Download 4Q/FY 2001 Financial Results

Fourth Quarter and
Full Year 2001
Financial Results
January 16, 2002
This presentation 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. Actual results may differ from those set
forth in the forward-looking statements. These uncertainties could cause our results
to differ materially from such forward looking statements.
Such risks and
uncertainties are described in our Quarterly Report on Form 10-Q for the quarter
ended September 30, 2001 and in the 2000 Annual Report on Form 10-K, each filed
with the Securities and Exchange Commission and available at the Securities and
Exchange Commission's internet site (http://www.sec.gov), to which reference is
hereby made.
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Fourth Quarter 2001
 Negative impact on financial results:
– Losses in Enron and Argentina
– Increase in loan loss reserves
– Continued weakness at JPMorgan Partners
 Expense discipline
 Stronger market positions – gaining momentum
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4Q and Full Year EPS
($ per share)
4Q01
FY01
Operating Earnings*
$0.12
$1.65
Non Operating Charges
(0.29)
(0.85)
Reported Net Income**
(0.18)
0.80
* Includes goodwill amortization of $0.09 and $0.36 for 4Q01 and FY01, respectively
** Reported net income is ($0.18) instead of ($0.17) since using diluted average shares outstanding would
cause anti-dilution. As a result, the net loss per share does not foot by ($0.01).
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4Q Cash Operating Results
($ in billions, except o/(u) in millions)
Excluding JPMP
Trading Revenues
4Q01
$0.9
O/(U)
4Q00
3Q01
$(710)
$(510)
All Other Revenues
6.4
198
85
Expenses
4.6
(252)
(916)
Credit Costs
1.7
717
1,065
Earnings
0.8
(595)
(308)
(0.3)
(189)
(207)
Total Earnings
0.4
(784)
(515)
ROE excl. JPMP
9%
15%
13%
ROE
4%
12%
9%
JPMP Earnings
Note: Some numbers do not add due to rounding
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Impact of Enron & Argentina
($ in millions)
Enron
Total
Argentina
($456)
($351)
Total
($807)
Breakdown of Total Impact
Revenue decrease
$446
Credit costs increase
$361
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Net Charge-Offs and Provision
($ in millions)
4Q01
%*
FY01
%*
$433
1.58
$982
0.87
Credit Card (Managed)
538
5.48
2,038
5.45
Other Consumer
111
0.48
363
0.39
Total Charge-offs
$1,082
1.80
$3,383
1.42
Commercial Loans
Incremental Reserves
Loan Loss Provision
650
850
1,732
4,233
* % is annualized for quarterly data and based on average outstandings
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Credit
($ in billions)
Nonperforming Assets
Reserves as % of Loans
Commercial - Surety bonds & LC's of Enron
Commercial
Consumer
2.08%
$3.9
1.70%
1.74%
4Q 00
3Q 01
4Q 01
$3.9
$4.5
$2.8
$2.6
$1.9
4Q 00
3Q 01
4Q 01
Reserves $3.7
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Investment Bank Results
($ in millions, cash operating basis)
O(U)
FY00*
4Q01
O(U)
4Q00
Revenue
$3,106
(16%)
$14,899
(11%)
Expense
1,877
(33%)
8,978
(16%)
Credit Costs
619
339%
1,155
328%
Earnings
379
(24%)
2,945
(18%)
60%
76%
60%
64%
8%
9%
15%
18%
Overhead Ratio
ROE
* Pro-forma Flemings
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FY01
Investment Bank League Table Summary
FY01
FY00
Rank %Share
Rank
%Share
Global Syndicated Loans
1
26%
1
23%
U.S. Investment Grade Bonds
2
15%
2
16%
Global High Yield Corp Debt
4
10%
5
10%
Global Announced M&A
5
22%
6
17%
U.S. Equity and Equity Related
8
4%
6
5%
Source: Thomson Financial
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2001 Momentum
U.S. Equity and Equity Related
Market Share
Global High Yield
Market Share
Chart title
Units
17%
12%
8%
10%
7%
5%
10%
10%
6%
4%
2%
1%
2000
2001
1Q01
2Q01
3Q01
2000 2001 1Q01 2Q01 3Q01 4Q01
4Q01
Source: Thomson Financial
