 2002 were $2.33 billion, or $1.15 per share. Return on common equity was 15% for the first half of 2003, compared with 11% on an operating basis for the first half of 2002.

“I am pleased with our second quarter results, as we are beginning to realize the earnings potential of the firm. Our investment banking business maintained key leadership positions, benefitted from continued improvement in commercial credit costs and produced strong trading results. Chase Financial Services produced record earnings, with Chase Home Finance capitalizing on the mortgage refinancing boom,” said William B. Harrison, Jr., Chairman and Chief Executive Officer.

Highlights for the second quarter of 2003:

•		Total firm operating revenues were 20% higher than the second quarter of 2002, and for the first six months of 2003 were up 16% compared to the first half of 2002.
•		The Investment Bank had strong capital markets results, improved market share in the first half of 2003 and benefitted from lower credit costs, generating a return on economic capital of 22%.
•		Commercial credit costs, non-performing assets and criticized exposures declined significantly from the first quarter of 2003.
•		Chase Financial Services reported record earnings, generating a return on economic capital of 41%.

The results for this quarter include an $100 million addition to the previously established litigation reserve. JPMorgan Chase is in advanced stages of discussion with the staff of the Securities and Exchange Commission, the New York County District Attorney’s Office, the Federal Reserve Bank of New York and the New York State Banking Department regarding a resolution of all regulatory matters related to the firm’s dealings with Enron. The firm expects these discussions will be resolved within the next ninety days. As a result of these discussions, and to cover the expected cost of the settlements, the previously established litigation reserve has been increased by $100 million.

Investor Contact:		Ann Borowiec (212) 270-7318		Media Contact:		Kristin Lemkau (212) 270-7454

 

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J.P. Morgan Chase & Co.
News Release

The line of business operating results set forth below reflect the revised internal management reporting policies relating to allocating economic risk capital and other items previously disclosed in the firm’s Form 8-K dated July 11, 2003. As discussed in that Form 8-K, all prior periods have been restated.

Investment Bank (“IB”)

Operating earnings were $1.09 billion in the second quarter, up 114% from the second quarter of 2002 and 15% from the first quarter of 2003. Operating revenues of $4.26 billion were 35% higher than the second quarter of 2002 and 5% better than the first quarter of 2003. Return on economic capital was 22% for the quarter, compared with 10% in the second quarter of 2002 and 18% in the first quarter of 2003.

•		Investment banking fees of $765 million were 2% lower than the second quarter of 2002, but 23% higher than the first quarter of 2003. Relative to last year, strength in debt underwriting and loan syndication fees was offset by declines in equity underwriting fees. Advisory fees were down 16% from the second quarter of 2002 and reflected industry-wide weakness in M&A activity. For the first six months of the year, the firm maintained its #1 ranking in Global Loan Syndications and its #2 ranking in U.S. Investment Grade Bonds, improved to #3 in Global Announced M&A, with a 17% market share, and improved to #3 in U.S. Equity and Equity Related, with a 13% market share.1
•		Capital markets and lending revenues for the quarter were $3.49 billion, up 47% from the second quarter of 2002. On a total return basis (which represents total revenues plus the unrealized gains or losses on third party or internally transfer-priced assets and liabilities in fixed income and treasury activities), revenues of $3.24 billion were up 35% from the second quarter of 2002. The increase reflected strong results in fixed income, driven by strength in North America credit markets, Latin America, interest rate derivatives and foreign exchange trading. Global Treasury had total return revenues of $438 million, up 104% from the second quarter of 2002, due to risk positioning to benefit from interest rate movements. Equity capital markets revenues of $390 million were 5% higher than the second quarter of 2002 reflecting better performance in equity derivatives.
•		Credit costs in the Investment Bank were negative $4 million as charge-offs of $220 million were adequately reserved for in previous quarters. In addition, the quality of the credit portfolio improved and few new problem credits emerged during the quarter.
•		Operating expenses of $2.46 billion increased 23% from the second quarter of 2002 primarily driven by higher incentives resulting from improved financial performance. Non-compensation expenses increased 12% from the second quarter of 2002 as a result of the $100 million addition to the Enron-related litigation reserve and $104 million in charges to provide for anticipated losses on subletting unoccupied excess real estate. Without these two items, non-compensation expenses were down 13% from the second quarter of 2002.

Chase Financial Services (“CFS”)

Operating earnings were a record $883 million, an increase of 36% from the second quarter of 2002 and 30% from the first quarter of 2003. Return on economic capital was 41% for the second quarter compared to 30% in the second quarter of 2002 and 32% in the first quarter of 2003.

•

Operating revenues were a record $3.98 billion for the quarter, up 17% from the second quarter of 2002, reflecting higher production volumes across all national consumer credit businesses. Home Finance revenues of $1.32 billion were up 71% from the second quarter of 2002, due to record mortgage originations and, to a lesser extent, gains on the hedging of mortgage servicing rights. Auto Finance also generated record revenues in the second quarter, up 35% from the second quarter of 2002, driven by higher originations resulting in increased market share. Cardmember Services revenues were up 2%

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1

Derived from Thomson Financial Securities Data

2

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J.P. Morgan Chase & Co.
News Release

		from the prior year reflecting growth in fee related revenues. Regional Banking and Middle Market average deposits grew 7% and 12%, respectively, from the second quarter of 2002. However, both reported lower revenue as declining interest rates resulted in reduced net interest income, despite the higher balances.
•		Operating expenses of $1.76 billion for the quarter were up 8% from the second quarter of 2002 reflecting higher business volumes, increased marketing costs and higher incentives due to better financial performance.
•		Credit costs of $817 million were 11% higher than the second quarter of 2002. Charge-offs decreased 2% from the second quarter of 2002 despite a 21% increase in average managed loans. Delinquency rates in the consumer loan portfolios have decreased compared to the first quarter of 2003.

Treasury & Securities Services (“T&SS”)

Operating earnings were $127 million, down 23% from the second quarter of 2002 and 3% from the first quarter of 2003, principally due to severance and related costs and lower “corporate credit allocation earnings” (see below). Return on economic capital for the quarter was 18%, compared to 25% in the second quarter of 2002 and 19% in the first quarter of 2003.

•		Operating revenues for the second quarter were $984 million, down 1% from the second quarter of 2002. Treasury Services revenues increased 7% from the second quarter of 2002 due to higher trade finance revenues, card revenues and balance deficiency fees. Institutional Trust Services revenues increased 8% from the prior year reflecting increased activity in the asset servicing business, together with growth in selected debt product lines and the impact of acquisitions. Investor Services revenues declined 14% from the prior year as the business continues to be adversely affected by difficult market conditions, resulting in reduced deposit balances, custody fees, foreign exchange revenue and securities lending activity.
•		Operating expenses increased 6% from the second quarter of 2002, reflecting charges to provide for anticipated losses on subletting unoccupied excess real estate, higher severance, the impact of acquisitions, the cost associated with expensing of options and increased pension costs.
•		Corporate Credit Allocation* impact on net earnings associated with shared client exposures declined $10 million, or 48%, from the second quarter of 2002 and $3 million, or 21%, from the first quarter of 2003, reflecting lower loan volumes and higher related expenses.
*		As previously announced in the Form 8-K dated July 11, 2003, management has decided to assign to T&SS a corporate credit allocation, together with associated economic capital. The corporate credit allocation is the amount of net earnings related to certain credit exposures managed within the IB credit portfolio on behalf of clients shared with T&SS.

Investment Management & Private Banking (“IMPB”)

Operating earnings were $69 million in the second quarter, down 16% from the second quarter of 2002, but up 92% from the first quarter of 2003. The pre-tax margin in the second quarter of 2003 was 15%, compared with 18% in the second quarter of 2002 and 10% for the first quarter of 2003. Return on economic capital was 5% compared with 6% in the second quarter of 2002 and 3% in the first quarter of 2003. Tangible return on economic capital was 21% compared with 21% in the second quarter of 2002 and 12% in the first quarter of 2003.

•		Operating revenues of $684 million were 6% below the same period last year and 6% higher than the first quarter of 2003. IMPB generated increased quarter-on-quarter revenues for the first time since the first quarter of 2002. Lower global equity valuations (the S&P 500 index was down approximately 14% from the prior year’s level) and institutional outflows contributed to the decrease in revenue versus the second quarter of 2002.
•		Operating expenses of $578 million were flat compared to the second quarter of 2002.

3

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J.P. Morgan Chase & Co.
News Release

•		Credit Costs were zero for the second quarter of 2003 as compared to $23 million in the second quarter of 2002.
•		Total assets under supervision were $694 billion at June 30, 2003, up 1% from the second quarter of 2002 and 12% higher than the first quarter of 2003. Assets under management decreased 6% from the second quarter of 2002 reflecting institutional outflows and equity market depreciation. Assets under management increased 3% from the first quarter of 2003. Not reflected in assets under management is the firm’s 44% interest in American Century, which had assets under management of $78 billion as of the end of the second quarter of 2003.

JPMorgan Partners (“JPMP”)

Total net private equity losses were $22 million, compared to losses of $126 million in the second quarter of 2002 and $230 million in the first quarter of 2003.

•		During the quarter, JPMP’s direct private equity investments recorded net gains of $123 million compared to net losses of $135 million in the second quarter of 2002. The net gains for the direct investment portfolio of $123 million included $153 million in realized cash gains, $147 million of mark-to-market gains on public securities and negative valuation adjustments of $177 million.
•		Limited partner interests in third-party private equity funds resulted in net losses of $145 million compared to net gains of $9 million in the second quarter of 2002. These included losses on the disposition of funded limited partnership interests under contract to be sold in the third quarter and additional performance deterioration in the remaining third party fund portfolio.
•		JPMorgan Partners had a net operating loss of $91 million for the quarter compared to net operating losses of $168 million in the second quarter of 2002 and $217 million in the first quarter of 2003.

Expenses

•		Operating expenses were $5.8 billion, up 17% from the second quarter of 2002 and up 5% from the first quarter of 2003. Relative to last year, the increase was primarily driven by higher compensation expenses resulting from higher performance-related incentive accruals of $628 million (including $62 million related to stock-based compensation), the additional Enron-related litigation reserve of $100 million, increased pension costs of $21 million and increased severance and related costs including a $128 million charge for vacant excess real estate. For the first half of 2003, expenses included $381 million of severance and related costs, inclusive of $206 million in charges for vacant excess real estate. Operating expenses in the first half of 2002 included $268 million in severance and related costs.
•		Personnel began to be transferred to IBM in connection with the technology infrastructure outsourcing agreement, resulting in a shift from compensation expenses to technology expenses.

Credit

•		Commercial loan net charge-offs in the second quarter of 2003 were $257 million compared to $292 million in the first quarter of 2003 and $293 million in the second quarter of 2002. The charge-off ratio for commercial loans was 1.20% in the second quarter of 2003, compared to 1.32% in the first quarter of 2003 and 1.17% for the second quarter of 2002.
•		Consumer loan net charge-offs excluding credit card securitizations were $357 million in the second quarter of 2003 compared to $378 million in the first quarter of 2003 and $528 million in the second quarter of 2002. On a managed basis, which includes credit card securitizations, charge-offs were $837 million, up from $835 million in the first quarter of 2003 but down from $862 million in the second quarter of 2002. The decrease from the second quarter of 2002 was due to improved credit quality across the consumer credit products. On a managed basis, the credit card net charge-off ratio was

4

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J.P. Morgan Chase & Co.
News Release

		6.01% for the second quarter of 2003, compared to 5.95% for the first quarter of 2003 and 6.42% for the second quarter of 2002.
•		Provision for credit losses of $435 million in the second quarter was less than total net charge-offs of $614 million. On a managed basis, credit costs were $915 million in the second quarter of 2003 compared to $1.16 billion in the second quarter of 2002 and $1.20 billion in the first quarter of 2003. Managed credit costs of $915 million were less than total net managed charge-offs of $1.09 billion.
•		Total Nonperforming Assets were $4.07 billion at June 30, 2003, down 7% from both the first quarter of 2003 and the second quarter of 2002. Commercial criticized exposures (including loans, derivative receivables and unfunded commitments) declined $1.73 billion, or 12%, since March 31, 2003 and $3.74 billion, or 23%, since December 31, 2002.

Total assets and capital

•

Total assets as of June 30, 2003 were $803 billion, compared with $755 billion as of March 31, 2003 and $741 billion as of June 30, 2002. Commercial loans were up 3%, or $2.6 billion, from the first quarter of 2003 and decreased 13%, or $13.6 billion, from June 30, 2002. Managed consumer loans increased 5% from March 31, 2003 and 26% from June 30, 2002, primarily from increases in mortgages. The Tier 1 capital ratio was 8.5% at June 30, 2003, compared to 8.4% at March 31, 2003 and 8.8% at June 30, 2002.

Other financial information (on a pre-tax basis)

•

There were no special items in the first half of 2003, as merger and restructuring costs are now included in reported results. Special items in the second quarter of 2002 and the first half of 2002 included $229 million and $484 million, respectively, in merger and restructuring costs.

J.P. Morgan Chase & Co. is a leading global financial services firm with assets of $803 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 New York and serves more than 30 million consumers nationwide, and many of the world’s most prominent corporate, institutional and government clients. Information about JPMorgan Chase is available on the Internet at www.jpmorganchase.com.

JPMorgan Chase will hold a conference call for the investment community on Wednesday, July 16, 2003 at 11:00 a.m. (Eastern Daylight Time) to review second quarter 2003 financial results. The dial-in number is (973) 935-8506. A live audio webcast of the call will be available on www.jpmorganchase.com. Slides for the call will also be available on www.jpmorganchase.com. A telephone replay of the presentation will be available beginning at 1:30 p.m. (EDT) on July 16, 2003 and continuing through 6:00 p.m. (EDT) on July 23, 2003 at (973) 341-3080 pin #4005588. The replay also will be available on www.jpmorganchase.com beginning at 1:30 p.m. (EDT) on July 16, 2003. Additional detailed financial, statistical and business-related information is included in a financial supplement. The earnings release and the financial supplement are available on the JPMorgan Chase web site (www.jpmorganchase.com).

This press release contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. These risks and uncertainties could cause our results to differ materially from those set forth in such forward-looking statements. Such risks and uncertainties are described in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 and in the 2002 Annual Report on Form 10-K filed with the Securities and Exchange Commission and available at the Securities and Exchange Commission’s internet site (www.sec.gov), to which reference is hereby made.

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J.P. MORGAN CHASE & CO. CONSOLIDATED FINANCIAL HIGHLIGHTS — REPORTED BASIS (in millions, except per share, ratio and employee data)

															2QTR 2003
															Over (Under)
			2QTR				1QTR				2QTR
			2003				2003				2002				1Q 2003				2Q 2002
INCOME STATEMENT
REVENUE:
Investment Banking Fees			$	779			$	616			$	785				26	%			(1	)%
Trading Revenue				1,477				1,232				731				20				102
Fees and Commissions				2,479				2,598				2,885				(5	)			(14	)
Private Equity Gains (Losses)				(29	)			(221	)			(125	)			87				77
Securities Gains				768				485				124				58			NM
Other Revenue				497				481				292				3				70
Total Noninterest Revenue				5,971				5,191				4,692				15				27
Net Interest Income				3,063				3,215				2,882				(5	)			6
Revenue before Provision for Credit Losses				9,034				8,406				7,574				7				19
Provision for Credit Losses				435				743				821				(41	)			(47	)
TOTAL NET REVENUE				8,599				7,663				6,753				12				27
EXPENSE:
Compensation Expense				3,231				3,174				2,761				2				17
Occupancy Expense				543				496				365				9				49
Technology and Communications Expense				732				637				629				15				16
Amortization of Intangibles				73				74				92				(1	)			(21	)
Other Expense				1,153				1,160				1,118				(1	)			3
Surety Settlement and Litigation Reserve (a)				100				—				—			NM				NM
Merger and Restructuring Costs				—				—				229			NM				NM
TOTAL NONINTEREST EXPENSE				5,832				5,541				5,194				5				12
Income before Income Tax Expense				2,767				2,122				1,559				30				77
Income Tax Expense				940				722				531				30				77
NET INCOME			$	1,827			$	1,400			$	1,028				31				78
PER COMMON SHARE
Net Income:
	Basic		$	0.90			$	0.69			$	0.51				30	%			76	%
	Diluted			0.89				0.69				0.50				29				78
Cash Dividends Declared				0.34				0.34				0.34				—				—
Share Price at Period End				34.18				23.71				33.92				44				1
Book Value at Period End				21.53				20.73				20.93				4				3
COMMON SHARES OUTSTANDING
Average Common Shares:
	Basic			2,005.6				1,999.8				1,982.6				—	%			1	%
	Diluted			2,050.6				2,021.9				2,016.0				1				2
Common Shares at Period End				2,035.1				2,030.0				1,993.4				—				2
PERFORMANCE RATIOS (b)
Return on Average Assets				0.96	%			0.73	%			0.56	%			23	bp			40	bp
Return on Average Common Equity				17				13				10				400				700
CAPITAL RATIOS
Tier I Capital Ratio				8.5	%(c)			8.4	%			8.8	%			10	bp			(30	)bp
Total Capital Ratio				12.2	(c)			12.2				12.7				—				(50	)
Tier I Leverage Ratio				5.5	(c)			5.0				5.4				50				10
SELECTED BALANCE SHEET ITEMS
Net Loans			$	222,307			$	212,256			$	207,080				5	%			7	%
Total Assets				802,603				755,156				740,546				6				8
Deposits				318,248				300,667				293,829				6				8
Long-Term Debt (d)				49,918				48,290				47,802				3				4
Common Stockholders’ Equity				43,812				42,075				41,727				4				5
Total Stockholders’ Equity				44,821				43,084				42,736				4				5
FULL-TIME EQUIVALENT EMPLOYEES				92,256				93,878				95,878				(2	)			(4	)

[Additional columns below]

[Continued from above table, first column(s) repeated]

