JP Morgan Chase 2014 Annual Report Download - page 71

JPMorgan Chase & Co./2014 Annual Report 69
Other income decreased from the prior year, predominantly
as a result of the absence of two significant items recorded
in Corporate in 2013, namely: a $1.3 billion gain on the
sale of Visa shares and a $493 million gain from the sale of
One Chase Manhattan Plaza. Lower valuations of seed
capital investments in AM and losses related to the exit of
non-core portfolios in Card also contributed to the
decrease. These items were partially offset by higher auto
lease income as a result of growth in auto lease volume, and
a benefit from a tax settlement.
Net interest income increased slightly from the prior year,
predominantly reflecting higher yields on investment
securities, the impact of lower interest expense, and higher
average loan balances. The increase was partially offset by
lower yields on loans due to the run-off of higher-yielding
loans and new originations of lower-yielding loans, and
lower average interest-earning trading asset balances. The
Firm’s average interest-earning assets were $2.0 trillion,
and the net interest yield on these assets, on a fully taxable-
equivalent (“FTE”) basis, was 2.18%, a decrease of 5 basis
points from the prior year.
2013 compared with 2012
Total net revenue for 2013 was down by $425 million, or
less than 1%. The 2013 results were driven by lower
mortgage fees and related income, net interest income, and
securities gains, predominantly offset by higher principal
transactions revenue, and asset management,
administration and commissions revenue.
Investment banking fees increased compared with the prior
year, reflecting higher equity and debt underwriting fees,
partially offset by lower advisory fees. Equity and debt
underwriting fees increased, driven by strong market
issuance and greater share of fees in equity capital markets
and loans. Advisory fees decreased, as industry-wide M&A
fee levels declined. Investment banking fee share and
industry-wide data are sourced from Dealogic, an external
vendor.
Principal transactions revenue increased compared with the
prior year, reflecting CIB’s strong equity markets revenue,
partially offset by a $1.5 billion loss from implementing a
FVA framework for OTC derivatives and structured notes in
the fourth quarter of 2013, and a $452 million loss from
DVA on structured notes and derivative liabilities (compared
with a $930 million loss from DVA in the prior year). The
prior year also included a $5.8 billion loss on the synthetic
credit portfolio incurred by CIO in the six months ended
June 30, 2012; a $449 million loss on the index credit
derivative positions retained by CIO in the three months
ended September 30, 2012; and additional modest losses
incurred by CIB from the synthetic credit portfolio in the last
six months of 2012. These losses were partially offset by a
$665 million gain recognized in 2012 in Corporate,
representing the recovery on a Bear Stearns-related
subordinated loan.
Lending- and deposit-related fees decreased compared with
the prior year, largely due to lower deposit-related fees in
CCB, resulting from reductions in certain product and
transaction fees.
Asset management, administration and commissions
revenue increased from 2012, driven by higher investment
management fees in AM due to net client inflows, the effect
of higher market levels, and higher performance fees, and
to higher investment sales revenue in CCB.
Securities gains decreased compared with the prior-year
period, reflecting the results of repositioning the CIO
available-for-sale (“AFS”) portfolio.
Mortgage fees and related income decreased in 2013
compared with 2012, reflecting lower Mortgage Banking
net production and servicing revenue. The decrease in net
production revenue was due to lower margins and volumes.
The decrease in net servicing revenue was predominantly
due to lower MSR risk management results.
Card income increased compared with the prior year period,
driven by higher net interchange income on credit and debit
cards and higher merchant servicing revenue due to growth
in sales volume.
Other income decreased in 2013 compared with the prior
year, predominantly reflecting lower revenues from
significant items recorded in Corporate. In 2013, the Firm
recognized a $1.3 billion gain on the sale of Visa shares, a
$493 million gain from the sale of One Chase Manhattan
Plaza, and a modest loss related to the redemption of
TruPS. In 2012, the Firm recognized a $1.1 billion benefit
from the Washington Mutual bankruptcy settlement and an
$888 million extinguishment gain related to the redemption
of TruPS. The net decrease was partially offset by higher
revenue in CIB, largely from client-driven activity.
Net interest income decreased in 2013 compared with the
prior year, primarily reflecting the impact of the runoff of
higher yielding loans and originations of lower yielding
loans, and lower trading-related net interest income. The
decrease in net interest income was partially offset by lower
long-term debt and other funding costs. The Firm’s average
interest-earning assets were $2.0 trillion in 2013, and the
net interest yield on those assets, on a FTE basis, was
2.23%, a decrease of 25 basis points from the prior year.