JP Morgan Chase 2009 Annual Report Download - page 109

JPMorgan Chase & Co./2009 Annual Report 107
Noninvestment-grade
December 31, 2008
(in millions, except ratios)
Credit
exposure(d)
% of
portfolio
Investment
grade Noncriticized Criticized
% of
criticized
portfolio
Net
charge-offs/
(recoveries)
Credit
derivative
hedges(e)
Collateral
held against
derivative
receivables(f)
Top 25 industries(a)
Real estate $ 80,284 10% 70% $ 17,849 $ 5,961 23% $ 212 $ (2,141) $ (48 )
Banks and finance companies
75,577 10 79 12,953 2,849 11 28 (5,016) (9,457 )
Healthcare
38,032 5 83 6,092 436 2 2 (5,338) (199 )
State and municipal governments
36,772 5 94 1,278 847 3 — (677) (134 )
Utilities 34,246 4 83 5,844 114 — 3 (9,007) (65
)
Consumer products 29,766 4 65 9,504 792 3 32 (8,114) (54
)
Asset managers 49,256 6 85 6,418 819 3 15 (115) (5,303
)
Oil and gas 24,746 3 75 5,940 231 1 15 (6,627) (7
)
Retail and consumer services 23,223 3 54 9,357 1,311 5 (6) (6,120) (55
)
Holding companies 14,466 2 70 4,182 116 1 (1) (689) (309
)
Technology 17,025 2 67 5,391 230 1 — (3,922) (3
)
Insurance 17,744 2 78 3,138 712 3 — (5,016) (846
)
Machinery and equipment
manufacturing 14,501 2 64 5,095 100 — 22 (3,743) (6
)
Metals/mining 14,980 2 61 5,579 262 1 (7) (3,149) (3
)
Media 13,177 2 61 3,779 1,305 5 26 (3,435) —
Telecom services 13,237 2 63 4,368 499 2 (5) (7,073) (92
)
Securities firms and exchanges 25,590 3 81 4,744 138 1 — (151) (898
)
Business services 11,247 1 64 3,885 145 1 46 (357) —
Building materials/construction 12,065 2 49 4,925 1,342 5 22 (2,601) —
Chemicals/plastics 11,719 1 66 3,357 591 2 5 (2,709) —
Transportation 10,253 1 64 3,364 319 1 — (1,567) —
Central government 14,441 2 98 276 — — — (4,548) (35
)
Automotive 11,448 1 52 3,687 1,775 7 (1) (2,975) (1
)
Leisure
8,158 1 42 2,827 1,928 7 (1) (721) —
Agriculture/paper manufacturing
6,920 1 43 3,226 726 3 1 (835) —
All other(b) 181,713 23 86 22,321 2,449 9 (6) (4,805) (2,301 )
Subtotal
$ 790,586 100% 77% $ 159,379 $ 25,997 100% $ 402 $ (91,451) $ (19,816 )
Loans held-for-sale and loans
at fair value
13,955 2,258
Receivables from customers 16,141
Interest in purchased receivables(c) —
Total
$ 820,682 $ 159,379 $ 28,255 $ 402 $ (91,451) $ (19,816 )
(a) Rankings are based on exposure at December 31, 2009. The rankings of the industries presented in the 2008 table are based on the rankings of such industries at year-end
2009, not actual rankings in 2008.
(b) For more information on exposures to SPEs included in all other, see Note 16 on pages 214–222 of this Annual Report.
(c) Represents undivided interests in pools of receivables and similar types of assets due to the consolidation during 2009 of one of the Firm-administered multi-seller conduits.
(d) Credit exposure is net of risk participations and excludes the benefit of credit derivative hedges and collateral held against derivative receivables or loans.
(e) Represents the net notional amounts of protection purchased and sold of single-name and portfolio credit derivatives used to manage the credit exposures; these derivatives
do not qualify for hedge accounting.
(f) Represents other liquid securities collateral held by the Firm as of December 31, 2009 and 2008, respectively.
Presented below is a discussion of several industries to which the Firm
has significant exposure, as well as industries the Firm continues to
monitor because of actual or potential credit concerns. For additional
information, refer to the tables above and on the preceding page.
• Real estate: Exposure to this industry decreased by 15% or
$11.8 billion from 2008 as loans and commitments were man-
aged down, predominantly through repayments and loans
sales. This sector continues to be challenging as property val-
ues in the U.S. remain under pressure, particularly in certain
regions. The ratios of nonperforming loans and net charge-offs
to loans have increased from 2008 due to deterioration in the
commercial real estate portfolio, particularly in the latter half
of 2009. The multi-family portfolio, which represents almost
half of the commercial real estate exposure, accounts for the
smallest proportion of nonperforming loans and net charge-
offs. The commercial lessors portfolio involves real estate
leased to retail, industrial and office space tenants, while the
commercial construction and development portfolio includes
financing for the construction of office and professional build-
ings and malls. Commercial real estate exposure in CB is pre-
dominantly secured; CB’s exposure represents the majority of
the Firm’s commercial real estate exposure. IB manages less
than one fifth of the total Firm’s commercial real estate expo-
sure; IB’s exposure represents primarily unsecured lending to
Real Estate Investment Trust (“REITs”), lodging, and home-
building clients. The increase in criticized real estate exposure
was largely a result of downgrades within the overall portfolio
reflecting the continued weakening credit environment.