			YEAR TO DATE								2003
											Over (Under)
			2003				2002				2002
INCOME STATEMENT
REVENUE:
Investment Banking Fees			$	1,395			$	1,540				(9	)%
Trading Revenue				2,709				2,030				33
Fees and Commissions				5,077				5,469				(7	)
Private Equity Gains (Losses)				(250	)			(363	)			31
Securities Gains				1,253				238				426
Other Revenue				978				449				118
Total Noninterest Revenue				11,162				9,363				19
Net Interest Income				6,278				5,809				8
Revenue before Provision for Credit Losses				17,440				15,172				15
Provision for Credit Losses				1,178				1,574				(25	)
TOTAL NET REVENUE				16,262				13,598				20
EXPENSE:
Compensation Expense				6,405				5,584				15
Occupancy Expense				1,039				703				48
Technology and Communications Expense				1,369				1,294				6
Amortization of Intangibles				147				161				(9	)
Other Expense				2,313				2,326				(1	)
Surety Settlement and Litigation Reserve (a)				100				—			NM
Merger and Restructuring Costs				—				484			NM
TOTAL NONINTEREST EXPENSE				11,373				10,552				8
Income before Income Tax Expense				4,889				3,046				61
Income Tax Expense				1,662				1,036				60
NET INCOME			$	3,227			$	2,010				61
PER COMMON SHARE
Net Income:
	Basic		$	1.60			$	1.00				60	%
	Diluted			1.57				0.99				59
Cash Dividends Declared				0.68				0.68				—
Share Price at Period End
Book Value at Period End
COMMON SHARES OUTSTANDING
Average Common Shares:
	Basic			2,002.8				1,980.4				1	%
	Diluted			2,036.3				2,011.0				1
Common Shares at Period End				2,035.1				1,993.4				2
PERFORMANCE RATIOS (b)
Return on Average Assets				0.84	%			0.56	%			28	bp
Return on Average Common Equity				15				10				500
CAPITAL RATIOS
Tier I Capital Ratio
Total Capital Ratio
Tier I Leverage Ratio
SELECTED BALANCE SHEET ITEMS
Net Loans
Total Assets
Deposits
Long-Term Debt (d)
Common Stockholders’ Equity
Total Stockholders’ Equity
FULL-TIME EQUIVALENT EMPLOYEES

(a) In the second quarter of 2003, a $100 million (pre-tax) charge was recorded for certain Enron-related litigation.
(b) Ratios are based on annualized amounts.
(c) Estimated
(d) Includes Guaranteed Preferred Beneficial Interests in the Firm’s Junior Subordinated Deferrable Interest Debentures.
bp — Denotes basis points; 100 bp equals 1%
NM — Not meaningful

Page 6

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J.P. MORGAN CHASE & CO. RECONCILIATION OF QUARTERLY REPORTED TO OPERATING RESULTS (in millions, except per share data)

			SECOND QUARTER 2003
			REPORTED				CREDIT				SPECIAL								OPERATING
			BASIS (a)				CARD (b)				ITEMS (c)				RECLASSES (d)				BASIS (e)
INCOME STATEMENT
Revenue
	Investment Banking Fees		$	779			$	—			$	—			$	—			$	779
	Trading Revenue			1,477				—				—				479				1,956
	Fees and Commissions			2,479				(122	)			—				—				2,357
	Private Equity — Gains (Losses)			(29	)			—				—				—				(29	)
	Securities Gains			768				—				—				—				768
	Other Revenue			497				(24	)			—				—				473
	Net Interest Income			3,063				626				—				(479	)			3,210
Total Revenue				9,034				480				—				—				9,514
Noninterest Expense
	Compensation Expense(f)			3,231				—				—				—				3,231
	Noncompensation Expense(f)(g)			2,601				—				—				—				2,601
	Merger and Restructuring Costs			—				—				—				—				—
Total Noninterest Expense				5,832				—				—				—				5,832
Operating Margin				3,202				480				—				—				3,682
Credit Costs				435				480				—				—				915
Income before Income Tax Expense				2,767				—				—				—				2,767
Income Tax Expense				940				—				—				—				940
Net Income			$	1,827			$	—			$	—			$	—			$	1,827
EARNINGS PER SHARE — DILUTED			$	0.89			$	—			$	—			$	—			$	0.89

			SECOND QUARTER 2002
			REPORTED				CREDIT				SPECIAL								OPERATING
			BASIS (a)				CARD (b)				ITEMS (c)				RECLASSES (d)				BASIS (e)
INCOME STATEMENT
Revenue
	Investment Banking Fees		$	785			$	—			$	—			$	—			$	785
	Trading Revenue			731				—				—				405				1,136
	Fees and Commissions			2,885				(140	)			—				—				2,745
	Private Equity — Gains (Losses)			(125	)			—				—				—				(125	)
	Securities Gains			124				—				—				—				124
	Other Revenue			292				(19	)			—				—				273
	Net Interest Income			2,882				493				—				(405	)			2,970
Total Revenue				7,574				334				—				—				7,908
Noninterest Expense
	Compensation Expense(f)			2,761				—				—				—				2,761
	Noncompensation Expense(f)(g)			2,204				—				—				—				2,204
	Merger and Restructuring Costs			229				—				(229	)			—				—
Total Noninterest Expense				5,194				—				(229	)			—				4,965
Operating Margin				2,380				334				229				—				2,943
Credit Costs				821				334				—				—				1,155
Income before Income Tax Expense				1,559				—				229				—				1,788
Income Tax Expense				531				—				78				—				609
Net Income			$	1,028			$	—			$	151			$	—			$	1,179
EARNINGS PER SHARE — DILUTED			$	0.50			$	—			$	0.08			$	—			$	0.58

(a)		Represents condensed results as reported in JPMorgan Chase’s financial statements.
(b)		Represents the impact of credit card securitizations. For securitized receivables, amounts that normally would be reported as net interest income and as provision for credit losses are reported as noninterest revenue.
(c)		Includes merger and restructuring costs and other special items. There were no special items reported in the second quarter of 2003. The 2002 second quarter includes $229 million (pre-tax) of merger and restructuring costs.
(d)		On an operating basis, JPMorgan Chase reclassifies trading-related net interest income from Net Interest Income to Trading Revenue.
(e)		In addition to analyzing the Firm’s results on a reported basis, management looks at results on an “operating basis” (or “managed basis”) to assess each of its businesses and to measure overall Firm results against targeted goals. The definition of operating basis starts with the reported U.S. GAAP results and then excludes the impact of merger and restructuring costs, credit card securitizations, the amortization of goodwill and special items (which management defined as significant nonrecurring gains or losses of $75 million or more during 2002 and $50 million or more prior to 2002). Both restructuring charges and special items are viewed by management as transactions that are not part of the Firm’s normal daily business operations or are unusual in nature and therefore are not indicative of trends. For a more detailed explanation of how the Firm looks at results on an “operating basis”, see Reconciliation from Reported Results to Operating Basis on page 29 of JPMorgan Chase’s March 31, 2003, Quarterly Report on Form 10-Q and on page 22 of JPMorgan Chase’s 2002 Annual Report.
(f)		Includes severance and other related costs associated with expense containment programs implemented in 2002.
(g)		Includes Occupancy Expense, Technology and Communications Expense, Amortization of Intangibles, Other Expense and Surety Settlement and Litigation Reserve.

Page 7

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J.P. MORGAN CHASE & CO. RECONCILIATION OF YEAR TO DATE REPORTED TO OPERATING RESULTS (in millions, except per share data)

			YEAR TO DATE 2003
			REPORTED				CREDIT				SPECIAL								OPERATING
			BASIS (a)				CARD (b)				ITEMS (c)				RECLASSES (d)				BASIS (e)
INCOME STATEMENT
Revenue
	Investment Banking Fees		$	1,395			$	—			$	—			$	—			$	1,395
	Trading Revenue			2,709				—				—				1,162				3,871
	Fees and Commissions			5,077				(291	)			—				—				4,786
	Private Equity — Gains (Losses)			(250	)			—				—				—				(250	)
	Securities Gains			1,253				—				—				—				1,253
	Other Revenue			978				(28	)			—				—				950
	Net Interest Income			6,278				1,256				—				(1,162	)			6,372
Total Revenue				17,440				937				—				—				18,377
Noninterest Expense
	Compensation Expense(f)			6,405				—				—				—				6,405
	Noncompensation Expense(f)(g)			4,968				—				—				—				4,968
	Merger and Restructuring Costs			—				—				—				—				—
Total Noninterest Expense				11,373				—				—				—				11,373
Operating Margin				6,067				937				—				—				7,004
Credit Costs				1,178				937				—				—				2,115
Income before Income Tax Expense				4,889				—				—				—				4,889
Income Tax Expense				1,662				—				—				—				1,662
Net Income			$	3,227			$	—			$	—			$	—			$	3,227
EARNINGS PER SHARE — DILUTED			$	1.57			$	—			$	—			$	—			$	1.57

			YEAR TO DATE 2002
			REPORTED				CREDIT				SPECIAL								OPERATING
			BASIS (a)				CARD (b)				ITEMS (c)				RECLASSES (d)				BASIS (e)
INCOME STATEMENT
Revenue
	Investment Banking Fees		$	1,540			$	—			$	—			$	—			$	1,540
	Trading Revenue			2,030				—				—				826				2,856
	Fees and Commissions			5,469				(231	)			—				—				5,238
	Private Equity — Gains (Losses)			(363	)			—				—				—				(363	)
	Securities Gains			238				—				—				—				238
	Other Revenue			449				(39	)			—				—				410
	Net Interest Income			5,809				925				—				(826	)			5,908
Total Revenue				15,172				655				—				—				15,827
Noninterest Expense
	Compensation Expense(f)			5,584				—				—				—				5,584
	Noncompensation Expense(f)(g)			4,484				—				—				—				4,484
	Merger and Restructuring Costs			484				—				(484	)			—				—
Total Noninterest Expense				10,552				—				(484	)			—				10,068
Operating Margin				4,620				655				484				—				5,759
Credit Costs				1,574				655				—				—				2,229
Income before Income Tax Expense				3,046				—				484				—				3,530
Income Tax Expense				1,036				—				165				—				1,201
Net Income			$	2,010			$	—			$	319			$	—			$	2,329
EARNINGS PER SHARE — DILUTED			$	0.99			$	—			$	0.16			$	—			$	1.15

(a)		Represents condensed results as reported in JPMorgan Chase’s financial statements.
(b)		Represents the impact of credit card securitizations. For securitized receivables, amounts that normally would be reported as net interest income and as provision for credit losses are reported as noninterest revenue.
(c)		Includes merger and restructuring costs and other special items. There were no special items reported in the first six months of 2003. The first six months of 2002 includes $484 million (pre-tax) of merger and restructuring costs.
(d)		On an operating basis, JPMorgan Chase reclassifies trading-related net interest income from Net Interest Income to Trading Revenue.
(e)		In addition to analyzing the Firm’s results on a reported basis, management looks at results on an “operating basis” (or “managed basis”) to assess each of its businesses and to measure overall Firm results against targeted goals. The definition of operating basis starts with the reported U.S. GAAP results and then excludes the impact of merger and restructuring costs, credit card securitizations, the amortization of goodwill and special items (which management defined as significant nonrecurring gains or losses of $75 million or more during 2002 and $50 million or more prior to 2002). Both restructuring charges and special items are viewed by management as transactions that are not part of the Firm’s normal daily business operations or are unusual in nature and therefore are not indicative of trends. For a more detailed explanation of how the Firm looks at results on an “operating basis”, see Reconciliation from Reported Results to Operating Basis on page 29 of JPMorgan Chase’s March 31, 2003, Quarterly Report on Form 10-Q and on page 22 of JPMorgan Chase’s 2002 Annual Report.
(f)		Includes severance and other related costs associated with expense containment programs implemented in 2002.
(g)		Includes Occupancy Expense, Technology and Communications Expense, Amortization of Intangibles, Other Expense and Surety Settlement and Litigation Reserve.

Page 8

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J.P. MORGAN CHASE & CO. CONSOLIDATED FINANCIAL HIGHLIGHTS — OPERATING BASIS (in millions, except per share and ratio data)

																2QTR 2003
																Over (Under)
				2QTR				1QTR				2QTR
				2003				2003				2002				1Q 2003				2Q 2002
OPERATING INCOME STATEMENT(a)
OPERATING REVENUE:
Investment Banking Fees				$	779			$	616			$	785				26	%			(1	)%
Trading-Related Revenue (Includes Trading NII)					1,956				1,915				1,136				2				72
Fees and Commissions					2,357				2,429				2,745				(3	)			(14	)
Private Equity Gains (Losses)					(29	)			(221	)			(125	)			87				77
Securities Gains					768				485				124				58			NM
Other Revenue					473				477				273				(1	)			73
Net Interest Income (Excludes Trading NII)					3,210				3,162				2,970				2				8
		TOTAL OPERATING REVENUE			9,514				8,863				7,908				7				20
OPERATING EXPENSE:
Compensation Expense(b)					3,231				3,174				2,761				2				17
Noncompensation Expense(b)(c)					2,601				2,367				2,204				10				18
	TOTAL OPERATING EXPENSE				5,832				5,541				4,965				5				17
Credit Costs					915				1,200				1,155				(24	)			(21	)
Corporate Credit Allocation					—				—				—			NM				NM
Operating Income before Income Tax Expense					2,767				2,122				1,788				30				55
Income Tax Expense					940				722				609				30				54
OPERATING EARNINGS					1,827				1,400				1,179				31				55
Special Items					—				—				(151	)		NM				NM
NET INCOME				$	1,827			$	1,400			$	1,028				31				78
OPERATING BASIS
Diluted Earnings per Share				$	0.89			$	0.69			$	0.58				29				53
Shareholder Value Added					536				148				(57	)			262			NM
Return on Average Managed Assets(d)					0.92	%			0.70	%			0.62	%			22	bp			30	bp
Return on Common Equity(d)					17				13				11				400				600
Common Dividend Payout Ratio					40				50				59				(1,000	)			(1,900	)
Compensation Expense as a % of Revenue					34				36				35				(200	)			(100	)
Noncompensation Expense as a % of Revenue					27				27				28				—				(100	)
Overhead Ratio					61				63				63				(200	)			(200	)

[Additional columns below]

[Continued from above table, first column(s) repeated]

				YEAR TO DATE								YTD 2003 Over (Under)
				2003				2002				2002
OPERATING INCOME STATEMENT(a)
OPERATING REVENUE:
Investment Banking Fees				$	1,395			$	1,540				(9	)%
Trading-Related Revenue (Includes Trading NII)					3,871				2,856				36
Fees and Commissions					4,786				5,238				(9	)
Private Equity Gains (Losses)					(250	)			(363	)			31
Securities Gains					1,253				238				426
Other Revenue					950				410				132
Net Interest Income (Excludes Trading NII)					6,372				5,908				8
		TOTAL OPERATING REVENUE			18,377				15,827				16
OPERATING EXPENSE:
Compensation Expense(b)					6,405				5,584				15
Noncompensation Expense(b)(c)					4,968				4,484				11
	TOTAL OPERATING EXPENSE				11,373				10,068				13
Credit Costs					2,115				2,229				(5	)
Corporate Credit Allocation					—				—			NM
Operating Income before Income Tax Expense					4,889				3,530				38
Income Tax Expense					1,662				1,201				38
OPERATING EARNINGS					3,227				2,329				39
Special Items					—				(319	)		NM
NET INCOME				$	3,227			$	2,010				61
OPERATING BASIS
Diluted Earnings per Share				$	1.57			$	1.15				37
Shareholder Value Added					684				(116	)		NM
Return on Average Managed Assets(d)					0.81	%			0.63	%			18	bp
Return on Common Equity(d)					15				11				400
Common Dividend Payout Ratio					44				60				(1,600	)
Compensation Expense as a % of Revenue					35				35				—
Noncompensation Expense as a % of Revenue					27				28				(100	)
Overhead Ratio					62				64				(200	)

(a)		See pages 7 and 8 for a reconciliation of reported results to operating basis.
(b)		Includes severance and other related costs associated with expense containment programs implemented in 2002.
(c)		Includes Occupancy Expense, Technology and Communications Expense, Amortization of Intangibles, Other Expense and Surety Settlement and Litigation Reserve.
(d)		Ratios are based on annualized amounts.

Page 9

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J.P. MORGAN CHASE & CO. LINES OF BUSINESS FINANCIAL HIGHLIGHTS SUMMARY (in millions, except per share and ratio data)

															2QTR 2003
															Over (Under)
			2QTR				1QTR				2QTR
			2003				2003				2002				1Q 2003				2Q 2002
OPERATING REVENUE
Investment Bank			$	4,257			$	4,068			$	3,154				5	%			35	%
Treasury & Securities Services				984				935				991				5				(1	)
Investment Management & Private Banking				684				643				729				6				(6	)
JPMorgan Partners				(70	)			(278	)			(193	)			75				64
Chase Financial Services				3,977				3,696				3,400				8				17
Support Units and Corporate				(318	)			(201	)			(173	)			(58	)			(84	)
OPERATING REVENUE(a)			$	9,514			$	8,863			$	7,908				7				20
EARNINGS
Investment Bank			$	1,087			$	946			$	507				15				114
Treasury & Securities Services				127				131				165				(3	)			(23	)
Investment Management & Private Banking				69				36				82				92				(16	)
JPMorgan Partners				(91	)			(217	)			(168	)			58				46
Chase Financial Services				883				677				649				30				36
Support Units and Corporate				(248	)			(173	)			(56	)			(43	)			(343	)
OPERATING EARNINGS(a)				1,827				1,400				1,179				31				55
Special Items (Net of Taxes):
	Merger and Restructuring Costs			—				—				(151	)		NM				NM
NET INCOME(a)			$	1,827			$	1,400			$	1,028				31				78
AVERAGE ECONOMIC CAPITAL
Investment Bank			$	20,101			$	20,825			$	19,638				(3	)			2
Treasury & Securities Services				2,768				2,759				2,662				—				4
Investment Management & Private Banking				5,481				5,432				5,741				1				(5	)
JPMorgan Partners				5,916				5,985				6,330				(1	)			(7	)
Chase Financial Services				8,661				8,469				8,716				2				(1	)
Support Units and Corporate				(168	)			(1,612	)			(2,198	)			90				92
TOTAL ECONOMIC CAPITAL(a)			$	42,759			$	41,858			$	40,889				2				5
EARNINGS PER SHARE — DILUTED
OPERATING EARNINGS(a)			$	0.89			$	0.69			$	0.58				29				53
Special Items (Net of Taxes):
	Merger and Restructuring Costs			—				—				(0.08	)		NM				NM
NET INCOME(a)			$	0.89			$	0.69			$	0.50				29				78
OPERATING RETURN ON ECONOMIC CAPITAL
Investment Bank				22	%			18	%			10	%			400	bp			1,200	bp
Treasury & Securities Services				18				19				25				(100	)			(700	)
Investment Management & Private Banking				5				3				6				200				(100	)
Chase Financial Services				41				32				30				900				1,100
OPERATING RETURN ON ECONOMIC CAPITAL(a)				17				13				11				400				600

[Additional columns below]

[Continued from above table, first column(s) repeated]

			YEAR TO DATE								YTD 2003 Over (Under)
			2003				2002				2002
OPERATING REVENUE
Investment Bank			$	8,325			$	6,809				22	%
Treasury & Securities Services				1,919				1,933				(1	)
Investment Management & Private Banking				1,327				1,494				(11	)
JPMorgan Partners				(348	)			(501	)			31
Chase Financial Services				7,673				6,455				19
Support Units and Corporate				(519	)			(363	)			(43	)
OPERATING REVENUE(a)			$	18,377			$	15,827				16
EARNINGS
Investment Bank			$	2,033			$	1,276				59
Treasury & Securities Services				258				301				(14	)
Investment Management & Private Banking				105				182				(42	)
JPMorgan Partners				(308	)			(413	)			25
Chase Financial Services				1,560				1,135				37
Support Units and Corporate				(421	)			(152	)			(177	)
OPERATING EARNINGS(a)				3,227				2,329				39
Special Items (Net of Taxes):
	Merger and Restructuring Costs			—				(319	)		NM
NET INCOME(a)			$	3,227			$	2,010				61
AVERAGE ECONOMIC CAPITAL
Investment Bank			$	20,461			$	19,934				3
Treasury & Securities Services				2,764				2,727				1
Investment Management & Private Banking				5,457				5,714				(4	)
JPMorgan Partners				5,950				6,447				(8	)
Chase Financial Services				8,565				8,661				(1	)
Support Units and Corporate				(886	)			(2,828	)			69
TOTAL ECONOMIC CAPITAL(a)			$	42,311			$	40,655				4
EARNINGS PER SHARE — DILUTED
OPERATING EARNINGS(a)			$	1.57			$	1.15				37
Special Items (Net of Taxes):
	Merger and Restructuring Costs			—				(0.16	)		NM
NET INCOME(a)			$	1.57			$	0.99				59
OPERATING RETURN ON ECONOMIC CAPITAL
Investment Bank				20	%			13	%			700	bp
Treasury & Securities Services				19				22				(300	)
Investment Management & Private Banking				4				6				(200	)
Chase Financial Services				37				26				1,100
OPERATING RETURN ON ECONOMIC CAPITAL(a)				15				11				400

(a)

Represents consolidated JPMorgan Chase.

