F I N A N C I A L R E S U L T S

Transcription

1 Q5 April, 05

2 Q5 Financial highlights ROTCE % CET ratio 0.6% Overhead ratio 60% Net payout ratio LTM 5% Q5 net income of $5.9B and EPS of $.5 Revenue of $.8B Adjusted expense of $.B 5 and adjusted overhead ratio of 57% 5 Fortress balance sheet Basel III Advanced CET capital of $67B Core loans 6 up 0% YoY and % QoQ Delivered strong capital return ~$.B 7 of net capital returned to shareholders in Q5, including $.6B of net repurchases 8 CCAR non-objection received March 05 Board intends to increase common dividend to $0., effective Q5 9 $6.B gross repurchase authorization Q5 Q6 Significant items ($mm, excluding EPS) Pretax Net income 0 EPS 0 Firmwide Legal Expense ($687) ($87) ($0.) See note on slide 9 Represents the estimated common equity Tier ( CET ) capital and ratio under the Basel III Advanced Fully Phased-in capital rules to which the Firm will be subject to as of January, 09. See note on slide 9 See note on slide 9 Last twelve months ( LTM ). Net of employee issuances 5 See note on slide 9 6 See note 9 on slide 9 7 Net of employee issuance 8 The repurchase amount is presented on a settlement-date basis 9 Subject to the Board s approval at the customary times those dividends are declared 0 Assumes a tax rate of 8% for items that are tax deductible

3 Q5 Financial results $mm, excluding EPS $ O/(U) Q5 Q Q Revenue (FTE) $,80 $,7 $967 Expense,88 (56) 7 Credit costs Reported net income $5,9 $98 $65 Net income applicable to common stockholders $5,5 $96 $559 Reported EPS $.5 $0.6 $0.7 ROE % 9% 0% Q5 ROE O/H ratio ROTCE, 7% 58% CIB 6% 59% CB 7% % Overhead ratio, AM % 7% Memo: Adjusted expense $,96 ($99) ($0) Memo: Adjusted overhead ratio, 57% 6% 6% Note: Certain prior period amounts have been revised; for further discussion, see page of the Earnings Release Financial Supplement See note on slide 9 Actual numbers for all periods, not over/(under) See note on slide 9 See note on slide 9

4 Fortress balance sheet and returns $B, except where noted Basel III Advanced Fully Phased-In Q5 Basel III Q5 Q Q CET Standardized Fully $67 $65 $56 CET ratio 0.8% 0.6% 0.% 9.5% Tier capital $89 $85 $7 Tier capital ratio.0%.% 0.% Total capital $0 $06 $9 Total capital ratio.%.7%.7% Risk-weighted assets $,57 $,69 $,67 Firm SLR 5.7% 5.6% 5.% Bank SLR HQLA $6 $600 $58 Total assets (EOP) $,577 $,57 $,77 Tangible common equity $69 $66 $58 Tangible book value per share 5 $5.5 $.60 $.65 Firm is compliant with U.S. LCR 6 and Basel final NSFR 7 Preferred stock issuance: $.B Phased-in of Firmwide total credit reserves of $.7B; nonperforming loan loss coverage ratio (ex. credit card) of 06% 8 Note: Certain prior period amounts have been revised; for further discussion, see page of the Earnings Release Financial Supplement See notes on non-gaap financial measures on slide 9 Estimated for Q5. Represents the capital rules the Firm will be subject to as of January, 09. See note on slide 9 Estimated for Q5. See note on slide 9. Q reflects the U.S. Final Leverage Ratio NPR issued on April 8, 0 High quality liquid assets ( HQLA ) is the estimated amount of assets that qualify for inclusion in the U.S. liquidity coverage ratio ( LCR ) for Q5 and Q; and for Q represents amount that qualified under Basel III LCR 5 See note on slide 9 6 Estimated for Q5. Based on the U.S. LCR rules, which became effective January, 05 7 Estimate as of Q 8 See note 5 on slide 9

