JP Morgan Chase 2006 Annual Report Download - page 51

JPMorgan Chase & Co. / 2006 Annual Report 49
TS Total net revenue of $2.7 billion grew by $635 million, and WSS Total net
revenue of $2.8 billion grew by $706 million. TSS firmwide Total net revenue,
which includes TS Total net revenue recorded in other lines of business, grew
to $7.8 billion, up $2.1 billion, or 38%. Treasury Services firmwide Total net
revenue grew to $4.9 billion, up $1.4 billion, or 41%.
Credit reimbursement to the Investment Bank was $154 million, an increase
of $64 million, primarily as a result of the Merger. TSS is charged a credit
reimbursement related to certain exposures managed within the Investment
Bank credit portfolio on behalf of clients shared with TSS.
Total noninterest expense of $4.1 billion was up $324 million, or 9%, due to
the Merger, increased compensation expense resulting from new business
growth and the Vastera acquisition, and charges of $93 million to terminate a
client contract. Partially offsetting these increases were higher product unit costs
charged to other lines of business, primarily Commercial Banking, lower allo-
cations of Corporate segment expenses, merger savings and business efficien-
cies. The prior year included software-impairment charges of $155 million.
Treasury & Securities Services firmwide metrics include certain TSS
product revenues and liability balances reported in other lines of business
for customers who are also customers of those lines of business.
Management reviews firmwide metrics such as liability balances, revenues
and overhead ratios in assessing financial performance for TSS as such
firmwide metrics capture the firmwide impact of TS’ and TSS’ products
and services. Management believes such firmwide metrics are necessary
in order to understand the aggregate TSS business.
Selected metrics
Year ending December 31,
(in millions, except headcount, ratio data
and where otherwise noted) 2006 2005 2004(g)
Revenue by business
Treasury Services $ 2,792 $ 2,695 $ 2,060
Worldwide Securities Services 3,317 2,844 2,138
Total net revenue $ 6,109 $ 5,539 $ 4,198
Business metrics
Assets under custody (in billions) $ 13,903 $ 10,662 $ 9,300
Number of:
US$ ACH transactions originated (in millions) 3,503 2,966 1,994
Total US$ clearing volume (in thousands) 104,846 95,713 81,162
International electronic funds transfer
volume (in thousands)(a) 145,325 89,537 45,654
Wholesale check volume (in millions) 3,409 3,735 NA
Wholesale cards issued (in thousands)(b) 17,228 13,206 11,787
Selected balance sheets (average)
Total assets $ 31,760 $ 28,206 $ 24,815
Loans 15,564 12,349 9,840
Liability balances(c) 189,540 154,731 115,514
Equity 2,285 1,525 1,989
Headcount 25,423 22,207 20,467
TSS firmwide metrics
Treasury Services firmwide revenue(d) $ 5,242 $ 4,937 $ 3,508
Treasury & Securities Services
firmwide revenue(d) 8,559 7,781 5,646
Treasury Services firmwide overhead ratio(e) 56% 58% 65%
Treasury & Securities Services
firmwide overhead ratio(e) 62 65 78
Treasury Services firmwide liability
balances (average)(f) $162,020 $139,579 $102,785
Treasury & Securities Services firmwide
liability balances(f) 262,678 220,781 163,169
(a) International electronic funds transfer includes non-US$ ACH and clearing volume.
(b) Wholesale cards issued include domestic commercial card, stored value card, prepaid card,
and government electronic benefit card products.
(c) Liability balances include deposits and deposits swept to on-balance sheet liabilities.
(d) Firmwide revenue includes TS revenue recorded in the CB, Regional Banking and AM lines of
business (see below) and excludes FX revenues recorded in the IB for TSS-related FX activity.
(in millions) 2006 2005 2004(g)
Treasury Services revenue reported in CB $ 2,243 $ 2,062 $ 1,335
Treasury Services revenue reported in
other lines of business 207 180 113
TSS firmwide FX revenue, which includes FX revenue recorded in TSS and FX revenue associ-
ated with TSS customers who are FX customers of the IB, was $445 million, $382 million
and $320 million for the years ended December 31, 2006, 2005 and 2004, respectively.
(e) Overhead ratios have been calculated based upon firmwide revenues and TSS and TS expens-
es, respectively, including those allocated to certain other lines of business. FX revenues and
expenses recorded in the IB for TSS-related FX activity are not included in this ratio.
(f) Firmwide liability balances include TS’ liability balances recorded in certain other lines of
business. Liability balances associated with TS customers who are also customers of the CB
line of business are not included in TS liability balances.
(g) 2004 results include six months of the combined Firm’s results and six months of heritage
JPMorgan Chase results.