Page 10

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J.P. MORGAN CHASE & CO. CONSOLIDATED BALANCE SHEET (in millions)

															Jun 30, 2003
															Over (Under)
			Jun 30				Mar 31				Jun 30				Mar 31				Jun 30
			2003				2003				2002				2003				2002
ASSETS
Cash and Due from Banks			$	23,398			$	22,229			$	21,878				5	%			7	%
Deposits with Banks				10,393				6,896				10,517				51				(1	)
Federal Funds Sold and Securities Purchased under Resale Agreements				69,748				69,764				71,740				—				(3	)
Securities Borrowed				41,067				39,188				48,429				5				(15	)
Trading Assets:
	Debt and Equity Instruments			139,275				146,783				159,746				(5	)			(13	)
	Derivative Receivables			93,602				86,649				69,858				8				34
Securities				82,549				85,178				64,526				(3	)			28
Loans (Net of Allowance for Loan Losses)				222,307				212,256				207,080				5				7
Private Equity Investments				7,901				8,170				8,229				(3	)			(4	)
Goodwill				8,132				8,122				8,089				—				1
Mortgage Servicing Rights				2,967				3,235				5,689				(8	)			(48	)
Other Intangibles:
	Purchased Credit Card Relationships			1,141				1,205				1,426				(5	)			(20	)
	All Other Intangibles			320				294				313				9				2
Other Assets				99,803				65,187				63,026				53				58
TOTAL ASSETS			$	802,603			$	755,156			$	740,546				6				8
LIABILITIES
Deposits			$	318,248			$	300,667			$	293,829				6				8
Federal Funds Purchased and Securities Sold under Repurchase Agreements				155,330				160,221				162,656				(3	)			(5	)
Commercial Paper				12,382				14,039				14,561				(12	)			(15	)
Other Borrowed Funds				12,176				12,848				17,352				(5	)			(30	)
Trading Liabilities:
	Debt and Equity Instruments			72,825				64,427				67,952				13				7
	Derivative Payables			72,831				64,804				55,575				12				31
Accounts Payable, Accrued Expenses and Other Liabilities (including the Allowance for Lending-Related Commitments)				64,072				46,776				38,083				37				68
Long-Term Debt				44,479				42,851				42,363				4				5
Guaranteed Preferred Beneficial Interests in the Firm’s Junior Subordinated Deferrable Interest Debentures				5,439				5,439				5,439				—				—
TOTAL LIABILITIES				757,782				712,072				697,810				6				9
STOCKHOLDERS’ EQUITY
Preferred Stock				1,009				1,009				1,009				—				—
Common Stock				2,036				2,032				2,020				—				1
Capital Surplus				12,898				12,477				13,111				3				(2	)
Retained Earnings				27,633				26,538				27,605				4				—
Accumulated Other Comprehensive Income				1,293				1,113				79				16			NM
Treasury Stock, at Cost				(48	)			(85	)			(1,088	)			44				96
TOTAL STOCKHOLDERS’ EQUITY				44,821				43,084				42,736				4				5
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	802,603			$	755,156			$	740,546				6				8

Page 11

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J.P. MORGAN CHASE & CO. CREDIT-RELATED INFORMATION (in millions, except ratios)

																Jun 30, 2003
																Over (Under)
				Jun 30				Mar 31				Jun 30				Mar 31				Jun 30
				2003				2003				2002				2003				2002
CREDIT EXPOSURE:
Commercial Loans				$	91,056			$	88,446			$	104,701				3	%			(13	)%
Derivative Receivables					93,602				86,649				69,858				8				34
Other Receivables(a)					108				108				1,130				—				(90	)
	Total Commercial Credit-Related Assets				184,766				175,203				175,689				5				5
Lending-Related Commitments(b)					229,119				230,698				239,240				(1	)			(4	)
	Total Commercial Credit Exposure(c)				413,885				405,901				414,929				2				—
Managed Consumer Loans(d)					170,127				161,402				134,884				5				26
	Total Credit Portfolio			$	584,012			$	567,303			$	549,813				3				6
NET CHARGE-OFFS:
Commercial Loans				$	257			$	292			$	293				(12	)			(12	)
Lending-Related Commitments					—				—				—			NM				NM
	Total Commercial Credit Exposure				257				292				293				(12	)			(12	)
Managed Credit Card(d)					748				732				767				2				(2	)
All Other Consumer					89				103				95				(14	)			(6	)
	Total Managed Consumer Loans				837				835				862				—				(3	)
	Total Credit Portfolio			$	1,094			$	1,127			$	1,155				(3	)			(5	)
NET CHARGE-OFF RATES — ANNUALIZED:
Total Commercial Loans					1.20	%			1.32	%			1.17	%			(12	)bp			3	bp
Managed Credit Card					6.01				5.95				6.42				6				(41	)
Total Credit Portfolio					0.91				0.95				0.97				(4	)			(6	)
NONPERFORMING ASSETS:
Commercial Loans				$	2,963			$	3,286			$	2,512				(10	)%			18	%
Derivative Receivables					276				277				144				—				92
Other Receivables(a)					108				108				1,130				—				(90	)
Consumer Loans					493				495				450				—				10
Assets Acquired in Loan Satisfactions					227				225				142				1				60
		Total Credit Portfolio(e)		$	4,067			$	4,391			$	4,378				(7	)			(7	)

(a)		Represents, at June 30, 2003, the Enron-related letter of credit, which continues to be the subject of litigation and which was classified in Other Assets.
(b)		Includes unused advised lines of credit of $19 billion at June 30, 2003, $22 billion at March 31, 2003, and $18 billion at June 30, 2002.
(c)		Includes all Enron-related credit exposures. Credit exposure excludes risk participations and does not reflect the benefit of credit derivative hedges or liquid collateral held against derivatives contracts.
(d)		Includes securitized credit card receivables.
(e)		Nonperforming assets exclude nonaccrual loans held for sale (“HFS”) of $45 million at June 30, 2003. HFS loans are carried at the lower of cost or market, and declines in value are recorded in Other Revenue.

Page 12

 

EXHIBIT 99.2

 

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J.P. MORGAN CHASE & CO
TABLE OF CONTENTS

		Page
JPMorgan Chase Consolidated
Statement of Income — Reported Basis			3
Lines of Business Financial Highlights Summary			4
Statement of Income — Operating Basis			5
Reconciliation from Reported to Operating Basis			6
Segment Detail
Investment Bank			7
Business-Related Metrics			8
Treasury & Securities Services			9
Investment Management & Private Banking			10
JPMorgan Partners			11
Investment Portfolio — Private and Public Securities			12
Chase Financial Services			13
Business-Related Metrics			14
Supplemental Detail
Noninterest Revenue and Noninterest Expense Detail			15
Consolidated Balance Sheet			16
Condensed Average Balance Sheet and Annualized Yields			17
Credit-Related Information			18-23
Capital			24
Market Risk — Average VAR			25
Glossary of Terms			26

Note: Prior periods have been adjusted to conform with current methodologies.

Page 2

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J.P. MORGAN CHASE & CO.
STATEMENT OF INCOME – REPORTED BASIS
(in millions, except per share, ratio and employee data)

																								2QTR 2003
																								Over (Under)
				2QTR				1QTR				4QTR				3QTR				2QTR
				2003				2003				2002				2002				2002				1Q 2003				2Q 2002
REVENUE
Investment Banking Fees				$	779			$	616			$	678			$	545			$	785				26	%			(1	)%
Trading Revenue					1,477				1,232				585				(21	)			731				20				102
Fees and Commissions					2,479				2,598				2,282				3,005				2,885				(5	)			(14	)
Private Equity Gains (Losses)					(29	)			(221	)			(68	)			(315	)			(125	)			87				77
Securities Gains					768				485				747				578				124				58			NM
Other Revenue					497				481				290				419				292				3				70
Total Noninterest Revenue					5,971				5,191				4,514				4,211				4,692				15				27
Interest Income					5,871				6,263				6,184				6,316				6,498				(6	)			(10	)
Interest Expense					2,808				3,048				3,203				3,580				3,616				(8	)			(22	)
Net Interest Income					3,063				3,215				2,981				2,736				2,882				(5	)			6
Revenue before Provision for Credit Losses					9,034				8,406				7,495				6,947				7,574				7				19
Provision for Credit Losses					435				743				921				1,836				821				(41	)			(47	)
	TOTAL NET REVENUE				8,599				7,663				6,574				5,111				6,753				12				27
EXPENSE
Compensation Expense					3,231				3,174				3,032				2,367				2,761				2				17
Occupancy Expense (a)					543				496				425				478				365				9				49
Technology and Communications Expense					732				637				635				625				629				15				16
Amortization of Intangibles					73				74				82				80				92				(1	)			(21	)
Other Expense					1,153				1,160				1,294				1,168				1,118				(1	)			3
Surety Settlement and Litigation Reserve (a)					100				—				1,300				—				—			NM				NM
Merger and Restructuring Costs					—				—				393				333				229			NM				NM
		TOTAL NONINTEREST EXPENSE			5,832				5,541				7,161				5,051				5,194				5				12
Income (Loss) before Income Tax Expense					2,767				2,122				(587	)			60				1,559				30				77
Income Tax Expense (Benefit)					940				722				(200	)			20				531				30				77
NET INCOME (LOSS)				$	1,827			$	1,400			$	(387	)		$	40			$	1,028				31				78
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK				$	1,815			$	1,387			$	(399	)		$	27			$	1,015				31				79
NET INCOME (LOSS) PER COMMON SHARE
Basic				$	0.90			$	0.69			$	(0.20	)		$	0.01			$	0.51				30				76
Diluted					0.89				0.69				(0.20	)			0.01				0.50				29				78
PERFORMANCE RATIOS (b)
Return on Average Assets					0.96	%			0.73	%		NM					0.02	%			0.56	%	23			bp	40			bp
Return on Average Common Equity					17				13			NM					—				10				400				700
FULL-TIME EQUIVALENT EMPLOYEES					92,256				93,878				94,335				95,637				95,878				(2	)%			(4	)%

[Additional columns below]

[Continued from above table, first column(s) repeated]

												YTD 2003
				YEAR TO DATE								Over (Under)
				2003				2002				2002
REVENUE
Investment Banking Fees				$	1,395			$	1,540				(9	)%
Trading Revenue					2,709				2,030				33
Fees and Commissions					5,077				5,469				(7	)
Private Equity Gains (Losses)					(250	)			(363	)			31
Securities Gains					1,253				238				426
Other Revenue					978				449				118
Total Noninterest Revenue					11,162				9,363				19
Interest Income					12,134				12,784				(5	)
Interest Expense					5,856				6,975				(16	)
Net Interest Income					6,278				5,809				8
Revenue before Provision for Credit Losses					17,440				15,172				15
Provision for Credit Losses					1,178				1,574				(25	)
	TOTAL NET REVENUE				16,262				13,598				20
EXPENSE
Compensation Expense					6,405				5,584				15
Occupancy Expense (a)					1,039				703				48
Technology and Communications Expense					1,369				1,294				6
Amortization of Intangibles					147				161				(9	)
Other Expense					2,313				2,326				(1	)
Surety Settlement and Litigation Reserve (a)					100				—			NM
Merger and Restructuring Costs					—				484			NM
		TOTAL NONINTEREST EXPENSE			11,373				10,552				8
Income (Loss) before Income Tax Expense					4,889				3,046				61
Income Tax Expense (Benefit)					1,662				1,036				60
NET INCOME (LOSS)				$	3,227			$	2,010				61
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK				$	3,202			$	1,984				61
NET INCOME (LOSS) PER COMMON SHARE
Basic				$	1.60			$	1.00				60
Diluted					1.57				0.99				59
PERFORMANCE RATIOS (b)
Return on Average Assets					0.84	%			0.56	%	28			bp
Return on Average Common Equity					15				10				500
FULL-TIME EQUIVALENT EMPLOYEES

(a)		In the second quarter of 2003, a $100 million (pre-tax) charge was recorded for certain Enron-related litigation. 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. In the third quarter of 2002, $98 million (pre-tax) in real estate charges were recorded in “Occupancy Expense” on a reported basis.
(b)		Ratios are based on annualized amounts.

Page 3

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J.P. MORGAN CHASE & CO.
LINES OF BUSINESS FINANCIAL HIGHLIGHTS SUMMARY
(in millions, except per share and ratio data)

																								2QTR 2003
																								Over (Under)
				2QTR				1QTR				4QTR				3QTR				2QTR
				2003				2003				2002				2002				2002				1Q 2003				2Q 2002
OPERATING REVENUE
Investment Bank				$	4,257			$	4,068			$	3,355			$	2,481			$	3,154				5	%			35	%
Treasury & Securities Services					984				935				941				1,029				991				5				(1	)
Investment Management & Private Banking					684				643				652				695				729				6				(6	)
JPMorgan Partners					(70	)			(278	)			(83	)			(359	)			(193	)			75				64
Chase Financial Services					3,977				3,696				3,334				3,668				3,400				8				17
Support Units and Corporate					(318	)			(201	)			(274	)			(213	)			(173	)			(58	)			(84	)
		OPERATING REVENUE (a)		$	9,514			$	8,863			$	7,925			$	7,301			$	7,908				7				20
EARNINGS
Investment Bank				$	1,087			$	946			$	363			$	(256	)		$	507				15				114
Treasury & Securities Services					127				131				129				201				165				(3	)			(23	)
Investment Management & Private Banking					69				36				12				68				82				92				(16	)
JPMorgan Partners					(91	)			(217	)			(96	)			(278	)			(168	)			58				46
Chase Financial Services					883				677				467				760				649				30				36
Support Units and Corporate					(248	)			(173	)			(145	)			(170	)			(56	)			(43	)			(343	)
		OPERATING EARNINGS (a)			1,827				1,400				730				325				1,179				31				55
Special Items (Net of Taxes):
	Real Estate Charge				—				—				—				(65	)			—			NM				NM
	Surety Settlement and Litigation Reserve				—				—				(858	)			—				—			NM				NM
	Merger and Restructuring Costs				—				—				(259	)			(220	)			(151	)		NM				NM
		NET INCOME (LOSS) (a)		$	1,827			$	1,400			$	(387	)		$	40			$	1,028				31				78
AVERAGE ECONOMIC CAPITAL
Investment Bank				$	20,101			$	20,825			$	20,317			$	19,443			$	19,638				(3)				2
Treasury & Securities Services					2,768				2,759				2,720				2,603				2,662				—				4
Investment Management & Private Banking					5,481				5,432				5,540				5,607				5,741				1				(5)
JPMorgan Partners					5,916				5,985				6,102				6,183				6,330				(1)				(7)
Chase Financial Services					8,661				8,469				8,516				8,637				8,716				2				(1)
Support Units and Corporate					(168)				(1,612)				(1,225)				(305)				(2,198)				90				92
		TOTAL ECONOMIC CAPITAL (a)		$	42,759			$	41,858			$	41,970			$	42,168			$	40,889				2				5
OPERATING EARNINGS (a)				$	0.89			$	0.69			$	0.36			$	0.16			$	0.58				29				53
Special Items (Net of Taxes):
	Real Estate Charge				—				—				—				(0.03	)			—			NM				NM
	Surety Settlement and Litigation Reserve				—				—				(0.43	)			—				—			NM				NM
	Merger and Restructuring Costs				—				—				(0.13	)			(0.12	)			(0.08	)		NM				NM
NET INCOME (LOSS) (a)				$	0.89			$	0.69			$	(0.20	)		$	0.01			$	0.50				29				78
OPERATING RETURN ON COMMON EQUITY
Investment Bank					22	%			18	%			7	%		NM					10	%	400			bp	1,200			bp
Treasury & Securities Services					18				19				19				31	%			25				(100	)			(700	)
Investment Management & Private Banking					5				3				1				5				6				200				(100	)
Chase Financial Services					41				32				22				35				30				900				1,100
OPERATING RETURN ON COMMON EQUITY (a)					17				13				7				3				11				400				600

[Additional columns below]

[Continued from above table, first column(s) repeated]

												YTD 2003
				YEAR TO DATE								Over (Under)
				2003				2002				2002
OPERATING REVENUE
Investment Bank				$	8,325			$	6,809				22	%
Treasury & Securities Services					1,919				1,933				(1	)
Investment Management & Private Banking					1,327				1,494				(11	)
JPMorgan Partners					(348	)			(501	)			31
Chase Financial Services					7,673				6,455				19
Support Units and Corporate					(519	)			(363	)			(43	)
		OPERATING REVENUE (a)		$	18,377			$	15,827				16
EARNINGS
Investment Bank				$	2,033			$	1,276				59
Treasury & Securities Services					258				301				(14	)
Investment Management & Private Banking					105				182				(42	)
JPMorgan Partners					(308	)			(413	)			25
Chase Financial Services					1,560				1,135				37
Support Units and Corporate					(421	)			(152	)			(177	)
		OPERATING EARNINGS (a)			3,227				2,329				39
Special Items (Net of Taxes):
	Real Estate Charge				—				—			NM
	Surety Settlement and Litigation Reserve				—				—			NM
	Merger and Restructuring Costs				—				(319	)		NM
		NET INCOME (LOSS) (a)		$	3,227			$	2,010				61
AVERAGE ECONOMIC CAPITAL
	Investment Bank			$	20,461			$	19,934				3
	Treasury & Securities Services				2,764				2,727				1
	Investment Management & Private Banking				5,457				5,714				(4	)
	JPMorgan Partners				5,950				6,447				(8	)
	Chase Financial Services				8,565				8,661				(1	)
	Support Units and Corporate				(886	)			(2,828	)			69
		TOTAL ECONOMIC CAPITAL (a)		$	42,311			$	40,655				4
EARNINGS PER SHARE — DILUTED
OPERATING EARNINGS (a)				$	1.57			$	1.15				37
Special Items (Net of Taxes):
	Real Estate Charge				—				—			NM
	Surety Settlement and Litigation Reserve				—				—			NM
	Merger and Restructuring Costs				—				(0.16	)		NM
NET INCOME (LOSS) (a)				$	1.57			$	0.99				59
OPERATING RETURN ON COMMON EQUITY
Investment Bank					20	%			13	%	700			bp
Treasury & Securities Services					19				22				(300	)
Investment Management & Private Banking					4				6				(200	)
Chase Financial Services					37				26				1,100
OPERATING RETURN ON COMMON EQUITY (a)					15				11				400

(a)

Represents consolidated JPMorgan Chase.

