JP Morgan Chase 2009 Annual Report Download - page 15

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Treasury & Securities Services reported net
income of $1.2 billion with an ROE of 25%
Overall results
Treasury & Securities Services (TSS) delivered
solid but lower results, producing 2009 profits
of $1.2 billion vs. $1.8 billion in the prior year.
The business delivered net revenue of $7.3
billion, down 10% from the previous year. We
describe TSS as our “Warren Buett-style”
business because it grows with our clients
and with inflation; delivers excellent margins
and high returns on capital; and is hard for
would-be competitors to replicate because of
its global scale, long-term client relationships
and complex technology.
Our 2009 performance largely was driven
by weakened market conditions and lower
interest rates. Securities lending and foreign
exchange volumes and spreads, in partic-
ular, saw significant declines. TSS also saw
deposits level o after an exceptional period
in late 2008 and early 2009, when we were
a huge beneficiary of the markets’ flight
to quality. Despite the headwinds of 2009,
the underlying business drivers remained
strong: International electronic funds transfer
volumes grew 13%, assets under custody
increased 13% and the number of wholesale
cards issued grew 19%.
What we do in Treasury & Securities Services
More than 6,000 TSS bankers serve more than
40,000 clients from all of our other lines of
business in 60 locations around the world.
TSS provides clients with critical products and
services, including global custody in more than
90 global markets, holding nearly $15 trillion
in assets; corporate cash management, moving
an astounding $10 trillion a day of cash trans-
actions around the world for clients; corporate
card services, providing 27 million cards to
more than 5,000 corporate clients and govern-
ment agencies; and trade services, guaran-
teeing international payments for our clients,
who are many of the world’s largest global
companies. Following are some specific exam-
ples of how TSS supports a range of clients:
• We delivered unemployment and other
benefits to more than 12 million individuals
in 2009, as the national leader in bringing
electronic banking services to low-income
households through electronic benefits
transfer and debit and stored-value cards.
• We were selected by the Federal Reserve
to serve as custodian for its program to
purchase up to $1.25 trillion in mortgage-
backed securities in order to provide support
to the mortgage and housing markets.
• We are the leading cash management
provider to the U.S. Postal Service,
providing cash and check depository
services to nearly one-third of the U.S.
Postal Service’s 80 districts.
How we intend to grow
TSS essentially grows by following its clients
around the world, which means opening
new branches and constantly improving
products. In 2009, TSS opened new branches
in China, Denmark, Finland, Norway and
Sweden; launched new services in Tokyo,
South Korea, Brazil and Mexico; and expanded
capabilities in Australia, India, Europe, the
Middle East and Africa. We will continue this
expansion for the foreseeable future.
In addition, more than three years ago, TSS
and the Investment Bank formed a joint
venture to create our Global Corporate Bank.
With a team of more than 100 corporate
bankers, the Global Corporate Bank serves
multinational clients by giving them access
to TSS products and services and certain
IB products, including derivatives, foreign
exchange and debt. We intend to expand the
Global Corporate Bank aggressively over the
next several years by opening 20-30 locations
and adding 150 corporate bankers, allowing
us to cover approximately 1,000 new clients
(3,100 total, up from 2,100).