JP Morgan Chase 2003 Annual Report Download - page 7

J.P. Morgan Chase & Co. / 2003 Annual Report 5
We are beginning to recognize the power and potential of our great
strategic platform. Clearly, our clients and customers like the value we
add in both our wholesale and retail businesses.
Commercial criticized exposure (rated CCC+/Caa1 and lower) and
non-performing loans were both down over 45% from the beginning
of the year. Our provision for commercial credit losses was down by
$2.8 billion. The risk profile of the firm has improved, and our bottom
line results are much better.
Building a great culture
I believe that a high-performance culture is the critical differentiator
that separates the great enterprises from those that are merely good,
and that separates enduring success from transitory achievement.
Business units continued to emphasize increased productivity and
improved quality. In 2003, our productivity and quality efforts yielded
more than $1 billion pre-tax in net financial benefits, more than dou-
bling those achieved in 2002. Over one-half of these benefits came
from re-engineering key business processes using the disciplined meth-
odology of Six Sigma. We used Six Sigma in several key areas, includ-
ing enhancing our customers’ experience and removing costs from our
larger and more complex operations.
The challenge has been the blending of key attributes of the cultures
of our predecessor firms into a new model. We are focused on develop-
ing a culture based on integrity, respect, excellence and innovation,
where diversity and differences are recognized and valued, and leader-
ship development and managing talent are hallmarks of our firm.
Our work on establishing a high-performance culture will continue as
we complete the merger with Bank One.
The firm’s efforts to build a strong culture have also focused on encour-
aging a spirit of giving back to the communities where we live and
do business. We are proud that the firm has maintained a consistent
“ outstanding” Community Reinvestment Act (CRA) rating, and we are
committed to partnering with our communities around the world to
make a positive difference. Our employees have developed a great
spirit of giving back, not just in monetary terms, but also through volun-
teering their time and talents to their communities.
2004: Still about strategy and delivering results
We are beginning to recognize the power and potential of our great
strategic platform. Clearly, our clients and customers like the value we
add in both our wholesale and retail businesses.
In wholesale banking, our capabilities reach across all important product
sets, clients and locations – from the Americas to Europe, Asia, the
Middle East and Africa. We have the competitive advantage of scale
and completeness, and we remain focused on integrated delivery to
serve our clients well. There is ample room for organic growth and
development in providing premier global wholesale financial services.
In other areas, such as Institutional Trust Services, we may choose to
augment our skills through tactical acquisitions. For the most part,
however, our wholesale banking business will grow through better
execution in delivering the whole firm to a highly sophisticated and
global client base at multiple points of need.
The retail banking landscape presents a different picture. It is large
and still relatively fragmented, even after a decade of consolidation.
Almost certainly, consolidation will continue and gather pace in years
to come. With Bank One, we will significantly extend our retail finan-
cial services platform and be better positioned to take advantage of
the enormous opportunities before us.
The strategic model we have adopted, with extensive leadership positions
in both wholesale and retail financial services, provides great balance
to our growth, returns and diversification.
Confidence in the future
With the strategic platform we created three years ago, the merger with
Bank One, and the progress we have made toward building a high-
performance culture, we have to prove that we can consistently produce
superior results, and that we are disciplined in how we use our capital.
We also have to demonstrate a seamless integration with Bank One
so that we add value from day one.
I have every confidence that we can accomplish these goals.
In 2004 as in 2003, the unrelenting focus of our firm will be on results
and performance.
William B. Harrison, Jr.
Chairman and Chief Executive Officer
March 15, 2004