Page 4

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J.P. MORGAN CHASE & CO.
STATEMENT OF INCOME – OPERATING BASIS
(in millions, except per share and ratio data)

																								2QTR 2003
																								Over (Under)
				2QTR				1QTR				4QTR				3QTR				2QTR
				2003				2003				2002				2002				2002				1Q 2003				2Q 2002
OPERATING REVENUE
Investment Banking Fees				$	779			$	616			$	678			$	545			$	785				26	%			(1	)%
Trading-Related Revenue (Includes Trading NII)					1,956				1,915				1,253				365				1,136				2				72
Fees and Commissions					2,357				2,429				2,052				2,768				2,745				(3	)			(14	)
Private Equity Gains (Losses)					(29	)			(221	)			(68	)			(315	)			(125	)			87				77
Securities Gains					768				485				747				578				124				58			NM
Other Revenue					473				477				303				409				273				(1	)			73
Net Interest Income (Excludes Trading NII)					3,210				3,162				2,960				2,951				2,970				2				8
		TOTAL OPERATING REVENUE			9,514				8,863				7,925				7,301				7,908				7				20
OPERATING EXPENSE
Compensation Expense (a)					3,231				3,174				3,032				2,367				2,761				2				17
Noncompensation Expense (a) (b)					2,601				2,367				2,436				2,253				2,204				10				18
	TOTAL OPERATING EXPENSE				5,832				5,541				5,468				4,620				4,965				5				17
Credit Costs					915				1,200				1,351				2,190				1,155				(24	)			(21	)
Corporate Credit Allocation					—				—				—				—				—			NM				NM
Operating Income before Income Tax Expense					2,767				2,122				1,106				491				1,788				30				55
Income Tax Expense					940				722				376				166				609				30				54
OPERATING EARNINGS				$	1,827			$	1,400			$	730			$	325			$	1,179				31				55
OPERATING BASIS
Diluted Earnings per Share				$	0.89			$	0.69			$	0.36			$	0.16			$	0.58				29				53
Shareholder Value Added (c)					536				148				(551	)			(964	)			(57	)			262			NM
Return on Average Managed Assets (d)					0.92	%			0.70	%			0.37	%			0.17	%			0.62	%	22			bp	30			bp
Return on Common Equity (d)					17				13				7				3				11				400				600
Common Dividend Payout Ratio					40				50				96				222				59				(1,000	)			(1,900	)
Effective Income Tax Rate					34				34				34				34				34				—				—
Compensation Expense as a % of Operating Revenue					34				36				38				32				35				(200	)			(100	)
Noncompensation Expense as a % of Operating Revenue					27				27				31				31				28				—				(100	)
Overhead Ratio					61				63				69				63				63				(200	)			(200	)
Shareholder Value Added: (c)
Net Income (Loss)				$	1,827			$	1,400			$	(387	)		$	40			$	1,028				31	%			78	%
Special Items (Net of Taxes):
	Real Estate Charge				—				—				—				65				—			NM				NM
	Surety Settlement and Litigation Reserve				—				—				858				—				—			NM				NM
	Merger and Restructuring Costs				—				—				259				220				151			NM				NM
Operating Earnings					1,827				1,400				730				325				1,179				31				55
Less: Preferred Dividends					12				13				12				13				13				(8	)			(8	)
Adjusted Operating Earnings					1,815				1,387				718				312				1,166				31				56
Less: Cost of Capital (e)					1,279				1,239				1,269				1,276				1,223				3				5
Total Shareholder Value Added				$	536			$	148			$	(551	)		$	(964	)		$	(57	)			262			NM
Return on Average Managed Assets: (d)
Operating Earnings				$	1,827			$	1,400			$	730			$	325			$	1,179				31				55
Average Managed Assets
Average Assets				$	764,655			$	778,238			$	755,166			$	724,366			$	734,946				(2	)			4
Average Credit Card Securitizations					31,665				31,834				30,556				28,348				25,289				(1	)			25
Average Managed Assets				$	796,320			$	810,072			$	785,722			$	752,714			$	760,235				(2	)			5

[Additional columns below]

[Continued from above table, first column(s) repeated]

												YTD 2003
				YEAR TO DATE								Over (Under)
				2003				2002				2002
OPERATING REVENUE
Investment Banking Fees				$	1,395			$	1,540				(9	)%
Trading-Related Revenue (Includes Trading NII)					3,871				2,856				36
Fees and Commissions					4,786				5,238				(9	)
Private Equity Gains (Losses)					(250	)			(363	)			31
Securities Gains					1,253				238				426
Other Revenue					950				410				132
Net Interest Income (Excludes Trading NII)					6,372				5,908				8
		TOTAL OPERATING REVENUE			18,377				15,827				16
OPERATING EXPENSE
Compensation Expense (a)					6,405				5,584				15
Noncompensation Expense (a) (b)					4,968				4,484				11
	TOTAL OPERATING EXPENSE				11,373				10,068				13
Credit Costs					2,115				2,229				(5	)
Corporate Credit Allocation					—				—			NM
Operating Income before Income Tax Expense					4,889				3,530				38
Income Tax Expense					1,662				1,201				38
OPERATING EARNINGS				$	3,227			$	2,329				39
OPERATING BASIS
Diluted Earnings per Share				$	1.57			$	1.15				37
Shareholder Value Added (c)					684				(116	)		NM
Return on Average Managed Assets (d)					0.81	%			0.63	%		18bp
Return on Common Equity (d)					15				11				400
Common Dividend Payout Ratio					44				60				(1,600	)
Effective Income Tax Rate					34				34				—
Compensation Expense as a % of Operating Revenue					35				35				—
Noncompensation Expense as a % of Operating Revenue					27				28				(100	)
Overhead Ratio					62				64				(200	)
Shareholder Value Added: (c)
Net Income (Loss)				$	3,227			$	2,010				61	%
Special Items (Net of Taxes):
	Real Estate Charge				—				—			NM
	Surety Settlement and Litigation Reserve				—				—			NM
	Merger and Restructuring Costs				—				319			NM
Operating Earnings					3,227				2,329				39
Less: Preferred Dividends					25				26				(4	)
Adjusted Operating Earnings					3,202				2,303				39
Less: Cost of Capital (e)					2,518				2,419				4
Total Shareholder Value Added				$	684			$	(116	)		NM
Return on Average Managed Assets: (d)
Operating Earnings				$	3,227			$	2,329				39
Average Managed Assets
Average Assets				$	771,409			$	726,841				6
Average Credit Card Securitizations					31,749				23,537				35
Average Managed Assets				$	803,158			$	750,378				7

(a)		Includes severance and other related costs associated with expense containment programs implemented in 2002.
(b)		Includes Occupancy Expense, Technology and Communications Expense, Amortization of Intangibles, Other Expense and Surety Settlement and Litigation Reserve.
(c)		The Firm uses the shareholder value added (“SVA”) framework to measure performance of its business segments. The table above reconciles the Firm’s net income, which is a GAAP financial measure, to SVA, which is a non-GAAP financial measure. To derive SVA, 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. Capital charges are an integral part of the SVA measurement for each business.
(d)		Ratios are based on annualized amounts.
(e)		A 12% (after-tax) cost of capital, based on average economic capital, is used for 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 5

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J.P. MORGAN CHASE & CO.
RECONCILIATION FROM REPORTED TO OPERATING BASIS
(in millions)

																								2QTR 2003
																								Over (Under)
				2QTR				1QTR				4QTR				3QTR				2QTR
				2003				2003				2002				2002				2002				1Q 2003				2Q 2002
REVENUE
TRADING REVENUE
	Reported			$	1,477			$	1,232			$	585			$	(21	)		$	731				20	%			102	%
	Trading-Related NII				479				683				668				386				405				(30	)			18
	Operating			$	1,956			$	1,915			$	1,253			$	365			$	1,136				2				72
CREDIT CARD REVENUE (a)
	Reported			$	698			$	692			$	807			$	806			$	669				1				4
	Credit Card Securitizations				(122	)			(169	)			(230	)			(237	)			(140	)			28				13
	Operating			$	576			$	523			$	577			$	569			$	529				10				9
OTHER REVENUE
	Reported			$	497			$	481			$	290			$	419			$	292				3				70
	Credit Card Securitizations				(24	)			(4	)			13				(10	)			(19	)		NM					(26	)
	Operating			$	473			$	477			$	303			$	409			$	273				(1	)			73
NET INTEREST INCOME
	Reported			$	3,063			$	3,215			$	2,981			$	2,736			$	2,882				(5	)			6
	Credit Card Securitizations				626				630				647				601				493				(1	)			27
	Trading-Related NII				(479	)			(683	)			(668	)			(386	)			(405	)			30				(18	)
	Operating			$	3,210			$	3,162			$	2,960			$	2,951			$	2,970				2				8
TOTAL REVENUE
	Reported			$	9,034			$	8,406			$	7,495			$	6,947			$	7,574				7				19
	Credit Card Securitizations				480				457				430				354				334				5				44
	Total Operating Revenue			$	9,514			$	8,863			$	7,925			$	7,301			$	7,908				7				20
NONINTEREST EXPENSE
	Reported			$	5,832			$	5,541			$	7,161			$	5,051			$	5,194				5				12
	Real Estate Reserves				—				—				—				(98	)			—			NM				NM
	Surety Settlement and Litigation Reserve				—				—				(1,300	)			—				—			NM				NM
	Merger and Restructuring Costs				—				—				(393	)			(333	)			(229	)		NM				NM
	Total Operating Expense			$	5,832			$	5,541			$	5,468			$	4,620			$	4,965				5				17
CREDIT COSTS
	Provision for Credit Losses — Reported			$	435			$	743			$	921			$	1,836			$	821				(41	)			(47	)
	Credit Card Securitizations				480				457				430				354				334				5				44
	Credit Costs — Operating			$	915			$	1,200			$	1,351			$	2,190			$	1,155				(24	)			(21	)

[Additional columns below]

[Continued from above table, first column(s) repeated]

												YTD 2003
				YEAR TO DATE								Over (Under)
				2003				2002				2002
REVENUE
TRADING REVENUE
	Reported			$	2,709			$	2,030				33	%
	Trading-Related NII				1,162				826				41
	Operating			$	3,871			$	2,856				36
CREDIT CARD REVENUE (a)
	Reported			$	1,390			$	1,256				11
	Credit Card Securitizations				(291	)			(231	)			(26	)
	Operating			$	1,099			$	1,025				7
OTHER REVENUE
	Reported			$	978			$	449				118
	Credit Card Securitizations				(28	)			(39	)			28
	Operating			$	950			$	410				132
NET INTEREST INCOME
	Reported			$	6,278			$	5,809				8
	Credit Card Securitizations				1,256				925				36
	Trading-Related NII				(1,162	)			(826	)			(41	)
	Operating			$	6,372			$	5,908				8
TOTAL REVENUE
	Reported			$	17,440			$	15,172				15
	Credit Card Securitizations				937				655				43
	Total Operating Revenue			$	18,377			$	15,827				16
NONINTEREST EXPENSE
	Reported			$	11,373			$	10,552				8
	Real Estate Reserves				—				—			NM
	Surety Settlement and Litigation Reserve				—				—			NM
	Merger and Restructuring Costs				—				(484	)		NM
	Total Operating Expense			$	11,373			$	10,068				13
CREDIT COSTS
	Provision for Credit Losses — Reported			$	1,178			$	1,574				(25	)
	Credit Card Securitizations				937				655				43
	Credit Costs — Operating			$	2,115			$	2,229				(5	)

(a)

Included in Fees and Commissions.

Page 6

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SEGMENT DETAIL

 

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J.P. MORGAN CHASE & CO.
INVESTMENT BANK
FINANCIAL HIGHLIGHTS
(in millions, except ratios and employees)

																									2QTR 2003
																									Over (Under)
					2QTR				1QTR				4QTR				3QTR				2QTR
					2003				2003				2002				2002				2002				1Q 2003				2Q 2002
OPERATING INCOME STATEMENT
REVENUE:
Trading Revenue (Includes Trading NII):
		Fixed Income and Other			$	1,870			$	1,730			$	1,298			$	631			$	1,034				8	%			81	%
		Equities				155				199				(33	)			(254	)			96				(22	)			61
						2,025				1,929				1,265				377				1,130				5				79
Investment Banking Fees						765				620				650				529				781				23				(2	)
Net Interest Income						637				735				674				681				681				(13	)			(6	)
Fees and Commissions						403				380				370				432				429				6				(6	)
Securities Gains						445				383				376				465				108				16				312
All Other Revenue						(18	)			21				20				(3	)			25			NM				NM
			TOTAL OPERATING REVENUE			4,257				4,068				3,355				2,481				3,154				5				35
EXPENSE:
Compensation Expense						1,391				1,321				1,065				721				1,057				5				32
Noncompensation Expense						915				836				882				848				820				9				12
	Operating Expense (Excludes Severance and Related Costs)					2,306				2,157				1,947				1,569				1,877				7				23
Severance and Related Costs						150				104				337				79				124				44				21
		TOTAL OPERATING EXPENSE				2,456				2,261				2,284				1,648				2,001				9				23
Operating Margin						1,801				1,807				1,071				833				1,153				—				56
Credit Costs						(4	)			245				489				1,316				306			NM				NM
Corporate Credit Allocation						(11	)			(14	)			(19	)			(25	)			(21	)			21				48
Operating Income (Loss) Before Income Tax Expense						1,794				1,548				563				(508	)			826				16				117
Income Tax Expense (Benefit)						707				602				200				(252	)			319				17				122
OPERATING EARNINGS (LOSS)					$	1,087			$	946			$	363			$	(256	)		$	507				15				114
Average Economic Capital					$	20,101			$	20,825			$	20,317			$	19,443			$	19,638				(3	)			2
Average Assets						494,221				525,613				515,614				494,699				503,339				(6	)			(2	)
Shareholder Value Added						480				324				(258	)			(849	)			(86	)			48			NM
Return on Economic Capital						22	%			18	%			7	%		NM					10	%		400bp				1,200bp
Overhead Ratio						58				56				68				66	%			63				200				(500	)
Overhead Ratio Excl. Severance and Related Costs						54				53				58				63				60				100				(600	)
Compensation Expense as a % of Operating Revenue Excl. Severance and Related Costs						33				32				32				29				34				100				(100	)
FULL-TIME EQUIVALENT EMPLOYEES						14,457				14,605				15,139				16,364				16,688				(1	)%			(13	)%
Shareholder Value Added:
Operating Earnings					$	1,087			$	946			$	363			$	(256	)		$	507				15				114
Less: Preferred Dividends						5				6				5				5				5				(17	)			—
Adjusted Operating Earnings						1,082				940				358				(261	)			502				15				116
Less: Cost of Capital						602				616				616				588				588				(2	)			2
Total Shareholder Value Added					$	480			$	324			$	(258	)		$	(849	)		$	(86	)			48				NM

[Additional columns below]

[Continued from above table, first column(s) repeated]

													YTD 2003
					YEAR TO DATE								Over (Under)
					2003				2002				2002
OPERATING INCOME STATEMENT
REVENUE:
Trading Revenue (Includes Trading NII):
		Fixed Income and Other			$	3,600			$	2,537				42	%
		Equities				354				297				19
						3,954				2,834				40
Investment Banking Fees						1,385				1,517				(9	)
Net Interest Income						1,372				1,438				(5	)
Fees and Commissions						783				817				(4	)
Securities Gains						828				235				252
All Other Revenue						3				(32	)		NM
			TOTAL OPERATING REVENUE			8,325				6,809				22
EXPENSE:
Compensation Expense						2,712				2,187				24
Noncompensation Expense						1,751				1,725				2
	Operating Expense (Excludes Severance and Related Costs)					4,463				3,912				14
Severance and Related Costs						254				171				49
		TOTAL OPERATING EXPENSE				4,717				4,083				16
Operating Margin						3,608				2,726				32
Credit Costs						241				588				(59	)
Corporate Credit Allocation						(25	)			(43	)			42
Operating Income (Loss) Before Income Tax Expense						3,342				2,095				60
Income Tax Expense (Benefit)						1,309				819				60
OPERATING EARNINGS (LOSS)					$	2,033			$	1,276				59
Average Economic Capital					$	20,461			$	19,934				3
Average Assets						509,830				485,576				5
Shareholder Value Added						804				79			NM
Return on Economic Capital						20	%			13	%		700bp
Overhead Ratio						57				60				(300	)
Overhead Ratio Excl. Severance and Related Costs						54				57				(300	)
Compensation Expense as a % of Operating Revenue Excl. Severance and Related Costs						33				32				100
Shareholder Value Added:
Operating Earnings					$	2,033			$	1,276				59	%
Less: Preferred Dividends						11				11				—
Adjusted Operating Earnings						2,022				1,265				60
Less: Cost of Capital						1,218				1,186				3
Total Shareholder Value Added					$	804			$	79				NM

Page 7

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J.P. MORGAN CHASE & CO. INVESTMENT BANK BUSINESS-RELATED METRICS (in millions)