5 Balance sheet and NII/NIM QoQ change Assets: Average and EOP ($B) Average EOP $6B $B $,5 $,5 $,557 $,557 $,57 $,57 $,577 $,577 : Average and EOP ($B) Average EOP Cash¹ $9 Cash¹ $9 Cash¹ $505 Cash¹ $505 $66 Cash¹ $5 Cash¹ $5 Cash¹ $59 Cash¹ $59 $7 $,99 $,99 $8B $5B $,7 $,7 $,6 $,6 $,68 $,68 $,99 $,7 $,7 $,6 $,6 $,68 $,68 $,99 Non-cash Non-cash assets assets $,07 $,07 Non-cash Non-cash assets assets $,05 $,05 ($0) Non-cash Non-cash assets assets $,06 $,06 ex. $80 Non-cash Non-cash ex. assets assets $80 $,08 $,08 ($) ex. ex. $80 $8 ex. ex. $80 $8 ex. $8 ex. $8 $ ex. $86 ex. $86 ex. ex. $86 $87 ex. ex. $86 $87 ex. ($) $87 ex. $87 $98 $98 $98 $98 $5 $5 $5 $5 $ $50 $50 $50 $50 $5 $5 $5 $8 $5 Q Q Q5 Q5 Q Q Q5 Q5 Balance sheet commentary Average balance sheet ~$6B higher QoQ and flat on a spot basis Growth in cash balances largely driven by higher deposits EOP deposit balances flat QoQ, with mix shift into more stable deposits Increase of ~$8B in deposits Decline of ~$B in other LOB deposits predominantly nonoperating deposits Q Q Q5 Q5 Q Q Q5 Q5 Q Q Q5 Q5 Q Q Q5 Q5 NII/NIM commentary Higher cash balances primary driver of Firm NIM compression of 7 bps QoQ to.07% Firm NII decrease of $7mm QoQ primarily driven by day count and lower balances in investment securities and trading assets Note: Numbers may not sum due to rounding Includes cash and due from banks and deposits with banks Managed basis. See note on slide 9

6 Consumer & Community Banking $mm $ O/(U) Q5 Q Q Net interest income $6,968 ($60) ($) Noninterest revenue,76 (85) 0 Revenue 0,70 (5) 70 Expense 6,90 () (7) Net charge-offs,05 () () Change in allowance () 6 Credit costs 90 (0) Net income $,9 $0 $8 Key drivers/statistics ($B) See note on slide 9 Actual numbers for all periods, not over/(under) 05 includes $5.0B of capital held at the level related to legacy mortgage servicing matters; 0 includes $.0B Based on FDIC 0 Summary of survey per SNL Financial 5 Based on J.D. Power 0 Mortgage Servicing Study 6 Based on disclosures by peers and internal estimates as of Q 7 Based on Phoenix Credit Card Monitor for the period January 0 to February 05; based on card accounts and revolving balance dollars 8 Based on Visa data as of Q for consumer and business credit card sales volume 9 Based on Nilson data as of 0 and internal estimates 0 Based on the Internet Retailer s 05 Leading Vendors to the Top 000 report Includes employees and contractors Leadership positions Consumer & Business Banking # in deposit growth for the third consecutive year # in customer satisfaction among the largest U.S. banks for the third consecutive year, according to ACSI # in consumer retail banking nationally for the third consecutive year, according to TNS, and winner of four TNS Choice Awards in 05 Mortgage Banking # in customer satisfaction for mortgage servicing by J.D. Power 5 Card, Commerce Solutions & Auto EOP Equity ROE $5.0 7% $5.0 6% $5.0 5% # credit card issuer in the U.S. based on loans outstanding 6 # U.S. co-brand credit card issuer 7 Overhead ratio # global Visa issuer 8 Average loans $98. $9. $89. # wholly-owned merchant acquirer 9 with ~50% of U.S. ecommerce Average deposits Client investment assets (EOP) volume 0 Number of branches 5,570 5,60 5,6 # in total U.S. credit and debit payments volume 9 Active mobile customers (000's) 9,96 9,08 6,05 households (mm) Headcount and operating leverage Total headcount down ~,900 YTD Reduced expense by $7mm or % YoY overhead ratio of 58% 5

