JP Morgan Chase 2014 Annual Report Download - page 99

JPMorgan Chase & Co./2014 Annual Report 97
COMMERCIAL BANKING
Commercial Banking delivers extensive industry
knowledge, local expertise and dedicated service to
U.S. and U.S. multinational clients, including
corporations, municipalities, financial institutions and
nonprofit entities with annual revenue generally
ranging from $20 million to $2 billion. CB provides
financing to real estate investors and owners.
Partnering with the Firm’s other businesses, CB
provides comprehensive financial solutions, including
lending, treasury services, investment banking and
asset management to meet its clients’ domestic and
international financial needs.
Selected income statement data
Year ended December 31,
(in millions, except ratios) 2014 2013 2012
Revenue
Lending- and deposit-related fees $ 978 $ 1,033 $ 1,072
Asset management, administration
and commissions 92 116 130
All other income(a) 1,279 1,149 1,081
Noninterest revenue 2,349 2,298 2,283
Net interest income 4,533 4,794 4,629
Total net revenue(b) 6,882 7,092 6,912
Provision for credit losses (189) 85 41
Noninterest expense
Compensation expense 1,203 1,115 1,014
Noncompensation expense 1,492 1,495 1,375
Total noninterest expense 2,695 2,610 2,389
Income before income tax expense 4,376 4,397 4,482
Income tax expense 1,741 1,749 1,783
Net income $ 2,635 $ 2,648 $ 2,699
Revenue by product
Lending $ 3,576 $ 3,945 $ 3,762
Treasury services 2,448 2,429 2,428
Investment banking 684 575 545
Other 174 143 177
Total Commercial Banking net
revenue $ 6,882 $ 7,092 $ 6,912
Investment banking revenue, gross $ 1,986 $ 1,676 $ 1,597
Revenue by client segment
Middle Market Banking $ 2,838 $ 3,075 $ 3,010
Corporate Client Banking 1,935 1,851 1,843
Commercial Term Lending 1,252 1,239 1,206
Real Estate Banking 495 561 450
Other 362 366 403
Total Commercial Banking net
revenue $ 6,882 $ 7,092 $ 6,912
Financial ratios
Return on common equity 18% 19% 28%
Overhead ratio 39 37 35
Note: As discussed on pages 79–80, effective with the fourth quarter of
2014 the Firm changed its methodology for allocating the cost of preferred
stock to its reportable business segments. Prior periods have been revised to
conform with the current period presentation.
(a) Includes revenue from investment banking products and commercial card
transactions.
(b) Total net revenue included tax-equivalent adjustments from income tax
credits related to equity investments in designated community
development entities that provide loans to qualified businesses in low-
income communities, as well as tax-exempt income from municipal bond
activity of $462 million, $407 million and $381 million for the years ended
December 31, 2014, 2013 and 2012, respectively.
2014 compared with 2013
Net income was $2.6 billion, flat compared with the prior
year, reflecting lower net revenue and higher noninterest
expense, predominantly offset by a lower provision for
credit losses.
Net revenue was $6.9 billion, a decrease of $210 million, or
3%, compared with the prior year. Net interest income was
$4.5 billion, a decrease of $261 million, or 5%, reflecting
yield compression, the absence of proceeds received in the
prior year from a lending-related workout, and lower
purchase discounts recognized on loan repayments,
partially offset by higher loan balances. Noninterest
revenue was $2.3 billion, up $51 million, or 2%, reflecting
higher investment banking revenue largely offset by
business simplification and lower lending fees.
Noninterest expense was $2.7 billion, an increase of $85
million, or 3%, from the prior year, largely reflecting higher
investments in controls.
2013 compared with 2012
Net income was $2.6 billion, a decrease of $51 million, or
2%, from the prior year, driven by an increase in
noninterest expense and the provision for credit losses,
partially offset by an increase in net revenue.
Net revenue was a record $7.1 billion, an increase of $180
million, or 3%, from the prior year. Net interest income was
$4.8 billion, up by $165 million, or 4%, driven by higher
loan balances and proceeds from a lending-related workout,
partially offset by lower purchase discounts recognized on
loan repayments. Noninterest revenue was $2.3 billion, flat
compared with the prior year.
Noninterest expense was $2.6 billion, an increase of $221
million, or 9%, from the prior year, reflecting higher
product- and headcount-related expense.