																							2QTR 2003
																							Over (Under)
			2QTR				1QTR				4QTR				3QTR				2QTR
			2003				2003				2002				2002				2002				1Q 2003				2Q 2002
BUSINESS REVENUE:
INVESTMENT BANKING FEES
	Advisory		$	162			$	160			$	216			$	139			$	194				1	%			(16	)%
	Underwriting and Other Fees			603				460				434				390				587				31				3
TOTAL				765				620				650				529				781				23				(2	)
CAPITAL MARKETS & LENDING
	Fixed Income			2,176				1,992				1,580				909				1,289				9				69
	Treasury			627				607				578				607				269				3				133
	Credit Portfolio			299				413				356				440				442				(28	)			(32	)
	Equities			390				436				191				(4	)			373				(11	)			5
TOTAL				3,492				3,448				2,705				1,952				2,373				1				47
TOTAL OPERATING REVENUE			$	4,257			$	4,068			$	3,355			$	2,481			$	3,154				5				35
MEMO:
CAPITAL MARKETS & LENDING TOTAL RETURN REVENUE (a)
	Fixed Income		$	2,113			$	1,954			$	1,497			$	943			$	1,362				8				55
	Treasury			438				536				464				364				215				(18	)			104
	Credit Portfolio			299				413				356				440				442				(28	)			(32	)
	Equities			390				436				191				(4	)			373				(11	)			5
TOTAL			$	3,240			$	3,339			$	2,508			$	1,743			$	2,392				(3	)			35
MARKET SHARE / RANKINGS: (b)
Global Syndicated Loans				24% / #1				14% / #1				20% / #1				22% / #1				28% / #1
U.S. Investment-Grade Bonds				17% / #2				15% / #2				14% / #2				15% / #2				19% / #2
Euro-Denominated Corporate International Bonds				5% / #7				4% / #10				7% / #4				5% / #9				5% / #7
Global Equity and Equity-Related				9% / #4				10% / #3				3% / #9				2% / #15				6% / #7
U.S. Equity and Equity-Related				12% / #4				16% / #1				5% / #7				3% / #8				9% / #5
Global Announced M&A				13% / #7				22% / #2				15% / #5				12% / #7				17% / #3

[Additional columns below]

[Continued from above table, first column(s) repeated]

											YTD 2003
			YEAR TO DATE								Over (Under)
			2003				2002				2002
BUSINESS REVENUE:
INVESTMENT BANKING FEES
	Advisory		$	322			$	388				(17	)%
	Underwriting and Other Fees			1,063				1,129				(6	)
TOTAL				1,385				1,517				(9	)
CAPITAL MARKETS & LENDING
	Fixed Income			4,168				3,052				37
	Treasury			1,234				654				89
	Credit Portfolio			712				771				(8	)
	Equities			826				815				1
TOTAL				6,940				5,292				31
TOTAL OPERATING REVENUE			$	8,325			$	6,809				22
MEMO:
CAPITAL MARKETS & LENDING TOTAL RETURN REVENUE (a)
	Fixed Income		$	4,067			$	3,083				32
	Treasury			974				685				42
	Credit Portfolio			712				771				(8	)
	Equities			826				815				1
TOTAL			$	6,579			$	5,354				23
MARKET SHARE / RANKINGS: (b)
Global Syndicated Loans				20% / #1				25% / #1
U.S. Investment-Grade Bonds				15% / #2				17% / #2
Euro-Denominated Corporate International Bonds				5% / #8				6% / #5
Global Equity and Equity-Related				10% / #4				5% / #7
U.S. Equity and Equity-Related				13% / #3				7% / #6
Global Announced M&A				17% / #3				15% / #6

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(a)		Total return revenue includes operating revenues plus the unrealized gains or losses on third-party or internally transfer-priced assets and liabilities in treasury and fixed income activities, which are not accounted for on a mark-to-market basis through earnings.
(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. U.S. Equity and Equity-Related adjusted to reflect all equity issuances in the U.S. market for both U.S. and non-U.S. issuers.

Page 8

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J.P. MORGAN CHASE & CO. TREASURY & SECURITIES SERVICES FINANCIAL HIGHLIGHTS (in millions, except ratios and employees)

																										2QTR 2003
																										Over (Under)
						2QTR				1QTR				4QTR				3QTR				2QTR
						2003				2003				2002				2002				2002				1Q 2003				2Q 2002
OPERATING INCOME STATEMENT
REVENUE:
	Fees and Commissions					$	632			$	598			$	581			$	605			$	621				6	%			2	%
	Net Interest Income						312				299				314				312				310				4				1
	All Other Revenue						40				38				46				112				60				5				(33	)
				TOTAL OPERATING REVENUE			984				935				941				1,029				991				5				(1	)
EXPENSE:
	Compensation Expense						320				319				285				290				302				—				6
	Noncompensation Expense						478				425				467				450				449				12				6
			TOTAL OPERATING EXPENSE				798				744				752				740				751				7				6
	Operating Margin						186				191				189				289				240				(3	)			(23	)
	Credit Costs						1				1				2				(1	)			(1	)		NM				NM
	Corporate Credit Allocation						11				14				19				25				21				(21	)			(48	)
	Operating Income Before Income Tax Expense						196				204				206				315				262				(4	)			(25	)
	Income Tax Expense						69				73				77				114				97				(5	)			(29	)
OPERATING EARNINGS						$	127			$	131			$	129			$	201			$	165				(3	)			(23	)
Average Economic Capital						$	2,768			$	2,759			$	2,720			$	2,603			$	2,662				—				4
Average Assets							20,165				17,504				19,279				15,943				18,919				15				7
Shareholder Value Added							43				49				46				122				85				(12	)			(49	)
Return on Economic Capital							18	%			19	%			19	%			31	%			25	%		(100)  bp				(700)  bp
Overhead Ratio							81				80				80				72				76				100				500
Assets under Custody (in billions)						$	6,777			$	6,269			$	6,336			$	6,251			$	6,417				8	%			6	%
FULL-TIME EQUIVALENT EMPLOYEES							14,388				14,344				14,435				14,734				14,857				—				(3	)
Shareholder Value Added: Operating Earnings						$	127			$	131			$	129			$	201			$	165				(3	)			(23	)
Less: Preferred Dividends							—				1				—				1				—				NM				NM
Adjusted Operating Earnings							127				130				129				200				165				(2	)			(23	)
Less: Cost of Capital							84				81				83				78				80				4				5
Total Shareholder Value Added						$	43			$	49			$	46			$	122			$	85				(12	)			(49	)
OPERATING REVENUE BY BUSINESS:
		Treasury Services				$	472			$	479			$	470			$	467			$	440				(1	)			7
		Investor Services					359				340				334				384				416				6				(14	)
		Institutional Trust Services					239				205				225				221				222				17				8
		Other					(86	)			(89	)			(88	)			(43	)			(87	)			3				1
		Total Treasury & Securities Services				$	984			$	935			$	941			$	1,029			$	991				5				(1	)

[Additional columns below]

[Continued from above table, first column(s) repeated]

														YTD 2003
						YEAR TO DATE								Over (Under)
						2003				2002				2002
OPERATING INCOME STATEMENT
REVENUE:
	Fees and Commissions					$	1,230			$	1,227				—	%
	Net Interest Income						611				611				—
	All Other Revenue						78				95				(18	)
				TOTAL OPERATING REVENUE			1,919				1,933				(1	)
EXPENSE:
	Compensation Expense						639				606				5
	Noncompensation Expense						903				894				1
			TOTAL OPERATING EXPENSE				1,542				1,500				3
	Operating Margin						377				433				(13	)
	Credit Costs						2				—			NM
	Corporate Credit Allocation						25				43				(42	)
	Operating Income Before Income Tax Expense						400				476				(16	)
	Income Tax Expense						142				175				(19	)
OPERATING EARNINGS						$	258			$	301				(14	)
Average Economic Capital						$	2,764			$	2,727				1
Average Assets							18,842				17,954				5
Shareholder Value Added							92				138				(33	)
Return on Economic Capital							19	%			22	%		(300)  bp
Overhead Ratio							80				78				200
Assets under Custody (in billions)
FULL-TIME EQUIVALENT EMPLOYEES
Shareholder Value Added:
Operating Earnings						$	258			$	301				(14	)%
Less: Preferred Dividends							1				1				—
Adjusted Operating Earnings							257				300				(14	)
Less: Cost of Capital							165				162				2
Total Shareholder Value Added						$	92			$	138				(33	)
OPERATING REVENUE BY BUSINESS:
		Treasury Services				$	951			$	887				7
		Investor Services					699				797				(12	)
		Institutional Trust Services					444				425				4
		Other					(175	)			(176	)			1
		Total Treasury & Securities Services				$	1,919			$	1,933				(1	)

Page 9

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J.P. MORGAN CHASE & CO. INVESTMENT MANAGEMENT & PRIVATE BANKING FINANCIAL HIGHLIGHTS (in millions, except ratios and employees)

																										2QTR 2003
																										Over (Under)
						2QTR				1QTR				4QTR				3QTR				2QTR
						2003				2003				2002				2002				2002				1Q 2003				2Q 2002
OPERATING INCOME STATEMENT
REVENUE:
	Fees and Commissions					$	509			$	511			$	507			$	519			$	560				—	%			(9	)%
	Net Interest Income						118				116				107				117				113				2				4
	All Other Revenue						57				16				38				59				56				256				2
				TOTAL OPERATING REVENUE			684				643				652				695				729				6				(6	)
EXPENSE:
	Compensation Expense						290				285				311				267				261				2				11
	Noncompensation Expense						288				289				315				296				315				—				(9	)
			TOTAL OPERATING EXPENSE				578				574				626				563				576				1				—
	Operating Margin						106				69				26				132				153				54				(31	)
	Credit Costs						—				6				12				26				23			NM				NM
	Operating Income Before Income Tax Expense						106				63				14				106				130				68				(18	)
	Income Tax Expense						37				27				2				38				48				37				(23	)
OPERATING EARNINGS						$	69			$	36			$	12			$	68			$	82				92				(16	)
Average Economic Capital						$	5,481			$	5,432			$	5,540			$	5,607			$	5,741				1				(5	)
Average Assets							33,929				32,346				33,522				34,968				36,478				5				(7	)
Shareholder Value Added							(97	)			(126	)			(155	)			(104	)			(92	)			23				(5	)
Tangible Shareholder Value Added							29				(1	)			(28	)			26				37			NM					(22	)
Return on Economic Capital							5	%			3	%			1	%			5	%			6	%		200  bp				(100)  bp
Tangible Return on Economic Capital							21				12				5				19				21				900				—
Overhead Ratio							85				89				96				81				79				(400	)			600
Pre-Tax Margin Ratio							15				10				2				15				18				500				(300	)
FULL-TIME EQUIVALENT EMPLOYEES							7,884				7,510				7,827				8,080				8,103				5	%			(3	)%
Shareholder Value Added:
Operating Earnings						$	69			$	36			$	12			$	68			$	82				92				(16	)
Less: Preferred Dividends							1				2				1				2				1				(50	)			—
Adjusted Operating Earnings							68				34				11				66				81				100				(16	)
Less: Cost of Capital							165				160				166				170				173				3				(5	)
Total Shareholder Value Added						$	(97	)		$	(126	)		$	(155	)		$	(104	)		$	(92	)			23				(5	)
ASSETS UNDER SUPERVISION (in billions)
Client Segment:
		Retail				$	84	(a)		$	72			$	80			$	77			$	89				17				(6	)
		Private Banking					130	(a)			125				130				126				138				4				(6	)
		Institutional					298	(a)			298				305				298				318				—				(6	)
			Assets under Management				512	(a)			495				515				501				545				3				(6	)
		Custody / brokerage / administration / deposits					182	(a)			127				129				131				140				43				30
			Assets under Supervision			$	694	(a)		$	622			$	644			$	632			$	685				12				1
Geographic Region:
		Americas				$	348	(a)		$	350			$	362			$	352			$	381				(1	)			(9	)
		Europe and Asia					164	(a)			145				153				149				164				13				—
			Assets under Management				512	(a)			495				515				501				545				3				(6	)
		Custody / brokerage / administration / deposits					182	(a)			127				129				131				140				43				30
			Assets under Supervision			$	694	(a)		$	622			$	644			$	632			$	685				12				1
Product Class:
		Liquidity				$	140	(a)		$	144			$	144			$	130			$	131				(3	)			7
		Fixed Income					150	(a)			144				149				150				156				4				(4	)
		Equities and Other					222	(a)			207				222				221				258				7				(14	)
			Assets under Management				512	(a)			495				515				501				545				3				(6	)
		Custody / brokerage / administration / deposits					182	(a)			127				129				131				140				43				30
			Assets under Supervision			$	694	(a)		$	622			$	644			$	632			$	685				12				1

[Additional columns below]

[Continued from above table, first column(s) repeated]

														YTD 2003
						YEAR TO DATE								Over (Under)
						2003				2002				2002
OPERATING INCOME STATEMENT
REVENUE:
	Fees and Commissions					$	1,020			$	1,150				(11	)%
	Net Interest Income						234				225				4
	All Other Revenue						73				119				(39	)
				TOTAL OPERATING REVENUE			1,327				1,494				(11	)
EXPENSE:
	Compensation Expense						575				547				5
	Noncompensation Expense						577				610				(5	)
			TOTAL OPERATING EXPENSE				1,152				1,157				—
	Operating Margin						175				337				(48	)
	Credit Costs						6				46				(87	)
	Operating Income Before Income Tax Expense						169				291				(42	)
	Income Tax Expense						64				109				(41	)
OPERATING EARNINGS						$	105			$	182				(42	)
Average Economic Capital						$	5,457			$	5,714				(4	)
Average Assets							33,142				37,238				(11	)
Shareholder Value Added							(223	)			(162	)			(38	)
Tangible Shareholder Value Added							28				96				(71	)
Return on Economic Capital							4	%			6	%		(200)  bp
Tangible Return on Economic Capital							16				24				(800	)
Overhead Ratio							87				77				1,000
Pre-Tax Margin Ratio							13				19				(600	)
Shareholder Value Added:
Operating Earnings						$	105			$	182				(42	)%
Less: Preferred Dividends							3				3				—
Adjusted Operating Earnings							102				179				(43	)
Less: Cost of Capital							325				341				(5	)
Total Shareholder Value Added						$	(223	)		$	(162	)			(38	)

---

(a)

Estimated

Page 10

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J.P. MORGAN CHASE & CO. JPMORGAN PARTNERS FINANCIAL HIGHLIGHTS (in millions, except employees)

						2QTR				1QTR				4QTR				3QTR				2QTR
						2003				2003				2002				2002				2002
OPERATING INCOME STATEMENT
REVENUE:
	Direct Investments:
		Realized Cash Gains (Net)				$	153			$	46			$	144			$	91			$	91
		Write-downs / Write-offs					(177	)			(176	)			(225	)			(210	)			(206	)
		Mark-to-Market					147				(6	)			108				(120	)			(20	)
				Total Direct Investments			123				(136	)			27				(239	)			(135	)
	Third Party Funds (Net)						(145	)			(94	)			(80	)			(60	)			9
	Total Private Equity Gains (Losses)						(22	)			(230	)			(53	)			(299	)			(126	)
	Net Interest Income (Loss)						(58	)			(62	)			(58	)			(63	)			(74	)
	Fees and Other Revenue						10				14				28				3				7
				TOTAL OPERATING REVENUE			(70	)			(278	)			(83	)			(359	)			(193	)
EXPENSE:
	Compensation Expense						36				34				24				33				34
	Noncompensation Expense						38				29				45				46				39
			TOTAL OPERATING EXPENSE				74				63				69				79				73
	Operating Income (Loss) Before Income Tax Expense						(144	)			(341	)			(152	)			(438	)			(266	)
	Income Tax Expense (Benefit)						(53	)			(124	)			(56	)			(160	)			(98	)
OPERATING EARNINGS (LOSS)						$	(91	)		$	(217	)		$	(96	)		$	(278	)		$	(168	)
Average Economic Capital						$	5,916			$	5,985			$	6,102			$	6,183			$	6,330
Average Assets							9,008				9,428				9,629				9,404				9,611
Shareholder Value Added							(314	)			(440	)			(327	)			(514	)			(407	)
FULL-TIME EQUIVALENT EMPLOYEES							329				342				357				364				357
Shareholder Value Added:
Operating Earnings						$	(91	)		$	(217	)		$	(96	)		$	(278	)		$	(168	)
Less: Preferred Dividends							1				2				2				2				2
Adjusted Operating Earnings							(92	)			(219	)			(98	)			(280	)			(170	)
Less: Cost of Capital							222				221				229				234				237
Total Shareholder Value Added						$	(314	)		$	(440	)		$	(327	)		$	(514	)		$	(407	)

[Additional columns below]

[Continued from above table, first column(s) repeated]

						2QTR 2003																YTD 2003
						Over (Under)								YEAR TO DATE								Over (Under)
						1Q 2003				2Q 2002				2003				2002				2002
OPERATING INCOME STATEMENT
REVENUE:
	Direct Investments:
		Realized Cash Gains (Net)					233	%			68	%		$	199			$	217				(8	)%
		Write-downs / Write-offs					(1	)			14				(353	)			(390	)			9
		Mark-to-Market				NM				NM					141				(198	)		NM
				Total Direct Investments		NM				NM					(13	)			(371	)			96
	Third Party Funds (Net)						(54	)		NM					(239	)			(10	)		NM
	Total Private Equity Gains (Losses)						90				83				(252	)			(381	)			34
	Net Interest Income (Loss)						6				22				(120	)			(147	)			18
	Fees and Other Revenue						(29	)			43				24				27				(11	)
				TOTAL OPERATING REVENUE			75				64				(348	)			(501	)			31
EXPENSE:
	Compensation Expense						6				6				70				71				(1	)
	Noncompensation Expense						31				(3	)			67				80				(16	)
			TOTAL OPERATING EXPENSE				17				1				137				151				(9	)
	Operating Income (Loss) Before Income Tax Expense						58				46				(485	)			(652	)			26
	Income Tax Expense (Benefit)						57				46				(177	)			(239	)			26
OPERATING EARNINGS (LOSS)							58				46			$	(308	)		$	(413	)			25
Average Economic Capital							(1	)			(7	)		$	5,950			$	6,447				(8	)
Average Assets							(4	)			(6	)			9,217				9,841				(6	)
Shareholder Value Added							29				23				(754	)			(897	)			16
FULL-TIME EQUIVALENT EMPLOYEES							(4	)			(8	)
Shareholder Value Added:
Operating Earnings							58				46			$	(308	)		$	(413	)			25
Less: Preferred Dividends							(50	)			(50	)			3				4				(25	)
Adjusted Operating Earnings							58				46				(311	)			(417	)			25
Less: Cost of Capital							—				(6	)			443				480				(8	)
Total Shareholder Value Added							29				23			$	(754	)		$	(897	)			16

Page 11

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J.P. MORGAN CHASE & CO. JPMORGAN PARTNERS INVESTMENT PORTFOLIO — PRIVATE AND PUBLIC SECURITIES (in millions)

																							Jun 30, 2003
																							Over (Under)
			Jun 30				Mar 31				Dec 31				Sep 30				Jun 30				Mar 31				Jun 30
			2003				2003				2002				2002				2002				2003				2002
PORTFOLIO INFORMATION
Public Securities (79 companies) (a) (b)
	Carrying Value		$	591			$	478			$	520			$	488			$	695				24	%			(15	)%
	Cost			531				624				663				764				860				(15	)			(38	)
Private Direct Securities (913 companies) (b)
	Carrying Value			5,766				5,912				5,865				5,694				5,707				(2	)			1
	Cost			7,351				7,439				7,316				7,186				7,066				(1	)			4
Private Fund Investments (306 funds) (b)
	Carrying Value			1,544				1,780				1,843				1,831				1,827				(13	)			(15	)
	Cost			2,121				2,360				2,333				2,216				2,164				(10	)			(2	)
Total Investment Portfolio — Carrying Value			$	7,901			$	8,170			$	8,228			$	8,013			$	8,229				(3	)			(4	)
Total Investment Portfolio — Cost			$	10,003			$	10,423			$	10,312			$	10,166			$	10,090				(4	)			(1	)
% of Portfolio to the Firm’s Common Equity				18	%			19	%			20	%			19	%			20	%		(100		)bp			(200	)bp

(a)		Publicly traded positions only. Quoted public value was $868 million at June 30, 2003.
(b)		Represents the number of companies and funds at June 30, 2003.