7 Consumer & Community Banking Consumer & Business Banking $mm Actual numbers for all periods, not over/(under) $ O/(U) Q5 Q Q Net interest income $,609 ($) ($7) Noninterest revenue,79 (77) 77 Revenue,58 (0) (0) Expense,958 (68) (07) Credit costs 60 (8) (6) Net income $88 ($) $77 Key drivers/statistics ($B) EOP Equity $.5 $.0 $.0 ROE 8% % 7% Average total deposits $97.6 $8.8 $58.5 Deposit margin.99%.%.7% Client investment assets (EOP) $9. $.5 $95.7 Net new investment assets.8.. Business Banking loan originations Business Banking loan balances (Avg) Financial performance Net income of $88mm, up 0% YoY and down % QoQ Net revenue of $.B, down % YoY and % QoQ on spread compression, day count and seasonality Expense down % YoY and % QoQ on branch efficiencies Key drivers Average total deposits of $97.6B, up 9% YoY and % QoQ Deposit margin of.99%, down 8 bps YoY and bps QoQ Record client investment assets of $9.B, up % YoY and % QoQ Business Banking loan originations up % YoY and % QoQ Average Business Banking loans up 6% YoY and % QoQ 6

8 Consumer & Community Banking Mortgage Banking $mm Excludes purchased credit-impaired (PCI) write-offs of $55mm, $7mm, and $6mm for Q5, Q and Q, respectively. See note 5 on slide 9 Actual numbers for all periods, not over/(under) Firmwide mortgage origination volume was $6.6B, $.B, and $8.B, for Q5, Q and Q, respectively. Excludes the impact of PCI loans. The allowance for PCI loan losses was $.B at the end of both Q5 and Q and $.B at the end of Q, respectively. See note 5 on slide 9 5 See note 6 on slide 9 $ O/(U) Q5 Q Q Net interest income $,056 $6 ($) Noninterest revenue 69 (5) 8 Revenue,79 (6) 5 Expense,9 (77) (8) Net charge-offs 0 (9) (7) Change in allowance (00) 00 Credit costs (9) 7 Net income $6 ($) $9 Key drivers/statistics ($B) EOP equity $6.0 $8.0 $8.0 ROE 7% 7% % Mortgage originations $.7 $.0 $7.0 Average NCI owned portfolio EOP total loans serviced ALL/nonaccrual loans retained 8% 9% 6% Net charge-off rate, Financial performance Net income of $6mm Excluding loan loss reserve releases 5, up $56mm YoY Revenue of $.7B, up 9% YoY, driven by lower MSR losses, partially offset by lower servicing revenue; down 7% QoQ on lower repurchase benefit and lower servicing revenue Expenses of $.B, down % YoY and 6% QoQ on lower headcount Credit costs up $7mm YoY, driven by lower loan loss reserve releases, largely offset by lower net charge-offs Key drivers Mortgage originations of $.7B, up 5% YoY and 7% QoQ Net charge-off rate of 0bps, down 5bps YoY and bps QoQ Average NCI owned portfolio of $.6B, up 8% YoY and 5% QoQ EOP total loans serviced of $9.B, down 7% YoY and % QoQ 7

