JP Morgan Chase 2005 Annual Report Download - page 54

Management’s discussion and analysis
JPMorgan Chase & Co.
52 JPMorgan Chase & Co. /2005 Annual Report
Credit data and quality statistics
Net charge-offs $23 $72 $ 9
Nonperforming loans 104 79 173
Allowance for loan losses 132 216 130
Allowance for lending-related commitments 454
Net charge-off rate 0.09% 0.33% 0.05%
Allowance for loan losses to average loans 0.50 1.00 0.78
Allowance for loan losses to nonperforming loans 127 273 75
Nonperforming loans to average loans 0.39 0.37 1.04
(a) 2004 results include six months of the combined Firm’s results and six months of heritage
JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only.
(b) Star rankings derived from Morningstar and Standard & Poor’s.
(c) Quartile rankings sourced from Lipper and Standard & Poor’s.
(d) Reflects the transfer in 2005 of certain consumer deposits from Retail Financial Services
to Asset & Wealth Management.
Assets under supervision
2005 compared with 2004
Assets under supervision (“AUS”) at December 31, 2005, were $1.1 trillion,
up 4%, or $43 billion, from the prior year despite a $33 billion reduction due
to the sale of BrownCo. Assets under management (“AUM”) were $847 billion,
up 7%. The increase was primarily the result of net asset inflows in equity-
related products and global equity market appreciation. The Firm also has
a 43% interest in American Century Companies, Inc., whose AUM totaled
$101 billion and $98 billion at December 31, 2005 and 2004, respectively.
Custody, brokerage, administration, and deposits were $302 billion, down
$13 billion due to a $33 billion reduction from the sale of BrownCo.
2004 compared with 2003
Assets under supervision at December 31, 2004, were $1.1 trillion, up 45% from
2003, and Assets under management were $791 billion, up 41% from the prior
year. The increases were primarily the result of the Merger, as well as market
appreciation, net asset inflows and the acquisition of a majority interest in
Highbridge Capital Management. The Firm also has a 43% interest in American
Century Companies, Inc., whose AUM totaled $98 billion and $87 billion at
December 31, 2004 and 2003, respectively. Custody, brokerage, administration,
and deposits were $315 billion, up 55%, due to market appreciation, the
Merger and net inflows across all products.
Assets under supervision(a) (in billions)
As of or for the year ended December 31, 2005 2004
Assets by asset class
Liquidity $ 238 $ 232
Fixed income 165 171
Equities & balanced 370 326
Alternatives 74 62
Total Assets under management 847 791
Custody/brokerage/administration/deposits 302 315
Total Assets under supervision $ 1,149 $ 1,106
Assets by client segment
Institutional $ 481 $ 466
Private Bank 145 139
Retail 169 133
Private Client Services 52 53
Total Assets under management $ 847 $ 791
Institutional $ 484 $ 487
Private Bank 318 304
Retail 245 221
Private Client Services 102 94
Total Assets under supervision $ 1,149 $ 1,106
Assets by geographic region
U.S./Canada $ 562 $ 554
International 285 237
Total Assets under management $ 847 $ 791
U.S./Canada $ 805 $ 815
International 344 291
Total Assets under supervision $ 1,149 $ 1,106
Mutual fund assets by asset class
Liquidity $ 182 $ 183
Fixed income 45 41
Equity 150 104
Total mutual fund assets $ 377 $ 328
Assets under management rollforward(b)
Beginning balance, January 1 $ 791 $561
Flows:
Liquidity 83
Fixed income —(8)
Equity, balanced and alternative 24 14
Acquisitions/divestitures(c) —183
Market/performance/other impacts(d) 24 38
Ending balance, December 31 $ 847 $791
Assets under supervision rollforward(b)
Beginning balance, January 1 $ 1,106 $764
Net asset flows 49 42
Acquisitions/divestitures(e) (33) 221
Market/performance/other impacts(d) 27 79
Ending balance, December 31 $ 1,149 $ 1,106
(a) Excludes Assets under management of American Century.
(b) 2004 results include six months of the combined Firm’s results and six months of heritage
JPMorgan Chase results.
(c) Reflects the Merger with Bank One ($176 billion) and the acquisition of a majority interest
in Highbridge Capital Management ($7 billion) in 2004.
(d) Includes AWM’s strategic decision to exit the Institutional fiduciary business ($12 billion)
in 2005.
(e) Reflects the Merger with Bank One ($214 billion) and the acquisition of a majority interest
in Highbridge Capital Management ($7 billion) in 2004, and the sale of BrownCo ($33 bil-
lion) in 2005.
AWM’s client segments are comprised of the following:
Institutional serves large and mid-size corporate and public institutions,
endowments and foundations, and governments globally. AWM offers
these institutions comprehensive global investment services, including
investment management across asset classes, pension analytics, asset-
liability management, active risk budgeting and overlay strategies.
The Private Bank addresses every facet of wealth management for
ultra-high-net-worth individuals and families worldwide, including invest-
ment management, capital markets and risk management, tax and estate
planning, banking, capital raising and specialty wealth advisory services.
Retail provides worldwide investment management services and
retirement planning and administration through third-party and direct
distribution channels.
Private Client Services offers high-net-worth individuals, families and busi-
ness owners comprehensive wealth management solutions that include finan-
cial planning, personal trust, investment and banking products and services.