Page 12

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J.P. MORGAN CHASE & CO. CHASE FINANCIAL SERVICES FINANCIAL HIGHLIGHTS (in millions, except ratios and employees)

																								2QTR 2003
																								Over (Under)
				2QTR				1QTR				4QTR				3QTR				2QTR
				2003				2003				2002				2002				2002				1Q 2003				2Q 2002
OPERATING INCOME STATEMENT
REVENUE:
Net Interest Income				$	2,423			$	2,319			$	2,128			$	2,107			$	2,072				4	%			17	%
Fees and Commissions					816				935				603				1,233				1,134				(13	)			(28	)
Securities Gains					324				102				375				112				19				218			NM
All Other Revenue					414				340				228				216				175				22				137
		TOTAL OPERATING REVENUE			3,977				3,696				3,334				3,668				3,400				8				17
EXPENSE:
Compensation Expense					762				733				634				677				668				4				14
Noncompensation Expense					1,002				1,021				1,078				981				958				(2	)			5
	TOTAL OPERATING EXPENSE				1,764				1,754				1,712				1,658				1,626				1				8
Operating Margin					2,213				1,942				1,622				2,010				1,774				14				25
Credit Costs					817				877				875				823				736				(7	)			11
Operating Income Before Income Tax Expense					1,396				1,065				747				1,187				1,038				31				34
Income Tax Expense					513				388				280				427				389				32				32
OPERATING EARNINGS				$	883			$	677			$	467			$	760			$	649				30				36
Average Economic Capital				$	8,661			$	8,469			$	8,516			$	8,637			$	8,716				2				(1	)
Average Managed Assets (a)					217,304				202,341				188,478				178,825				175,555				7				24
Shareholder Value Added					621				424				207				496				386				46				61
Return on Economic Capital					41	%			32	%			22	%			35	%			30	%		900bp				1,100bp
Overhead Ratio					44				47				51				45				48				(300	)			(400	)
FULL-TIME EQUIVALENT EMPLOYEES					45,349				44,393				43,612				42,910				42,642				2	%			6	%
Shareholder value added:
Operating Earnings				$	883			$	677			$	467			$	760			$	649				30				36
Less: Preferred Dividends					2				3				2				3				2				(33	)			—
Adjusted Operating Earnings					881				674				465				757				647				31				36
Less: Cost of Capital					260				250				258				261				261				4				—
Total Shareholder Value Added				$	621			$	424			$	207			$	496			$	386				46				61
CHASE FINANCIAL SERVICES’ BUSINESSES
CHASE HOME FINANCE:
Operating Revenue				$	1,320			$	1,137			$	637			$	971			$	770				16				71
Operating Expense					375				361				380				312				312				4				20
Operating Earnings					568				431				146				385				261				32				118
CHASE CARDMEMBER SERVICES:
Operating Revenue				$	1,520			$	1,469			$	1,571			$	1,557			$	1,486				3				2
Operating Expense					540				535				610				547				523				1				3
Operating Earnings					173				153				140				232				166				13				4
CHASE AUTO FINANCE:
Operating Revenue				$	223			$	199			$	187			$	165			$	165				12				35
Operating Expense					72				67				65				61				61				7				18
Operating Earnings					68				39				36				24				79				74				(14	)
CHASE REGIONAL BANKING:
Operating Revenue				$	658			$	632			$	694			$	699			$	713				4				(8	)
Operating Expense					572				564				565				550				553				1				3
Operating Earnings					42				36				79				76				90				17				(53	)
CHASE MIDDLE MARKET:
Operating Revenue				$	355			$	364			$	358			$	377			$	362				(2	)			(2	)
Operating Expense					218				210				225				201				210				4				4
Operating Earnings					82				91				57				94				90				(10	)			(9	)

[Additional columns below]

[Continued from above table, first column(s) repeated]

												YTD 2003
				YEAR TO DATE								Over (Under)
				2003				2002				2002
OPERATING INCOME STATEMENT
REVENUE:
Net Interest Income				$	4,742			$	4,058				17	%
Fees and Commissions					1,751				2,028				(14	)
Securities Gains					426				6			NM
All Other Revenue					754				363				108
		TOTAL OPERATING REVENUE			7,673				6,455				19
EXPENSE:
Compensation Expense					1,495				1,313				14
Noncompensation Expense					2,023				1,857				9
	TOTAL OPERATING EXPENSE				3,518				3,170				11
Operating Margin					4,155				3,285				26
Credit Costs					1,694				1,462				16
Operating Income Before Income Tax Expense					2,461				1,823				35
Income Tax Expense					901				688				31
OPERATING EARNINGS				$	1,560			$	1,135				37
Average Economic Capital				$	8,565			$	8,661				(1	)
Average Managed Assets (a)					209,864				175,574				20
Shareholder Value Added					1,045				615				70
Return on Economic Capital					37	%			26	%		1,100bp
Overhead Ratio					46				49				(300	)
FULL-TIME EQUIVALENT EMPLOYEES
Shareholder value added:
Operating Earnings				$	1,560			$	1,135				37	%
Less: Preferred Dividends					5				5				—
Adjusted Operating Earnings					1,555				1,130				38
Less: Cost of Capital					510				515				(1	)
Total Shareholder Value Added				$	1,045			$	615				70
CHASE FINANCIAL SERVICES’ BUSINESSES
CHASE HOME FINANCE:
Operating Revenue				$	2,457			$	1,297				89
Operating Expense					736				609				21
Operating Earnings					999				389				157
CHASE CARDMEMBER SERVICES:
Operating Revenue				$	2,989			$	2,838				5
Operating Expense					1,075				1,004				7
Operating Earnings					326				304				7
CHASE AUTO FINANCE:
Operating Revenue				$	422			$	336				26
Operating Expense					139				122				14
Operating Earnings					107				109				(2	)
CHASE REGIONAL BANKING:
Operating Revenue				$	1,290			$	1,440				(10	)
Operating Expense					1,136				1,111				2
Operating Earnings					78				204				(62	)
CHASE MIDDLE MARKET:
Operating Revenue				$	719			$	733				(2	)
Operating Expense					428				416				3
Operating Earnings					173				173				—

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Page 13

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J.P. MORGAN CHASE & CO. CHASE FINANCIAL SERVICES BUSINESS-RELATED METRICS (in billions, except ratios and where otherwise noted)

																							2QTR 2003
																							Over (Under)
			2QTR				1QTR				4QTR				3QTR				2QTR
			2003				2003				2002				2002				2002				1Q 2003				2Q 2002
Chase Home Finance
Originations:
	Retail, Wholesale and Correspondent		$	55			$	41			$	40			$	29			$	22				34	%			150	%
	Correspondent Negotiated Transactions			23				21				21				7				5				10				360
Loans Serviced				437				432				426				435				436				1				—
End-of-Period Outstandings				74.5				67.3				63.6				55.6				53.6				11				39
Total Average Loans Owned				71.2				64.4				59.7				54.2				54.1				11				32
MSR Carrying Value				3.0				3.2				3.2				3.6				5.7				(6	)			(47	)
Number of Customers (in millions)				3.9				4.0				4.0				4.0				4.0				(3	)			(3	)
Net Charge-Off Ratio				0.18	%			0.20	%			0.27	%			0.21	%			0.30	%		(2)bp				(12)bp
Overhead Ratio				28				32				60				32				41				(400	)			(1,300	)
Chase Cardmember Services — Managed Basis
End-of-Period Outstandings			$	51.0			$	50.6			$	51.1			$	51.1			$	49.5				1	%			3	%
Average Outstandings				50.7				50.9				50.7				50.4				48.9				—				4
Total Purchases & Cash Advances (a)				22.2				20.7				21.2				23.0				20.9				7				6
Total Accounts (in millions)				30.3				29.8				29.2				28.6				28.1				2				8
Active Accounts (in millions)				16.4				16.5				16.5				16.5				16.3				(1	)			1
Net Charge-Off Ratio				6.01	%			5.87	%			5.75	%			5.59	%			6.41	%		14bp				(40)bp
30+ Day Delinquency Rate				4.40				4.59				4.67				4.47				4.17				(19	)			23
Overhead Ratio				36				36				39				35				35				—				100
Chase Auto Finance
Loan and Lease Receivables			$	41.7			$	41.1			$	37.4			$	33.8			$	29.3				1	%			42	%
Average Loan and Lease Receivables				41.7				39.6				35.8				31.5				29.6				5				41
Auto Origination Volume				7.9				7.4				6.8				7.6				5.2				7				52
Auto Market Share				6.8	%(c)			6.7	%			5.7	%			5.8	%			5.1	%		10bp				170bp
Net Charge-Off Ratio				0.37				0.48				0.53				0.59				0.38				(11	)			(1	)
Overhead Ratio				32				34				35				37				37				(200	)			(500	)
Chase Regional Banking
Total Average Deposits			$	74.5			$	72.6			$	70.1			$	70.1			$	69.9				3	%			7	%
Total Average Assets Under Management (b)				108.1	(c)			105.3				102.6				102.6				104.3				3				4
Number of Branches				527				527				528				533				533				—				(1	)
Number of ATMs				1,735	(c)			1,870				1,876				1,884				1,878				(7	)			(8	)
Overhead Ratio				87	%			89	%			82	%			79	%			78	%		(200)bp				900bp
Chase Middle Market
Total Average Loans			$	14.3			$	14.3			$	14.1			$	13.7			$	13.5				—	%			6	%
Total Average Deposits				26.9				28.0				25.8				24.0				24.0				(4	)			12
Nonperforming Average Loans as a % of Total Average Loans				1.24	%			1.42	%			1.59	%			1.95	%			1.89	%		(18)bp				(65)bp
Overhead Ratio				61				58				63				53				58				300				300

[Additional columns below]

[Continued from above table, first column(s) repeated]

											YTD 2003
			YEAR TO DATE								Over (Under)
			2003				2002				2002
Chase Home Finance
Originations:
	Retail, Wholesale and Correspondent		$	96			$	44				118	%
	Correspondent Negotiated Transactions			44				15				193
Loans Serviced				437				436				—
End-of-Period Outstandings				74.5				53.6				39
Total Average Loans Owned				67.1				56.2				19
MSR Carrying Value				3.0				5.7				(47	)
Number of Customers (in millions)				3.9				4.0				(3	)
Net Charge-Off Ratio				0.19	%			0.26	%		(7)bp
Overhead Ratio				30				47				(1,700	)
Chase Cardmember Services — Managed Basis
End-of-Period Outstandings			$	51.0			$	49.5				3	%
Average Outstandings				50.8				47.6				7
Total Purchases & Cash Advances (a)				42.9				39.8				8
Total Accounts (in millions)				30.3				28.1				8
Active Accounts (in millions)				16.4				16.3				1
Net Charge-Off Ratio				5.94	%			6.12	%		(18)bp
30+ Day Delinquency Rate				4.40				4.17				23
Overhead Ratio				36				35				100
Chase Auto Finance
Loan and Lease Receivables			$	41.7			$	29.3				42	%
Average Loan and Lease Receivables				40.7				29.8				37
Auto Origination Volume				15.3				10.9				40
Auto Market Share				6.8	%			5.1	%		170bp
Net Charge-Off Ratio				0.42				0.45				(3	)
Overhead Ratio				33				36				(300	)
Chase Regional Banking
Total Average Deposits			$	73.6			$	69.5				6	%
Total Average Assets Under Management (b)				106.9				104.6				2
Number of Branches				527				533				(1	)
Number of ATMs				1,735				1,878				(8	)
Overhead Ratio				88	%			77	%		1,100bp
Chase Middle Market
Total Average Loans			$	14.3			$	13.5				6	%
Total Average Deposits				27.5				23.4				18
Nonperforming Average Loans as a % of Total Average Loans				1.33	%			2.02	%		(69)bp
Overhead Ratio				60				57				300

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Page 14

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SUPPLEMENTAL DETAIL

 

---

 

J.P. MORGAN CHASE & CO. NONINTEREST REVENUE AND NONINTEREST EXPENSE DETAIL ON A REPORTED BASIS (in millions)

																								2QTR 2003
																								Over (Under)
				2QTR				1QTR				4QTR				3QTR				2QTR
				2003				2003				2002				2002				2002				1Q 2003				2Q 2002
NONINTEREST REVENUE
Investment Banking Fees:
	Advisory			$	156			$	166			$	233			$	143			$	189				(6	)%			(17	)%
	Underwriting:
		Equity			163				108				84				57				184				51				(11	)
		Debt			460				342				361				345				412				35				12
	Total			$	779			$	616			$	678			$	545			$	785				26				(1	)
Trading-Related Revenue: (a)
	Equities			$	151			$	194			$	(20	)		$	(211	)		$	120				(22	)			26
	Fixed Income and Other				1,805				1,721				1,273				576				1,016				5				78
	Total			$	1,956			$	1,915			$	1,253			$	365			$	1,136				2				72
Fees and Commissions:
	Investment Management, Custody and Processing Services			$	891			$	885			$	863			$	923			$	981				1				(9	)
	Credit Card Revenue				698				692				807				806				669				1				4
	Brokerage and Investment Services				321				277				273				321				333				16				(4	)
	Mortgage Servicing Fees, Net of Amortization, Writedowns and Derivatives Hedging				(94	)			90				(330	)			323				257			NM				NM
	Other Lending-Related Service Fees				127				124				160				128				128				2				(1	)
	Deposit Service Fees				284				285				277				288				273				—				4
	Other Fees				252				245				232				216				244				3				3
	Total			$	2,479			$	2,598			$	2,282			$	3,005			$	2,885				(5	)			(14	)
Other Revenue:
	Residential Mortgage Origination/Sales Activities			$	439			$	378			$	212			$	213			$	146				16				201
	All Other Revenue				58				103				78				206				146				(44	)			(60	)
	Total			$	497			$	481			$	290			$	419			$	292				3				70
NONINTEREST EXPENSE
Other Expense:
Professional Services				$	324			$	325			$	378			$	307			$	311				—				4
Outside Services					310				272				249				256				240				14				29
Marketing					167				164				220				179				144				2				16
Travel and Entertainment					102				89				96				102				112				15				(9	)
All Other					250				310				351				324				311				(19	)			(20	)
Total				$	1,153			$	1,160			$	1,294			$	1,168			$	1,118				(1	)			3

[Additional columns below]

[Continued from above table, first column(s) repeated]

												YTD 2003
				YEAR TO DATE								Over (Under)
				2003				2002				2002
NONINTEREST REVENUE
Investment Banking Fees:
	Advisory			$	322			$	380				(15	)%
	Underwriting:
		Equity			271				323				(16	)
		Debt			802				837				(4	)
	Total			$	1,395			$	1,540				(9	)
Trading-Related Revenue: (a)
	Equities			$	345			$	343				1
	Fixed Income and Other				3,526				2,513				40
	Total			$	3,871			$	2,856				36
Fees and Commissions:
	Investment Management, Custody and Processing Services			$	1,776			$	1,973				(10	)
	Credit Card Revenue				1,390				1,256				11
	Brokerage and Investment Services				598				637				(6	)
	Mortgage Servicing Fees, Net of Amortization, Writedowns and Derivatives Hedging				(4	)			305			NM
	Other Lending-Related Service Fees				251				258				(3	)
	Deposit Service Fees				569				563				1
	Other Fees				497				477				4
	Total			$	5,077			$	5,469				(7	)
Other Revenue:
	Residential Mortgage Origination/Sales Activities			$	817			$	246				232
	All Other Revenue				161				203				(21	)
	Total			$	978			$	449				118
NONINTEREST EXPENSE
Other Expense:
Professional Services				$	649			$	618				5
Outside Services					582				489				19
Marketing					331				290				14
Travel and Entertainment					191				213				(10	)
All Other					560				716				(22	)
Total				$	2,313			$	2,326				(1	)

(a)

Includes trading-related net interest income. See reconciliation from reported to operating basis on page 6.