9 Consumer & Community Banking Card, Commerce Solutions & Auto $mm Note: Commerce Solutions, formerly known as Merchant Services, includes Chase Paymentech, ChaseNet and Chase Offers businesses Actual numbers for all periods, not over/(under) Excludes Commercial Card For adjusted net charge-off trend see slide 6 in appendix See note 6 on slide 9 Q5 Q Q Net interest income,0 (6) 6 Noninterest revenue,9 Revenue $,597 $8 $59 Expense,0 (76) Net charge-offs 89 (08) () Change in allowance (5) 5 5 Credit costs Net income $,065 $85 ($) EOP equity ($B) $8.5 $9.0 $9.0 ROE % 0% % Card Services Key drivers/statistics ($B) Average loans $5.0 $7. $. Sales volume Net revenue rate.9%.7%.9% Net charge-off rate day delinquency rate...6 # of accounts with sales activity (mm) Commerce Solutions Key drivers/statistics ($B) Merchant processing volume $. $0. $95. # of total transactions (B) Auto Key drivers/statistics ($B) $ O/(U) Average loans $55.0 $5.6 $5.7 Originations Financial performance Net income of $.B Excluding loan loss reserve releases, up % YoY Revenue of $.6B, up % YoY and % QoQ Noninterest expense of $.0B, up % YoY from higher Auto lease depreciation and down % QoQ on lower marketing expense Credit costs up % YoY, driven by lower loan loss reserve releases, largely offset by lower net charge-offs Key drivers Card Services Average loans of $5.0B, up % YoY and down seasonally % QoQ Sales volume of $.8B, up 8% YoY and down seasonally 9% QoQ Net charge-off rate of.6%, down from.9% in the prior year and.69% in the prior quarter Commerce Solutions Merchant processing volume of $.B, up % YoY and down seasonally % QoQ Transaction volume of 9.8B, up 8% YoY and down seasonally 5% QoQ Auto Average loans up % YoY and % QoQ Originations up 9% YoY and 6% QoQ 8

10 Corporate & Investment Bank $mm $ O/(U) Q5 Q Q Corporate & Investment Bank revenue $9,58 $,99 $70 Investment banking fees,76 (50) 7 Treasury Services,0 (9) (0) Lending Total Banking,6 0 5 Fixed Income Markets,065,55 76 Equity Markets, Securities Services 9 (60) (88) Credit Adjustments & Other (5) 00 Total Markets & Investor Services 6,56,79 5 Expense 5, Credit costs () 8 (80) Net income $,57 $,565 $ Key drivers/statistics ($B) EOP equity $6.0 $6.0 $6.0 ROE 6% 5% % Overhead ratio Comp/revenue 7 EOP loans $0.6 $0.0 $0.7 Average client deposits..8.6 Assets under custody ($T) ALL/EOP loans ex-conduits and trade,.6%.8%.8% Net charge-off/(recovery) rate (0.05) (0.0) Average VaR ($mm) $ $0 $ Note: Certain prior period amounts have been revised; for further discussion, see page of the Earnings Release Financial Supplement See note on slide 9 Actual numbers for all periods, not over/(under) ALL/EOP loans as reported was.06%,.07%, and.% for Q5, Q, and Q, respectively See note 7 on slide 9 Financial performance Net income of $.5B on revenue of $9.6B ROE of 6% Banking revenue IB fees of $.8B, up % YoY, with strength across products Ranked # in Global IB fees for Q5 Treasury Services revenue of $.0B, down % YoY Lending revenue of $5mm, up 9% YoY, largely reflecting higher gains on securities received from restructurings Markets & Investor Services revenue Markets revenue of $5.7B, up 9% YoY; ex-business simplification, up 0%, primarily driven by: Fixed Income Markets of $.B, up 5% YoY; ex-business simplification, up 0%, primarily driven by higher revenues in Currencies & Emerging Markets and Rates Equity Markets of $.6B, up % YoY, showing strength across derivatives and cash Securities Services revenue of $9mm, down 9% YoY Credit Adjustments & Other loss of $5mm, primarily driven by valuation refinements as well as net FVA/DVA losses Expense of $5.7B, up % YoY, driven by higher legal expense and performance-based compensation, largely offset by business simplification 9

