JP Morgan Chase 2014 Annual Report Download - page 91

JPMorgan Chase & Co./2014 Annual Report 89
Card, Merchant Services & Auto
Selected income statement data
As of or for the year
ended December 31,
(in millions, except ratios) 2014 2013 2012
Revenue
Card income $ 4,173 $ 4,289 $ 4,092
All other income 993 1,041 1,009
Noninterest revenue 5,166 5,330 5,101
Net interest income 13,150 13,559 13,820
Total net revenue 18,316 18,889 18,921
Provision for credit losses 3,432 2,669 3,953
Noninterest expense(a) 8,176 8,078 8,216
Income before income tax
expense 6,708 8,142 6,752
Net income $ 4,074 $ 4,907 $ 4,099
Return on common equity 21% 31% 24%
Overhead ratio 45 43 43
Equity (period-end and
average) $ 19,000 $ 15,500 $16,500
(a) Included operating lease depreciation expense of $1.2 billion, $972
million and $817 million for the years ended December 31, 2014,
2013 and 2012, respectively.
2014 compared with 2013
Card net income was $4.1 billion, a decrease of $833
million, or 17%, compared with the prior year,
predominantly driven by higher provision for credit losses
and lower net revenue.
Net revenue was $18.3 billion, down $573 million or 3%
compared with the prior year. Net interest income was
$13.2 billion, a decrease of $409 million, or 3%, from the
prior year primarily driven by spread compression in Credit
Card and Auto, partially offset by higher average loan
balances. Noninterest revenue was $5.2 billion, down $164
million, or 3%, from the prior year. The decrease was
primarily driven by higher amortization of new account
origination costs and the impact of non-core portfolio exits,
largely offset by higher auto lease income and net
interchange income from higher sales volume.
The provision for credit losses was $3.4 billion, compared
with $2.7 billion in the prior year. The current-year
provision reflected lower net charge-offs and a $554
million reduction in the allowance for loan losses. The
reduction in the allowance for loan losses was primarily
related to a decrease in the asset-specific allowance
resulting from increased granularity of the impairment
estimates and lower balances related to credit card loans
modified in TDRs, runoff in the student loan portfolio, and
lower estimated losses in auto loans. The prior-year
provision included a $1.7 billion reduction in the allowance
for loan losses.
Noninterest expense was $8.2 billion, up $98 million, or
1% from the prior year primarily driven by higher auto
lease depreciation expense and higher investment in
controls, predominantly offset by lower intangible
amortization and lower remediation costs.
2013 compared with 2012
Card net income was $4.9 billion, an increase of $808
million, or 20%, compared with the prior year, driven by
lower provision for credit losses.
Net revenue was $18.9 billion, flat compared with the prior
year. Net interest income was $13.6 billion, down $261
million, or 2%, from the prior year. The decrease was
primarily driven by spread compression in Credit Card and
Auto and lower average credit card loan balances, largely
offset by the impact of lower revenue reversals associated
with lower net charge-offs in Credit Card. Noninterest
revenue was $5.3 billion, an increase of $229 million, or
4%, compared with the prior year primarily driven by
higher net interchange income, auto lease income and
merchant servicing revenue, largely offset by lower revenue
from an exited non-core product and a gain on an
investment security recognized in the prior year.
The provision for credit losses was $2.7 billion, compared
with $4.0 billion in the prior year. The current-year
provision reflected lower net charge-offs and a $1.7 billion
reduction in the allowance for loan losses due to lower
estimated losses reflecting improved delinquency trends
and restructured loan performance. The prior-year
provision included a $1.6 billion reduction in the allowance
for loan losses. The Credit Card net charge-off rate was
3.14%, down from 3.95% in the prior year; and the 30+
day delinquency rate was 1.67%, down from 2.10% in the
prior year. The Auto net charge-off rate was 0.31%, down
from 0.39% in the prior year.
Noninterest expense was $8.1 billion, a decrease of $138
million, or 2%, from the prior year. This decrease was due
to one-time expense items recognized in the prior year
related to the exit of a non-core product and the write-off of
intangible assets associated with a non-strategic
relationship. The reduction in expenses was partially offset
by increased auto lease depreciation and payments to
customers required by a regulatory Consent Order during
2013.