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Investment Management & Private Banking
($ in millions, cash operating basis)
O(U)
4Q00
4Q01
FY01
O(U)
FY00*
Revenue
$729
(20%)
$3,085
(20%)
Earnings
115
(17%)
467
(30%)
20%
20%
19%
25%
8%
8%
8%
10%
$605
(5%)
Pre-tax Margin
ROE
AUM ($ in BN)
 Tangible ROE was 26% for 4Q01 and FY01
* Pro-forma Flemings
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Treasury and Securities Services
($ in millions, cash operating basis)
 Expense initiatives fully
FY01
incorporated 4Q01
 increased
operating leverage
Revenue
$890 $3,632
Full Year Revenue $3.6 BN ( 2%)
Investor
Services
4% decline
Treasury
Services
 Integration of 168
four firms 693
Earnings
behind us
Overhead Ratio 71%
71%
3% growth
 Private bank 23%
cross-sell 24%
ROE
success
Institutional Trust Services
15% growth
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Retail & Middle Market Results
($ in millions, cash operating basis)
4Q01
O(U)
4Q00
FY01
O(U)
FY00
Revenue
$2,868
11%
$10,915
7%
Expense
1,426
5%
5,468
4%
Credit Costs
918
77%
2,803
35%
Earnings
343
(25%)
1,688
(5%)
Overhead Ratio
50%
52%
50%
52%
ROE
15%
22%
20%
21%
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Retail & Middle Market Business Units
(growth from FY00)
Full Year Revenue $10.9 BN (7%)
Production Statistics
Card Outstandings
Mortgage Originations
Auto
142%
Auto Originations
63%
Regional Bkg Deposits
5%
Middle Mkt Deposits
7%
17%
growth
63%
growth
12%
3%
decline
Credit
Card
Middle
Market
Regional
Banking
5% decline
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Home
Finance
22%
growth
JPMP Private Equity Gains
($ in millions)
4Q01
FY01
FY00
Realized
$119
$675
$2,041
Unrealized
(504)
(1,857)
(1,053)
Total
(385)
(1,182)
988
 Contribution to EPS of ($0.17) in Q4, ($0.58) in FY01
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JPMP: Improved Diversification
As of 12/31/01
Real Estate
5%
Fin. Services
7%
Fund
21%
Life Science
7%
Consumer Retail
and Services
11%
TMT
TMT
27%
Industrial
Growth
22%
12/31/00 $4.2
TMT
6/30/01
17%
12/31/01
Total Book Value = $9.2 BN
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$
O/(U)
FY00
3.2
2.5 (40%)
Cash Operating Expenses
($ in billions)
4Q Run Rate Comparison
Total Firm Expenses
$22.5
$21.9
$20.0
$19.6
2000*
4Q00
2001
 4Q run rates reflect full year incentives
* Pro-forma Flemings
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4Q01
2001 Operating Results
($ in billions except EPS)
Pro-forma new GAAP
FY01
O(U)00*
Revenue excl. JPMP
$31.6
($1.7)
JPMP
(1.5)
(2.2)
Expenses
20.2
(1.8)
Credit
4.2
1.8
Operating Income
3.8
(2.6)
$ 2.42
(0.58)
$(0.58)
(0.70)
EPS excl. JPMP
JPMP
* Pro-forma Flemings
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Balance Sheet and Capital
($ in billions)
Tier 1 Capital Ratio
8.5%
8.3%
8.2%
Total Assets
12/31/00
09/30/01
12/31/01
$715
$799
$694
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FY2001
 Difficult operating environment
 Merger integration success
 Building value for long term while executing through
short term challenges
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Enron Exposure
($ millions)
Unsec.
12/19
$620
Payments
Charge-offs
(216)
Write-downs
(235)
12/31
$169(a)
Sec./JV Surety/LC
$604
$1,130
DIP
Total
$250
$2,604
(85)
(85)
(5)
(221)
(235)
$514(b)
$1,130
$250
$2,063
(a) Includes $58 million in undrawn letters of credit.
(b) Includes $400 million secured by pipelines, $74mm in creditworthy joint ventures, and $40mm secured by other
Enron assets.
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Argentina Exposure
($ millions)
Loans
3/31
12/31
Additional
Reserves
Taken
$380
$305
$140
$165
Net at
12/31
Derivatives
502
346 *
89
257
Other
868
183
122
61
$1,750
$834
$351
$483
Total
*Includes impact of 50% devaluation
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