11 Commercial Banking $mm $ O/(U) Q5 Q Q Revenue $,7 ($8) $6 Middle Market Banking 677 (5) () Corporate Client Banking Commercial Term Lending 08 (5) (6) Real Estate Banking 6 () () Other 77 () (6) Expense 709 Credit costs Net income $598 ($95) $ Key drivers/statistics ($B) EOP equity $.0 $.0 $.0 ROE 7% 9% 7% Overhead ratio 8 Gross IB Revenue ($mm) $75 $557 $7 Average loans EOP loans Average client deposits Allowance for loan losses Nonaccrual loans Net charge-off/(recovery) rate 0.0% 0.08% (0.0)% ALL/loans See note on slide 9 Effective January, 05, mortgage warehouse lending clients were transferred from Middle Market Banking to Corporate Client Banking. Prior period revenue, period-end loans, and average loans by client segment were revised to conform with current period presentation Actual numbers for all periods, not over/(under) Loans held-for-sale and loans at fair value were excluded when calculating the loan loss coverage ratio and net charge-off/(recovery) rate. See note 5 on slide 9 5 CB s Commercial and Industrial (C&I) grouping is internally defined to include certain client segments (Middle Market, which includes Nonprofit Clients and Corporate Client Banking) and does not align with regulatory definitions 6 CB's Commercial Real Estate (CRE) grouping is internally defined to include certain client segments (Real Estate Banking, Commercial Term Lending and Community Development Banking) and does not align with regulatory definitions Financial performance Net income of $598mm, up % YoY and down % QoQ Revenue of $.7B, up % YoY and down % QoQ Record gross investment banking revenue of $75mm, up 68% YoY and 5% QoQ Expense of $709mm, up % YoY, largely reflecting higher investment in controls Credit costs of $6mm Net charge-off rate of 0.0%, 9th consecutive quarter of single digit NCO rate or net recoveries Reserves include build related to Oil & Gas portfolio EOP loan balances up % YoY and % QoQ C&I 5 loans up % QoQ CRE 6 loans up % QoQ Average client deposits of $0.0B, up % YoY and % QoQ 0

12 Asset Management $mm $ O/(U) Q5 Q Q Revenue $,005 ($95) $05 Global Investment Management,5 (07) 5 Global Wealth Management,7 90 Expense,75 (5) 00 Credit costs Net income $50 ($8) $8 Key drivers/statistics ($B) EOP equity $9.0 $9.0 $9.0 ROE % % 0% Pretax margin Assets under management (AUM) $,759 $,7 $,68 Client assets,05,87,9 Average loans EOP loans Average deposits See note on slide 9 Actual numbers for all periods, not over/(under) Financial performance Net income of $50mm, up % YoY and down 7% QoQ Revenue of $.0B, up 7% YoY and down 6% QoQ Record AUM of $.8T, up 7% YoY and % QoQ AUM net inflows for the quarter of $5B, driven by net inflows of $6B to long-term products and net outflows of $B from liquidity products Client assets of $.T, up % QoQ Expense of $.B, up 5% YoY, driven by investments in infrastructure and controls, and down 6% QoQ largely due to seasonal performance-based compensation Average loan balances of $0.B, up 8% YoY and flat QoQ Average deposit balances of $58.B, up 6% YoY and % QoQ Strong investment performance 79% of mutual fund AUM ranked in the st or nd quartiles over 5 years

13 Corporate $mm $ O/(U) Q5 Q Q Treasury and CIO ($) ($6) $98 Other Corporate 79 (7) (55) Net income/(loss) $58 ($89) ($57) See note on slide 9 Effective with the first quarter of 05, the Firm began including the results of Private Equity in the Other Corporate line within the Corporate segment. Prior period amounts have been revised to conform with the current period presentation. The Corporate segment s balance sheets and results of operations were not impacted by this reporting change Financial performance Treasury and CIO Treasury and CIO net loss of $mm, compared to a net loss of $05mm in Q Results include $7mm pretax loss associated with the amortization of cash flow hedges, primarily related to the exit of certain non-operational deposits Other Corporate Noninterest expense includes legal expense of $05mm (pretax) Includes $77mm net income benefit from tax adjustments