Page 15

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J.P. MORGAN CHASE & CO. CONSOLIDATED BALANCE SHEET (in millions)

																								Jun 30, 2003
																								Over (Under)
				Jun 30				Mar 31				Dec 31				Sep 30				Jun 30				Mar 31				Jun 30
				2003				2003				2002				2002				2002				2003				2002
ASSETS
Cash and Due from Banks				$	23,398			$	22,229			$	19,218			$	18,159			$	21,878				5	%			7	%
Deposits with Banks					10,393				6,896				8,942				13,447				10,517				51				(1	)
Federal Funds Sold and Securities Purchased under Resale Agreements					69,748				69,764				65,809				63,748				71,740				—				(3	)
Securities Borrowed					41,067				39,188				34,143				35,283				48,429				5				(15	)
Trading Assets:
	Debt and Equity Instruments				139,275				146,783				165,199				151,264				159,746				(5	)			(13	)
	Derivative Receivables				93,602				86,649				83,102				87,518				69,858				8				34
Securities					82,549				85,178				84,463				79,768				64,526				(3	)			28
Loans (Net of Allowance for Loan Losses)					222,307				212,256				211,014				206,215				207,080				5				7
Private Equity Investments					7,901				8,170				8,228				8,013				8,229				(3	)			(4	)
Goodwill					8,132				8,122				8,096				8,108				8,089				—				1
Mortgage Servicing Rights					2,967				3,235				3,230				3,606				5,689				(8	)			(48	)
Other Intangibles:
	Purchased Credit Card Relationships				1,141				1,205				1,269				1,337				1,426				(5	)			(20	)
	All Other Intangibles				320				294				307				311				313				9				2
Other Assets					99,803				65,187				65,780				64,982				63,026				53				58
TOTAL ASSETS				$	802,603			$	755,156			$	758,800			$	741,759			$	740,546				6				8
LIABILITIES
Deposits:
	Noninterest-Bearing			$	88,096			$	77,822			$	82,029			$	74,724			$	73,529				13				20
	Interest-Bearing				230,152				222,845				222,724				217,447				220,300				3				4
		Total Deposits			318,248				300,667				304,753				292,171				293,829				6				8
Federal Funds Purchased and Securities Sold under Repurchase Agreements					155,330				160,221				169,483				154,745				162,656				(3	)			(5	)
Commercial Paper					12,382				14,039				16,591				13,775				14,561				(12	)			(15	)
Other Borrowed Funds					12,176				12,848				8,946				12,646				17,352				(5	)			(30	)
Trading Liabilities:
	Debt and Equity Instruments				72,825				64,427				66,864				71,607				67,952				13				7
	Derivative Payables				72,831				64,804				66,227				70,593				55,575				12				31
Accounts Payable, Accrued Expenses and Other Liabilities (including the Allowance for Lending-Related Commitments)					64,072				46,776				38,440				38,233				38,083				37				68
Long-Term Debt					44,479				42,851				39,751				39,113				42,363				4				5
Guaranteed Preferred Beneficial Interests in the Firm’s Junior Subordinated Deferrable Interest Debentures					5,439				5,439				5,439				5,439				5,439				—				—
TOTAL LIABILITIES					757,782				712,072				716,494				698,322				697,810				6				9
STOCKHOLDERS’ EQUITY
Preferred Stock					1,009				1,009				1,009				1,009				1,009				—				—
Common Stock					2,036				2,032				2,024				2,023				2,020				—				1
Capital Surplus					12,898				12,477				13,222				13,113				13,111				3				(2	)
Retained Earnings					27,633				26,538				25,851				26,940				27,605				4				—
Accumulated Other Comprehensive Income					1,293				1,113				1,227				1,465				79				16			NM
Treasury Stock, at Cost					(48	)			(85	)			(1,027	)			(1,113	)			(1,088	)			44				96
TOTAL STOCKHOLDERS’ EQUITY					44,821				43,084				42,306				43,437				42,736				4				5
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY				$	802,603			$	755,156			$	758,800			$	741,759			$	740,546				6				8

Page 16

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J.P. MORGAN CHASE & CO. CONDENSED AVERAGE BALANCE SHEET AND ANNUALIZED YIELDS (in millions, except rates)

																						2QTR 2003
																						Over (Under)
		2QTR				1QTR				4QTR				3QTR				2QTR
		2003				2003				2002				2002				2002				1Q 2003				2Q 2002
AVERAGE BALANCES
ASSETS
Deposits with Banks		$	7,061			$	9,998			$	13,074			$	13,071			$	9,287				(29	)%			(24	)%
Federal Funds Sold and Securities Purchased under Resale Agreements			76,690				87,657				88,974				83,402				83,317				(13	)			(8	)
Securities and Trading Assets			225,333				246,007				229,120				205,232				201,512				(8	)			12
Securities Borrowed			42,160				38,654				40,673				41,881				46,537				9				(9	)
Loans			219,950				215,882				211,489				205,037				211,495				2				4
Total Interest-Earning Assets			571,194				598,198				583,330				548,623				552,148				(5	)			3
Noninterest-Earning Assets			193,461				180,040				171,836				175,743				182,798				7				6
TOTAL ASSETS		$	764,655			$	778,238			$	755,166			$	724,366			$	734,946				(2	)			4
LIABILITIES
Interest-Bearing Deposits		$	225,950			$	225,389			$	215,061			$	214,932			$	221,687				—				2
Federal Funds Purchased and Securities Sold under Repurchase Agreements			164,386				191,163				182,526				170,266				166,919				(14	)			(2	)
Commercial Paper			12,929				14,254				13,469				13,740				18,514				(9	)			(30	)
Other Borrowings (a)			63,524				68,453				65,591				66,014				78,614				(7	)			(19	)
Long-Term Debt			49,219				46,001				44,621				45,525				42,482				7				16
Total Interest-Bearing Liabilities			516,008				545,260				521,268				510,477				528,216				(5	)			(2	)
Noninterest-Bearing Liabilities			204,879				190,111				190,919				170,712				164,832				8				24
TOTAL LIABILITIES			720,887				735,371				712,187				681,189				693,048				(2	)			4
PREFERRED STOCK OF SUBSIDIARY (b)			—				—				—				—				—			NM				NM
Preferred Stock			1,009				1,009				1,009				1,009				1,009				—				—
Common Stockholders’ Equity			42,759				41,858				41,970				42,168				40,889				2				5
TOTAL STOCKHOLDERS’ EQUITY			43,768				42,867				42,979				43,177				41,898				2				4
TOTAL LIABILITIES, PREFERRED STOCK OF SUBSIDIARY AND STOCKHOLDERS’ EQUITY		$	764,655			$	778,238			$	755,166			$	724,366			$	734,946				(2	)			4
AVERAGE RATES
INTEREST-EARNING ASSETS
Deposits with Banks			2.39	%			2.58	%			1.48	%			2.65	%			3.31	%		(19)bp				(92)bp
Federal Funds Sold and Securities Purchased under Resale Agreements			1.85				2.19				2.33				2.52				2.58				(34	)			(73	)
Securities and Trading Assets			4.64				4.64				4.62				4.98				5.18				—				(54	)
Securities Borrowed			0.75				1.02				1.42				1.70				1.49				(27	)			(74	)
Loans			5.12				5.32				5.29				5.73				5.95				(20	)			(83	)
Total Interest-Earning Assets			4.13				4.26				4.22				4.58				4.74				(13	)			(61	)
INTEREST-BEARING LIABILITIES
Interest-Bearing Deposits			1.69				1.92				2.17				2.62				2.38				(23	)			(69	)
Federal Funds Purchased and Securities Sold under Repurchase Agreements			1.41				1.54				1.71				2.06				2.06				(13	)			(65	)
Commercial Paper			1.22				1.30				1.53				1.81				1.84				(8	)			(62	)
Other Borrowings			5.39				4.99				4.69				5.06				5.24				40				15
Long-Term Debt			3.14				3.23				3.68				3.22				3.10				(9	)			4
Total Interest-Bearing Liabilities			2.18				2.27				2.44				2.78				2.75				(9	)			(57	)
INTEREST RATE SPREAD			1.95	%			1.99	%			1.78	%			1.80	%			1.99	%			(4	)			(4	)
NET INTEREST MARGIN			2.16	%			2.19	%			2.04	%			1.99	%			2.11	%			(3	)			5
NET INTEREST MARGIN ADJUSTED FOR SECURITIZATIONS			2.47	%			2.49	%			2.36	%			2.31	%			2.36	%			(2	)			11

[Additional columns below]

[Continued from above table, first column(s) repeated]

										YTD 2003
		YEAR TO DATE								Over (Under)
		2003				2002				2002
AVERAGE BALANCES
ASSETS
Deposits with Banks		$	8,521			$	10,798				(21	)%
Federal Funds Sold and Securities Purchased under Resale Agreements			82,143				82,166				—
Securities and Trading Assets			235,613				191,288				23
Securities Borrowed			40,417				44,152				(8	)
Loans			217,927				214,654				2
Total Interest-Earning Assets			584,621				543,058				8
Noninterest-Earning Assets			186,788				183,783				2
TOTAL ASSETS		$	771,409			$	726,841				6
LIABILITIES
Interest-Bearing Deposits		$	225,671			$	219,879				3
Federal Funds Purchased and Securities Sold under Repurchase Agreements			177,701				160,327				11
Commercial Paper			13,588				18,706				(27	)
Other Borrowings (a)			65,974				73,042				(10	)
Long-Term Debt			47,619				42,762				11
Total Interest-Bearing Liabilities			530,553				514,716				3
Noninterest-Bearing Liabilities			197,536				170,285				16
TOTAL LIABILITIES			728,089				685,001				6
PREFERRED STOCK OF SUBSIDIARY (b)			—				176			NM
Preferred Stock			1,009				1,009				—
Common Stockholders’ Equity			42,311				40,655				4
TOTAL STOCKHOLDERS’ EQUITY			43,320				41,664				4
TOTAL LIABILITIES, PREFERRED STOCK OF SUBSIDIARY AND STOCKHOLDERS’ EQUITY		$	771,409			$	726,841				6
AVERAGE RATES
INTEREST-EARNING ASSETS
Deposits with Banks			2.50	%			3.11	%			(61	)bp
Federal Funds Sold and Securities Purchased under Resale Agreements			2.03				2.52				(49	)
Securities and Trading Assets			4.64				5.26				(62	)
Securities Borrowed			0.88				1.63				(75	)
Loans			5.22				5.91				(69	)
Total Interest-Earning Assets			4.20				4.76				(56	)
INTEREST-BEARING LIABILITIES
Interest-Bearing Deposits			1.80				2.44				(64	)
Federal Funds Purchased and Securities Sold under Repurchase Agreements			1.48				2.07				(59	)
Commercial Paper			1.26				1.80				(54	)
Other Borrowings			5.18				5.04				14
Long-Term Debt			3.18				3.22				(4	)
Total Interest-Bearing Liabilities			2.23				2.73				(50	)
INTEREST RATE SPREAD			1.97	%			2.03	%			(6	)
NET INTEREST MARGIN			2.18	%			2.17	%			1
NET INTEREST MARGIN ADJUSTED FOR SECURITIZATIONS			2.48	%			2.41	%			7

(a)		Includes securities sold but not yet purchased.
(b)		On February 28, 2002, all outstanding shares were redeemed.

Page 17

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J.P. MORGAN CHASE & CO. CREDIT-RELATED INFORMATION (in millions, except ratios)

																							June 30, 2003
																							Over (Under)
			Jun 30				Mar 31				Dec 31				Sep 30				Jun 30				Mar 31				Jun 30
			2003				2003				2002				2002				2002				2003				2002
CREDIT EXPOSURE
COMMERCIAL
Loans — U.S			$	55,693			$	54,156			$	56,667			$	62,901			$	67,124				3	%			(17	)%
Loans — Non-U.S				35,363				34,290				34,881				34,585				37,577				3				(6	)
Total Commercial Loans				91,056				88,446				91,548				97,486				104,701				3				(13	)
Derivative Receivables				93,602				86,649				83,102				87,518				69,858				8				34
Other Receivables (a)				108				108				108				1,130				1,130				—				(90	)
TOTAL COMMERCIAL CREDIT-RELATED ASSETS				184,766				175,203				174,758				186,134				175,689				5				5
Lending-Related Commitments				229,119				230,698				238,120				238,150				239,240				(1	)			(4	)
TOTAL COMMERCIAL CREDIT EXPOSURE (b)				413,885				405,901				412,878				424,284				414,929				2				—
CONSUMER
1-4 Family Residential Mortgages — First Liens				57,593				51,711				49,357				41,934				39,602				11				45
Home Equity				17,327				15,363				14,643				13,741				13,067				13				33
	1-4 Family Residential Mortgages			74,920				67,074				64,000				55,675				52,669				12				42
Credit Card — Reported (c)				16,578				17,509				19,677				20,508				21,036				(5	)			(21	)
Credit Card Securitizations (c)				33,789				32,377				30,722				29,843				27,499				4				23
	Credit Card — Managed			50,367				49,886				50,399				50,351				48,535				1				4
Auto Financings				38,151				36,865				33,615				30,612				26,666				3				43
Other Consumer (d)				6,689				7,577				7,524				7,197				7,014				(12	)			(5	)
TOTAL MANAGED CONSUMER LOANS				170,127				161,402				155,538				143,835				134,884				5				26
TOTAL CREDIT PORTFOLIO			$	584,012			$	567,303			$	568,416			$	568,119			$	549,813				3				6

(a)		Represents at June 30, 2003 the Enron-related letter of credit, which continues to be the subject of litigation and was classified in Other Assets.
(b)		Credit exposure excludes risk participations and does not reflect the benefit of credit derivative hedges or liquid collateral held against derivatives contracts.
(c)		At June 30, 2003 and March 31, 2003, credit card securitizations includes $1,019 million and $978 million, respectively, 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)		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.

Page 18

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J.P. MORGAN CHASE & CO. CREDIT-RELATED INFORMATION (CONT.) (in millions, except ratios)

																							Jun 30, 2003
																							Over (Under)
			Jun 30				Mar 31				Dec 31				Sep 30				Jun 30				Mar 31				Jun 30
			2003				2003				2002				2002				2002				2003				2002
NONPERFORMING ASSETS AND RATIOS
COMMERCIAL
Loans — U.S			$	1,810			$	2,029			$	2,059			$	1,865			$	1,402				(11	)%			29	%
Loans — Non-U.S				1,153				1,257				1,613				1,731				1,110				(8	)			4
Total Commercial Loans				2,963				3,286				3,672				3,596				2,512				(10	)			18
Derivative Receivables				276				277				289				169				144				—				92
Other Receivables (a)				108				108				108				1,130				1,130				—				(90	)
TOTAL COMMERCIAL CREDIT EXPOSURE				3,347				3,671				4,069				4,895				3,786				(9	)			(12	)
CONSUMER
1-4 Family Residential Mortgages — First Liens				251				249				259				265				226				1				11
Home Equity				52				54				53				49				49				(4	)			6
	1-4 Family Residential Mortgages			303				303				312				314				275				—				10
Credit Card — Reported				13				14				15				17				18				(7	)			(28	)
Credit Card Securitizations				—				—				—				—				—			NM				NM
	Credit Card — Managed			13				14				15				17				18				(7	)			(28	)
Auto Financings				111				112				118				108				103				(1	)			8
Other Consumer (b)				66				66				76				68				54				—				22
TOTAL MANAGED CONSUMER LOANS				493				495				521				507				450				—				10
Assets Acquired in Loan Satisfactions				227				225				190				140				142				1				60
TOTAL CREDIT PORTFOLIO (c)			$	4,067			$	4,391			$	4,780			$	5,542			$	4,378				(7	)			(7	)
TOTAL NONPERFORMING ASSETS TO TOTAL ASSETS				0.51	%			0.58	%			0.63	%			0.75	%			0.59	%		(7)bp				(8)bp
PAST DUE 90 DAYS AND OVER AND ACCRUING
COMMERCIAL
Loans — U.S			$	35			$	37			$	57			$	32			$	29				(5	)%			21	%
Loans — Non-U.S				—				2				—				1				2			NM				NM
Derivative Receivables				—				—				—				—				—			NM				NM
TOTAL COMMERCIAL CREDIT EXPOSURE				35				39				57				33				31				(10	)			13
CONSUMER
1-4 Family Residential Mortgages — First Liens				—				—				—				1				—			NM				NM
Home Equity				—				—				—				—				—			NM				NM
	1-4 Family Residential Mortgages			—				—				—				1				—			NM				NM
Credit Card — Reported (d)				229				269				451				447				505				(15	)			(55	)
Credit Card Securitizations (d)				792				808				630				526				457				(2	)			73
	Credit Card — Managed			1,021				1,077				1,081				973				962				(5	)			6
Auto Financings				—				—				—				—				—			NM				NM
Other Consumer (b)				21				22				22				26				37				(5	)			(43	)
TOTAL MANAGED CONSUMER LOANS				1,042				1,099				1,103				1,000				999				(5	)			4
TOTAL CREDIT PORTFOLIO			$	1,077			$	1,138			$	1,160			$	1,033			$	1,030				(5	)			5

(a)		Represents at June, 2003 the Enron-related letter of credit, which continues to be the subject of litigation and was classified in Other Assets.
(b)		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.
(c)		Nonperforming assets at June 30, 2003 have not been reduced for credit protection (single name credit default swaps and collateralized loan obligations) relating to nonperforming counterparties in amounts aggregating $97 million at June 30, 2003. Nonperforming assets exclude nonaccrual loans held for sale (“HFS”) of $45 million at June 30, 2003. HFS loans are carried at the lower of cost or market, and declines in value are recorded in Other Revenue.
(d)		At June 30, 2003 and March 31, 2003, credit card securitizations includes $141 million and $144 million, respectively, 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 19

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J.P. MORGAN CHASE & CO. CREDIT-RELATED INFORMATION (CONT.) (in millions, except ratios)

																								2QTR 2003
																								Over (Under)
				2QTR				1QTR				4QTR				3QTR				2QTR
				2003				2003				2002				2002				2002				1Q 2003				2Q 2002
NET CHARGE-OFFS
COMMERCIAL
Loans — U.S				$	185			$	118			$	226			$	307			$	181				57	%			2	%
Loans — Non-U.S					72				174				208				527				112				(59	)			(36	)
Total Commercial Loans					257				292				434				834				293				(12	)			(12	)
Lending-Related Commitments					—				—				212				—				—			NM				NM
TOTAL COMMERCIAL CREDIT EXPOSURE					257				292				646				834				293				(12	)			(12	)
CONSUMER
1-4 Family Residential Mortgages — First Liens					5				5				11				6				21				—				(76	)
Home Equity					6				2				4				1				—				200			NM
	1-4 Family Residential Mortgages				11				7				15				7				21				57				(48	)
Credit Card — Reported					268				275				286				333				433				(3	)			(38	)
Credit Card Securitizations					480				457				430				354				334				5				44
		Credit Card — Managed			748				732				716				687				767				2				(2	)
Auto Financings					39				46				47				47				29				(15	)			34
Other Consumer (a)					39				50				54				45				45				(22	)			(13	)
TOTAL MANAGED CONSUMER LOANS					837				835				832				786				862				—				(3	)
TOTAL CREDIT PORTFOLIO				$	1,094			$	1,127			$	1,478			$	1,620			$	1,155				(3	)			(5	)
NET CHARGE-OFF RATES — ANNUALIZED
COMMERCIAL
Loans — U.S					1.40	%			0.86	%			1.61	%			1.95	%			1.13	%		54bp				27bp
Loans — Non-U.S					0.88				2.07				2.30				6.66				1.24				(119	)			(36	)
Total Commercial Loans					1.20				1.32				1.88				3.53				1.17				(12	)			3
Lending-Related Commitments					—				—				0.35				—				—				—				—
TOTAL COMMERCIAL CREDIT EXPOSURE					0.33				0.37				0.78				1.00				0.34				(4	)			(1	)
CONSUMER
1-4 Family Residential Mortgages — First Liens					0.04				0.04				0.09				0.06				0.20				—				(16	)
Home Equity					0.15				0.05				0.11				0.03				—				10				15
	1-4 Family Residential Mortgages				0.06				0.04				0.10				0.05				0.16				2				(10	)
Credit Card — Reported					6.22				6.17				5.90				6.27				7.67				5				(145	)
Credit Card Securitizations					5.90				5.82				5.58				4.95				5.30				8				60
		Credit Card — Managed			6.01				5.95				5.70				5.51				6.42				6				(41	)
Auto Financings					0.41				0.53				0.58				0.64				0.43				(12	)			(2	)
Other Consumer (a)					2.15				2.54				2.77				2.53				2.35				(39	)			(20	)
TOTAL MANAGED CONSUMER LOANS					2.01				2.14				2.20				2.23				2.53				(13	)			(52	)
TOTAL MANAGED LOANS					1.74				1.85				2.08				2.75				1.96				(11	)			(22	)
TOTAL CREDIT PORTFOLIO					0.91				0.95				1.22				1.36				0.97				(4	)			(6	)

[Additional columns below]

[Continued from above table, first column(s) repeated]

												YTD 2003
				YEAR TO DATE								Over (Under)
				2003				2002				2002
NET CHARGE-OFFS
COMMERCIAL
Loans — U.S				$	303			$	388				(22	)%
Loans — Non-U.S					246				225				9
Total Commercial Loans					549				613				(10	)
Lending-Related Commitments					—				—			NM
TOTAL COMMERCIAL CREDIT EXPOSURE					549				613				(10	)
CONSUMER
1-4 Family Residential Mortgages — First Liens					10				32				(69	)
Home Equity					8				2				300
	1-4 Family Residential Mortgages				18				34				(47	)
Credit Card — Reported					543				770				(29	)
Credit Card Securitizations					937				655				43
		Credit Card — Managed			1,480				1,425				4
Auto Financings					85				67				27
Other Consumer (a)					89				90				(1	)
TOTAL MANAGED CONSUMER LOANS					1,672				1,616				3
TOTAL CREDIT PORTFOLIO				$	2,221			$	2,229				—
NET CHARGE-OFF RATES — ANNUALIZED
COMMERCIAL
Loans — U.S					1.13	%			1.18	%		(5)bp
Loans — Non-U.S					1.48				1.29				19
Total Commercial Loans					1.26				1.22				4
Lending-Related Commitments					—				—				—
TOTAL COMMERCIAL CREDIT EXPOSURE					0.35				0.36				(1	)
CONSUMER
1-4 Family Residential Mortgages — First Liens					0.04				0.15				(11	)
Home Equity					0.10				0.03				7
	1-4 Family Residential Mortgages				0.05				0.12				(7	)
Credit Card — Reported					6.19				6.71				(52	)
Credit Card Securitizations					5.85				5.61				24
		Credit Card — Managed			5.97				6.15				(18	)
Auto Financings					0.47				0.50				(3	)
Other Consumer (a)					2.35				2.25				10
TOTAL MANAGED CONSUMER LOANS					2.07				2.38				(31	)
TOTAL MANAGED LOANS					1.79				1.89				(10	)
TOTAL CREDIT PORTFOLIO					0.93				0.93				—

(a)

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.

