JP Morgan Chase 2014 Annual Report Download - page 96

Management’s discussion and analysis
94 JPMorgan Chase & Co./2014 Annual Report
$4.8 billion up 8% compared with the prior year driven by
higher revenue in derivatives and cash equities products
and Prime Services primarily on higher balances. Securities
Services revenue was $4.1 billion compared with $4.0
billion in the prior year on higher custody and fund services
revenue primarily driven by higher assets under custody of
$20.5 trillion. Credit Adjustments & Other was a loss of
$2.1 billion predominantly driven by FVA (effective 2013)
and DVA.
The provision for credit losses was a benefit of $232
million, compared with a benefit of $479 million in the
prior year. The 2013 benefit reflected lower recoveries as
compared with 2012 as the prior year benefited from the
restructuring of certain nonperforming loans. Net
recoveries were $78 million, compared with $284 million in
the prior year reflecting a continued favorable credit
environment with stable credit quality trends.
Nonperforming loans were down 57% from the prior year.
Noninterest expense was $21.7 billion slightly down
compared with the prior year, driven by lower compensation
expense, offset by higher noncompensation expense related
to higher litigation expense as compared with the prior
year. The compensation ratio, excluding the impact of DVA
and FVA (effective 2013), was 30% and 32% for 2013 and
2012, respectively.
Return on equity was 15% on $56.5 billion of average
allocated capital and 17% excluding FVA (effective 2013)
and DVA.
Selected metrics
As of or for the year ended
December 31,
(in millions, except headcount) 2014 2013 2012
Selected balance sheet data
(period-end)
Assets $ 861,819 $ 843,577 $ 876,107
Loans:
Loans retained(a) 96,409 95,627 109,501
Loans held-for-sale and
loans at fair value 5,567 11,913 5,749
Total loans 101,976 107,540 115,250
Equity 61,000 56,500 47,500
Selected balance sheet data
(average)
Assets $ 854,712 $ 859,071 $ 854,670
Trading assets-debt and equity
instruments 317,535 321,585 312,944
Trading assets-derivative
receivables 64,833 70,353 74,874
Loans:
Loans retained(a) 95,764 104,864 110,100
Loans held-for-sale and
loans at fair value 7,599 5,158 3,502
Total loans 103,363 110,022 113,602
Equity 61,000 56,500 47,500
Headcount 51,129 52,250 52,022
(a) Loans retained includes credit portfolio loans, trade finance loans, other held-
for-investment loans and overdrafts.
Selected metrics
As of or for the year ended
December 31,
(in millions, except ratios
and where otherwise noted) 2014 2013 2012
Credit data and quality
statistics
Net charge-offs/
(recoveries) $ (12) $ (78) $ (284)
Nonperforming assets:
Nonaccrual loans:
Nonaccrual loans
retained(a)(b) 110 163 535
Nonaccrual loans held-
for-sale and loans at
fair value 11 180 254
Total nonaccrual loans 121 343 789
Derivative receivables 275 415 239
Assets acquired in loan
satisfactions 67 80 64
Total nonperforming
assets 463 838 1,092
Allowance for credit losses:
Allowance for loan
losses 1,034 1,096 1,300
Allowance for lending-
related commitments 439 525 473
Total allowance for credit
losses 1,473 1,621 1,773
Net charge-off/(recovery)
rate(a) (0.01)% (0.07)% (0.26)%
Allowance for loan losses to
period-end loans
retained(a) 1.07 1.15 1.19
Allowance for loan losses to
period-end loans retained,
excluding trade finance
and conduits 1.82 2.02 2.52
Allowance for loan losses to
nonaccrual loans
retained(a)(b) 940 672 243
Nonaccrual loans to total
period-end loans 0.12 0.32 0.68
(a) Loans retained includes credit portfolio loans, trade finance loans, other held-
for-investment loans and overdrafts.
(b) Allowance for loan losses of $18 million, $51 million and $153 million were held
against these nonaccrual loans at December 31, 2014, 2013 and 2012,
respectively.