14 Outlook Firmwide Expect FY05 core loan growth of 0%+/- Expect FY05 NCOs to remain low at $B+ Expect FY05 adjusted expense of $57B+/- Expect Basel III Fully Phased-in CET ratio of %+/- by year-end 05 Corporate & Investment Bank For Q5, expect business simplification to generate YoY negative variance in Markets revenue of ~$00mm, or 6%, with an associated ~$00mm reduction in expense Expect Securities Services revenue to be $950mm $B in each of the remaining quarters of 05, depending on seasonality Consumer & Community Banking Expect Mortgage Banking noninterest revenue for FY05 to be down ~$B YoY on lower servicing revenue as well as lower repurchase benefits Expect Card Services revenue rate in 05 to remain at the low end of the target range of -.5% Expect Card Services FY05 NCO rate to be slightly less than.5% Commercial Banking Expect expense to be relatively stable as compared to Q5 run-rate, as the build-out of the control environment is completed Asset Management Expect FY05 pretax margin and ROE to be at the low end of TTC targets See note on slide 9

15 Agenda Page Appendix

16 A P P E N D I X Consumer credit Delinquency trends Home equity delinquency trend ($mm) Prime mortgage delinquency trend ($mm) $,500 $, day delinquencies 50+ day delinquencies $,500 $, day delinquencies 50+ day delinquencies $,500 $,500 $,000 $,000 $,500 $,500 $,000 $,000 $500 $500 $0 Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar-5 $0 Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar-5 Subprime mortgage delinquency trend ($mm) Credit card delinquency trend ($mm) $,500 $,000 $,500 $,000 $, day delinquencies 50+ day delinquencies $0,500 $9,000 $7,500 $6,000 $, day delinquencies 0-89 day delinquencies $,000 $,000 $500 $,500 $0 Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar-5 $0 Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar-5 Note: Home equity and prime mortgages exclude Asset Management, Corporate and government-insured loans Excluding purchased credit-impaired and held-for-sale loans 5

17 A P P E N D I X Mortgage Banking and Card Services Coverage ratios Mortgage Banking and Card Services credit data ($mm) O/(U) Q5 Q Q Q Mortgage Banking (NCI) Net charge-offs $0 $ $77 ($7) NCO rate 0.0% 0.% 0.55% (5) bps Allowance for loan losses $,088 $,88 $,88 ($00) ALL/annualized NCOs 50% 8% 7% ALL/nonaccrual loans retained 8% 9% 6% Card Services 7 Net charge-offs $789 $797 $888 ($99) Reflects seasonality NCO rate.6%.8%.9% () bps Allowance for loan losses $, $,9 $,59 ($57) ALL/annualized NCOs 09% 08% 0% NCOs ($mm) $5,000 $,000 $,000 $,000 $,000,5,7, Mortgage Banking Card Services,67,6,08,80,85,,99,90,86,69,080,5,6,097,08, $0 Q0 Q0 Q0 Q0 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q5 See note 8 on slide 9 Net charge-offs annualized (NCOs are multiplied by ) Q0 adjusted net charge-offs for Mortgage Banking exclude a one-time $6mm adjustment related to the timing of when the Firm recognizes charge-offs on delinquent loans Q adjusted net charge-offs for Card Services were $,5mm or.0%; excluding the effect of a change in charge-off policy for troubled debt restructurings, Q reported net charge-offs were $,5mm or.% 5 Q adjusted net charge-offs for Mortgage Banking exclude the effect of an incremental $85mm of net charge-offs based on regulatory guidance 6 Q adjusted net charge-offs for Mortgage Banking reflects a full quarter of normalized Chapter 7 Bankruptcy discharge activity, which exclude one-time adjustments related to the adoption of Chapter 7 Bankruptcy discharge regulatory guidance 6 7 Q adjusted net charge-offs for Card Services were $797mm or.8% excluding losses from portfolio exits; Q reported net charge-offs were $858mm or.69%