Page 20

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J.P. MORGAN CHASE & CO. CREDIT-RELATED INFORMATION (CONT.) (in millions, except ratios)

																							2QTR 2003
																							Over (Under)
			2QTR				1QTR				4QTR				3QTR				2QTR
			2003				2003				2002				2002				2002				1Q 2003				2Q 2002
SUMMARY OF CHANGES IN THE ALLOWANCE
LOANS:
Beginning Balance			$	5,215			$	5,350			$	5,263			$	5,006			$	5,005				(3	)%			4	%
	Net Charge-Offs			(614	)			(670	)			(836	)			(1,266	)			(821	)			8				25
	Provision for Loan Losses			487				670				921				1,544				821				(27	)			(41	)
	Other			(1	)			(135	)			2				(21	)			1				99			NM
Ending Balance			$	5,087			$	5,215			$	5,350			$	5,263			$	5,006				(2	)			2
LENDING-RELATED COMMITMENTS:
Beginning Balance			$	436			$	363			$	573			$	281			$	281				20				55
	Net Charge-Offs			—				—				(212	)			—				—			NM				NM
	Provision for Lending-Related Commitments			(52	)			73				—				292				—			NM				NM
	Other			—				—				2				—				—			NM				NM
Ending Balance			$	384			$	436			$	363			$	573			$	281				(12	)			37
ALLOWANCE COMPONENTS AND RATIOS
LOANS:
Commercial — Specific			$	1,371			$	1,528			$	1,603			$	1,525			$	1,212				(10	)%			13	%
Commercial — Expected				548				590				613				554				594				(7	)			(8	)
	Total Commercial			1,919				2,118				2,216				2,079				1,806				(9	)			6
Consumer Expected				2,226				2,255				2,360				2,365				2,387				(1	)			(7	)
	Total Specific and Expected			4,145				4,373				4,576				4,444				4,193				(5	)			(1	)
Residual Component				942				842				774				819				813				12				16
	Total Allowance for Loans Losses		$	5,087			$	5,215			$	5,350			$	5,263			$	5,006				(2	)			2
LENDING-RELATED COMMITMENTS:
Commercial — Specific			$	252			$	305			$	237			$	426			$	165				(17	)			53
Commercial — Expected				85				84				87				83				78				1				9
	Total Specific and Expected			337				389				324				509				243				(13	)			39
Residual Component				47				47				39				64				38				—				24
Total Allowance for Lending-Related Commitments			$	384			$	436			$	363			$	573			$	281				(12	)			37
Allowance for Loan Losses to Total Loans				2.24	%			2.40	%			2.47	%			2.49	%			2.36	%		(16)bp				(12)bp
Allowance for Loan Losses to Total Nonperforming Loans				147				138				128				128				169				900				(2,200	)
Allowance for Loan Losses to Total Nonperforming Assets				125				119				112				95				114				600				1,100
CREDIT COSTS
Loans:
	Commercial		$	58			$	194			$	526			$	1,107			$	344				(70	)%			(83	)%
	Consumer			329				411				395				438				391				(20	)			(16	)
Total Specific and Expected				387				605				921				1,545				735				(36	)			(47	)
	Residual Component			100				65				—				(1	)			86				54				16
Total Provision for Loan Losses				487				670				921				1,544				821				(27	)			(41	)
Lending-Related Commitments:
	Commercial			(52	)			65				25				266				(1	)		NM				NM
	Residual Component			—				8				(25	)			26				1			NM				NM
Total Provision for Lending-Related Commitments				(52	)			73				—				292				—			NM				NM
Securitized Credit Losses				480				457				430				354				334				5				44
Total Managed Credit Costs			$	915			$	1,200			$	1,351			$	2,190			$	1,155				(24	)			(21	)

Page 21

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J.P. MORGAN CHASE & CO. CREDIT-RELATED INFORMATION (CONT.)

Page 22

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J.P. MORGAN CHASE & CO. CREDIT-RELATED INFORMATION (CONT.) (in millions, except ratios)

				Jun 30								Mar 31								Dec 31								Sep 30
				2003								2003								2002								2002
				$				%				$				%				$				%				$				%
TELECOM AND RELATED INDUSTRIES (a)
Credit Exposure (b)				$	16,059				100	%		$	16,739				100	%		$	16,770				100	%		$	18,208				100	%
Risk Profile of Credit Exposure:
Investment-Grade					10,715				67	%			11,061				66	%			9,376				56	%			10,107				56	%
Noninvestment-Grade:
	Noncriticized				3,201				20	%			3,381				20	%			5,076				30	%			4,928				27	%
	Criticized Performing				1,738				11	%			1,756				11	%			1,487				9	%			2,421				13	%
	Criticized Nonperforming (c)				405				2	%			541				3	%			831				5	%			752				4	%
CABLE INDUSTRY
Credit Exposure (b)				$	5,143				100	%		$	5,312				100	%		$	5,982				100	%		$	5,427				100	%
Risk Profile of Credit Exposure:
Investment-Grade					1,909				37	%			2,112				40	%			2,681				45	%			1,913				35	%
Noninvestment-Grade:
	Noncriticized				908				18	%			977				18	%			1,096				18	%			1,385				26	%
	Criticized Performing				1,833				36	%			1,717				32	%			1,673				28	%			1,735				32	%
	Criticized Nonperforming (c)				493				9	%			506				10	%			532				9	%			394				7	%
MERCHANT ENERGY AND RELATED INDUSTRIES (d)
Credit Exposure (b)				$	5,915				100	%		$	6,170				100	%		$	6,230				100	%		$	6,241				100	%
Risk Profile of Credit Exposure:
Investment-Grade					3,996				68	%			3,744				61	%			3,580				57	%			3,470				56	%
Noninvestment-Grade:
	Noncriticized				1,214				20	%			1,066				17	%			423				7	%			1,196				19	%
	Criticized Performing				463				8	%			1,156				19	%			1,849				30	%			1,405				22	%
	Criticized Nonperforming (c)				242				4	%			204				3	%			378				6	%			170				3	%

[Additional columns below]

[Continued from above table, first column(s) repeated]

												Jun 30, 2003
												Over (Under)
				Jun 30								Mar 31				Jun 30
				2002								2003				2002
				$				%
TELECOM AND RELATED INDUSTRIES (a)
Credit Exposure (b)				$	19,973				100	%			(4	)%			(20	)%
Risk Profile of Credit Exposure:
Investment-Grade					11,677				58	%			(3	)			(8	)
Noninvestment-Grade:
	Noncriticized				5,865				29	%			(5	)			(45	)
	Criticized Performing				2,116				11	%			(1	)			(18	)
	Criticized Nonperforming (c)				315				2	%			(25	)			29
CABLE INDUSTRY
Credit Exposure (b)				$	4,556				100	%			(3	)			13
Risk Profile of Credit Exposure:
Investment-Grade					1,371				30	%			(10	)			39
Noninvestment-Grade:
	Noncriticized				1,878				41	%			(7	)			(52	)
	Criticized Performing				1,209				27	%			7				52
	Criticized Nonperforming (c)				98				2	%			(3	)			403
MERCHANT ENERGY AND RELATED INDUSTRIES (d)
Credit Exposure (b)				$	6,201				100	%			(4	)			(5	)
Risk Profile of Credit Exposure:
Investment-Grade					3,682				59	%			7				9
Noninvestment-Grade:
	Noncriticized				2,141				35	%			14				(43	)
	Criticized Performing				358				6	%			(60	)			29
	Criticized Nonperforming (c)				20				0	%			19			NM

Note:

The risk profile is based on JPMorgan Chase’s internal risk ratings, which generally correspond to the following ratings as defined by Standard & Poor’s / Moody’s: Investment Grade: AAA / Aaa to BBB- / Baa3 Noninvestment Grade: BB+ / Ba1 to B- / B3 Criticized: CCC+ / Caa1 & below

(a)		Telecom and Related Industries includes other companies with an interdependence upon the telecommunications sector.
(b)		Credit exposure excludes risk participations and does not reflect the benefit of credit derivative hedges or liquid collateral held against derivatives contracts.
(c)		Nonperforming assets exclude nonaccrual HFS loans, which are carried at the lower of cost or market and declines in value are recorded in Other Revenue.
(d)		These amounts exclude Enron-related exposure.

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J.P. MORGAN CHASE & CO. CAPITAL

																								2QTR 2003
																								Over (Under)
				2QTR				1QTR				4QTR				3QTR				2QTR
				2003				2003				2002				2002				2002				1Q 2003				2Q 2002
AVAILABLE VERSUS REQUIRED ECONOMIC CAPITAL
(in billions)
Common Stockholders’ Equity				$	42.8	(a)		$	41.9			$	42.0			$	42.2			$	40.9				2	%			5	%
Required Economic Capital
	Credit Risk				14.4	(a)			15.1				14.7				13.5				13.5				(5	)			7
	Market Risk				4.3	(a)			4.2				4.1				4.8				4.9				2				(12	)
	Operational Risk				3.5	(a)			3.5				3.5				3.5				3.5				—				—
	Business Risk				1.7	(a)			1.7				1.8				1.8				1.8				—				(6	)
	Private Equity Risk				5.4	(a)			5.4				5.5				5.7				5.9				—				(8	)
		Economic Risk Capital			29.3	(a)			29.9				29.6				29.3				29.6				(2	)			(1	)
	Goodwill/Intangibles				8.9	(a)			8.9				8.9				8.9				8.9				—				—
	Asset Capital Tax				3.9	(a)			4.0				3.9				3.8				3.9				(3	)			—
		Capital Against Nonrisk Factors			12.8	(a)			12.9				12.8				12.7				12.8				(1	)			—
Diversification Effect					(5.0	)(a)			(5.0	)			(4.9	)			(5.3	)			(5.4	)			—				7
Total Required Economic Capital					37.1	(a)			37.8				37.5				36.7				37.0				(2	)			—
Capital In Excess of Required Economic Capital				$	5.7	(a)		$	4.1			$	4.5			$	5.5			$	3.9				39				46
COMMON SHARES OUTSTANDING
(in millions)
Basic Weighted-Average Shares Outstanding					2,005.6				1,999.8				1,990.0				1,986.0				1,982.6				—				1
Diluted Weighted-Average Shares Outstanding					2,050.6				2,021.9				2,008.5				2,005.8				2,016.0				1				2
Common Shares Outstanding — at Period End					2,035.1				2,030.0				1,998.7				1,995.9				1,993.4				—				2
CASH DIVIDENDS DECLARED PER SHARE				$	0.34			$	0.34			$	0.34			$	0.34			$	0.34				—				—
BOOK VALUE PER SHARE					21.53				20.73				20.66				21.26				20.93				4				3
SHARE PRICE
	High			$	36.52			$	28.29			$	26.14			$	33.68			$	38.75				29				(6	)
	Low				23.75				20.13				15.26				17.86				30.15				18				(21	)
	Close				34.18				23.71				24.00				18.99				33.92				44				1
CAPITAL RATIOS
(in millions, except ratios)
Tier 1 Capital				$	41,000	(a)		$	38,442			$	37,570			$	38,459			$	38,949				7				5
Total Capital					59,000	(a)			55,702				54,495				55,024				55,893				6				6
Risk-Weighted Assets					483,000	(a)			455,549				455,948				442,586				441,623				6				9
Adjusted Average Assets					751,000	(a)			764,677				741,862				711,703				723,566				(2	)			4
Tier 1 Capital Ratio					8.5	%(a)			8.4	%			8.2	%			8.7	%			8.8	%		10bp				(30)bp
Total Capital Ratio					12.2	(a)			12.2				12.0				12.4				12.7				—				(50	)
Tier 1 Leverage Ratio					5.5	(a)			5.0				5.1				5.4				5.4				50				10

[Additional columns below]

[Continued from above table, first column(s) repeated]

												YTD 2003
				YEAR TO DATE								Over (Under)
				2003				2002				2002
AVAILABLE VERSUS REQUIRED ECONOMIC CAPITAL
(in billions)
Common Stockholders’ Equity				$	42.3	(a)		$	40.7				4	%
Required Economic Capital
	Credit Risk				14.7	(a)			13.9				6
	Market Risk				4.3	(a)			5.1				(16	)
	Operational Risk				3.5	(a)			3.5				—
	Business Risk				1.7	(a)			1.8				(6	)
	Private Equity Risk				5.4	(a)			5.9				(8	)
		Economic Risk Capital			29.6	(a)			30.2				(2	)
	Goodwill/Intangibles				8.9	(a)			8.8				1
	Asset Capital Tax				4.0	(a)			3.8				5
		Capital Against Nonrisk Factors			12.9	(a)			12.6				2
	Diversification Effect				(5.1	)(a)			(5.5	)			7
	Total Required Economic Capital				37.4	(a)			37.3				—
	Capital In Excess of Required Economic Capital			$	4.9	(a)		$	3.4				44
COMMON SHARES OUTSTANDING
(in millions)
Basic Weighted-Average Shares Outstanding					2,002.8				1,980.4				1
Diluted Weighted-Average Shares Outstanding					2,036.3				2,011.0				1
Common Shares Outstanding — at Period End					2,035.1				1,993.4				2
CASH DIVIDENDS DECLARED PER SHARE				$	0.68			$	0.68				—
BOOK VALUE PER SHARE
SHARE PRICE
	High			$	36.52			$	39.68				(8	)
	Low				20.13				26.70				(25	)

(a) Estimated

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J.P. MORGAN CHASE & CO. MARKET RISK – AVERAGE VAR

																							2QTR 2003
																							Over (Under)
			2QTR				1QTR				4QTR				3QTR				2QTR
(in millions)			2003				2003				2002				2002				2002				1Q 2003				2Q 2002
Trading Portfolio:
	Interest Rate		$	62.4			$	54.2			$	66.5			$	69.2			$	71.6				15	%			(13	)%
	Foreign Exchange			15.1				17.3				14.0				11.6				11.3				(13	)			34
	Equities			9.1				11.0				8.5				18.3				18.4				(17	)			(51	)
	Commodities			3.0				2.2				2.1				2.8				4.2				36				(29	)
	Hedge Fund Investment			4.5				3.5				3.4				3.4				2.9				29				55
Less: Portfolio Diversification				(35.3	)			(34.5	)			(27.5	)			(32.7	)			(30.6	)			(2	)			(15	)
Total Trading VAR			$	58.8			$	53.7			$	67.0			$	72.6			$	77.8				9				(24	)

[Additional columns below]

[Continued from above table, first column(s) repeated]

											YTD 2003
			YEAR TO DATE								Over (Under)
(in millions)			2003				2002				2002
Trading Portfolio:
	Interest Rate		$	58.4			$	67.6				(14	)%
	Foreign Exchange			16.1				10.3				56
	Equities			10.1				15.4				(34	)
	Commodities			2.6				4.7				(45	)
	Hedge Fund Investment			4.0				3.0				33
Less: Portfolio Diversification				(34.8	)			(27.5	)			(27	)
Total Trading VAR			$	56.4			$	73.5				(23	)

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J.P. MORGAN CHASE & CO. Glossary of Terms

Assets Under Management: Represent assets actively managed by Investment Management & Private Banking on behalf of institutional 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, restricted stock, brokerage, administration and deposit accounts.

Average Economic Capital: Represents the portion of average common stockholders’ equity allocated to the business segments. The total average economic capital of all business segments equals the total average common stockholders’ equity of the Firm.

Average Managed Assets: Excludes the impact of credit card securitizations.

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.

JPMorgan Partners (“JPMP”): JPMorgan Chase’s 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 JPMP’s 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 JPMorgan Chase’s balance sheet plus securitized credit card receivables.

NM: Not meaningful

Operating Basis or Operating Earnings: Represents 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 the operating revenues.

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.

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 less preferred dividends and an explicit charge for capital.

Special Items: Includes merger and restructuring costs and special items.

Tangible Return on Economic Capital: Excludes the impact of goodwill on operating earnings and average common equity.

Tangible Shareholder Value Added: Excludes the impact of goodwill on operating earnings and capital charges.

Trading-Related Revenue: Includes net interest income (“NII”) attributable to trading activities.

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. VAR is calculated using a one-day time horizon and a 99% confidence level.

Page 26