18 A P P E N D I X Firmwide Coverage ratios $mm 5.00% Loan loss reserve/total loans Loan loss reserve Nonperforming retained loans Loan loss reserve/npls 500%.00% 00%.00%.00% 0,780 9,8 7,57 6,6 5,87 5,6,889,85,065 00% 00%.00% 0,96 9,578 9,07 8,7 8, 7,6 7, 7,07 6,9 00% 0.00% Q Q Q Q Q Q Q Q Q5 0% JPM Credit Summary Consumer, ex. credit card Q5 Q Q LLR/Total loans.9%.50%.7% LLR/NPLs Credit Card LLR/Total loans.8%.69%.96% Wholesale LLR/Total loans.%.%.% LLR/NPLs Comments $.B of loan loss reserves at March, 05, down ~$.8B from $5.8B in the prior year, reflecting improved portfolio credit quality Nonperforming loan loss coverage ratio (ex. credit card) of 06% Firmw ide LLR/Total loans.5%.55%.75% LLR/NPLs (ex. credit card) LLR/NPLs See note 5 on slide 9 7

19 A P P E N D I X IB League Tables League table results wallet share League table results volumes Q5 FY0 Rank Share Rank Share Based on fees : Global Debt, Equity & Equity-related 8.% 7.6% U.S. Debt, Equity & Equity-related.9% 0.7% Global Long-term Debt 8.% 8.0% U.S. Long-term Debt.%.6% Global Equity & Equity-related 7.9% 7.% U.S. Equity & Equity-related.% 9.6% Global M&A 9.0% 8.% U.S. M&A 0.8% 9.8% Global Loan Syndications 9.6% 9.% U.S. Loan Syndications.5%.% Q5 FY0 Rank Share Rank Share Based on volumes 6 : Global Debt, Equity & Equity-related 7.% 6.8% U.S. Debt, Equity & Equity-related.8%.8% Global Long-term Debt 7.% 6.7% U.S. Long-term Debt.6%.% Global Equity & Equity-related 7.7% 7.5% U.S. Equity & Equity-related.%.0% Global M&A Announced.%.% U.S. M&A Announced.6% 8.% Global Loan Syndications.%.% U.S. Loan Syndications 7.8% 9.0% Global IB fees,5 8.6% 8.% Source: Wallet data from Dealogic Media Manager Cortex as of April, 05 & Volume data from Dealogic Analytics as of March, 05 Reflects ranking of revenue wallet and market share Long-term debt rankings include investment-grade, high-yield, supranational, sovereigns, agencies, covered bonds, asset-backed securities ( ABS ) and mortgage-backed securities ( MBS ); and exclude money market, short-term debt and U.S. municipal securities Global Equity and equity-related ranking includes rights offerings and Chinese A-Shares M&A and Announced M&A reflects the removal of any withdrawn transactions. U.S. announced M&A volumes represent any U.S. involvement ranking. U.S. M&A revenue wallet represents wallet from client parents based in the U.S. 5 Global Investment Banking revenue wallet rankings exclude money market, short-term debt and shelf deals 6 Rankings reflect transaction volume rank and market share. Global announced M&A is based on transaction value at announcement; because of joint M&A assignments, M&A market share of all participants will add up to more than 00%. All other transaction volume-based rankings are based on proceeds, with full credit to each book manager/equal if joint 8

20 A P P E N D I X Notes Notes on non-gaap financial measures. In addition to analyzing the Firm s results on a reported basis, management reviews the Firm s results, including the overhead ratio, and the results of the lines of business on a managed basis, which is a non-gaap financial measure. The Firm s definition of managed basis starts with the reported U.S. GAAP results and includes certain reclassifications to present total net revenue for the Firm (and each of the business segments) on a fully taxable-equivalent ( FTE ) basis. Accordingly, revenue from investments that receive tax credits and tax exempt securities is presented in the managed results on a basis comparable to taxable securities and investments. This non- GAAP financial measure allows management to assess the comparability of revenue arising from both taxable and tax-exempt sources. The corresponding income tax impact related to tax-exempt items is recorded within income tax expense. These adjustments have no impact on net income as reported by the Firm as a whole or by the lines of business.. Tangible common equity ( TCE ), return on tangible common equity ( ROTCE ) and tangible book value per share ( TBVPS ), are each non-gaap financial measures. TCE represents the Firm s common stockholders equity (i.e., total stockholders equity less preferred stock) less goodwill and identifiable intangible assets (other than MSRs), net of related deferred tax liabilities. ROTCE measures the Firm s earnings as a percentage of TCE. TBVPS represents the Firm s tangible common equity divided by period-end common shares. TCE, ROTCE, and TBVPS are meaningful to the Firm, as well as investors and analysts, in assessing the Firm s use of equity.. Common equity Tier ( CET ) capital, Tier capital, Total capital, risk-weighted assets ( RWA ) and the CET, Tier capital and total capital ratios and the supplementary leverage ratio ( SLR ) under the Basel III Fully Phased-In rules are each non-gaap financial measures. These measures are used by management, bank regulators, investors and analysts to assess and monitor the Firm s capital position. For additional information on these measures, see Regulatory capital on pages 6-5 of JPMorgan Chase & Co. s Annual Report on Form 0-K for the year ended December, 0.. Adjusted expense and adjusted overhead ratio are each non-gaap financial measures, and exclude Firmwide legal expense. Management believes this information helps investors understand the effect of these items on reported results and provides an alternate presentation of the Firm s performance. 5. The ratios of the allowance for loan losses to end-of-period loans retained and allowance for loan losses to nonperforming loans exclude the following: loans accounted for at fair value and loans held-for-sale; purchased credit-impaired ( PCI ) loans; and the allowance for loan losses related to PCI loans. Additionally, net charge-offs and net charge-off rates exclude the impact of PCI loans. 6. Within Consumer & Community Banking, Mortgage Banking and Card, Commerce Solutions & Auto present the year-over-year change in net income excluding loan loss reserve releases (assuming a tax rate of 8%). This non-gaap financial measure is used by management to facilitate more meaningful comparisons with prior periods. 7. The CIB provides certain non-gaap financial measures, as such measures are used by management to assess the underlying performance of the business and for comparability with peers: The ratio of the allowance for loan losses to end-of-period loans is calculated excluding the impact of consolidated Firm-administered multi-seller conduits and trade finance loans, to provide a more meaningful assessment of CIB s allowance coverage ratio. Within Markets & Investor Services revenue, the change in Markets revenue and Fixed Income Markets revenue excludes the decline related to business simplification. 8. Net charge-offs for Mortgage Banking and Card Services may be adjusted for significant items, as indicated. These adjusted charge-offs are non-gaap financial measures used by management to facilitate comparisons with prior periods. Additional notes on financial measures 9. Core loans include loans considered central to the Firm s ongoing businesses; core loans exclude runoff portfolios, discontinued portfolios and portfolios the Firm has an intent to exit. 9

21 A P P E N D I X Forward-looking statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 995. These statements are based on the current beliefs and expectations of JPMorgan Chase & Co. s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Factors that could cause JPMorgan Chase & Co. s actual results to differ materially from those described in the forward-looking statements can be found in JPMorgan Chase & Co. s Annual Report on Form 0-K for the year ended December, 0, which has been filed with the Securities and Exchange Commission and is available on JPMorgan Chase & Co. s website ( and on the Securities and Exchange Commission s website ( JPMorgan Chase & Co. does not undertake to update the forward-looking statements to reflect the impact of circumstances or events that may arise after the date of the forward-looking statements. 0