JP Morgan Chase 2005 Annual Report Download - page 25

JPMorgan Chase & Co. /2005 Annual Report 23
the largest noncaptive originator of automobile loans as well as a top provider
of loans for college students. Through its Insurance operations, the Firm sells and
underwrites an extensive range of financial protection products and investment
alternatives, including life insurance, annuities and debt protection products.
Card Services
Card Services (“CS”) is one of the largest issuers of credit cards in the United
States, with more than 110 million cards in circulation, and is the largest
merchant acquirer. CS offers a wide variety of products to satisfy the needs of its
cardmembers, including cards issued on behalf of many well-known partners,
such as major airlines, hotels, universities, retailers and other financial institutions.
Commercial Banking
Commercial Banking (“CB”) serves more than 25,000 clients, including
corporations, municipalities, financial institutions and not-for-profit entities
with annual revenues generally ranging from $10 million to $2 billion. While
most Middle Market clients are within the Retail Financial Services footprint,
CB also covers larger corporations, as well as local governments and financial
institutions on a national basis. CB is a market leader with superior client
penetration across the businesses it serves. Local market presence, coupled with
industry expertise and excellent client service and risk management, enable
CB to offer superior financial advice. Partnership with other JPMorgan Chase
businesses positions CB to deliver broad product capabilities – including lending,
treasury services, investment banking, and asset and wealth management –
and meet its clients’ financial needs.
Treasury & Securities Services
Treasury & Securities Services (“TSS”) is a global leader in providing transaction,
investment and information services to support the needs of corporations,
issuers and institutional investors worldwide. TSS is one of the largest cash
management providers in the world and a leading global custodian. The
Treasury Services (“TS”) business provides a variety of cash management
products, trade finance and logistics solutions, wholesale card products, and
short-term liquidity management tools. The Investor Services (“IS”) business
provides custody, fund services, securities lending, and performance measure-
ment and execution products. The Institutional Trust Services (“ITS”) business
provides trustee, depository and administrative services for debt and equity
issuers. TS partners with the Commercial Banking, Consumer & Small
Business Banking and Asset & Wealth Management businesses to serve
clients firmwide. As a result, certain TS revenues are included in other seg-
ments’ results. TSS combined the management of the IS and ITS businesses
under the name Worldwide Securities Services (“WSS”) to create an integrat-
ed franchise which provides custody and investor services as well as securities
clearance and trust services to clients globally. Beginning January 1, 2006,
TSS will report results for two divisions: TS and WSS.
Introduction
JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”), a financial holding
company incorporated under Delaware law in 1968, is a leading global financial
services firm and one of the largest banking institutions in the United States,
with $1.2 trillion in assets, $107 billion in stockholders’ equity and operations
worldwide. The Firm is a leader in investment banking, financial services for
consumers and businesses, financial transaction processing, asset and wealth
management and private equity. Under the JPMorgan, Chase and Bank One
brands, the Firm serves millions of customers in the United States and many
of the world’s most prominent corporate, institutional and government clients.
JPMorgan Chase’s principal bank subsidiaries are JPMorgan Chase Bank,
National Association (“JPMorgan Chase Bank”), a national banking association
with branches in 17 states; and Chase Bank USA, National Association, a
national bank that is the Firm’s credit card issuing bank. JPMorgan Chase’s
principal nonbank subsidiary is J.P. Morgan Securities Inc. (“JPMSI”), the
Firm’s U.S. investment banking firm.
JPMorgan Chase’s activities are organized, for management reporting
purposes, into six business segments, as well as Corporate.The Firm’s
wholesale businesses comprise the Investment Bank, Commercial Banking,
Treasury & Securities Services, and Asset & Wealth Management. The Firm’s
consumer businesses comprise Retail Financial Services and Card Services.
A description of the Firm’s business segments, and the products and services
they provide to their respective client bases, follows.
Investment Bank
JPMorgan Chase is one of the world’s leading investment banks, as
evidenced by the breadth of the Investment Bank client relationships and
product capabilities. The Investment Bank (“IB”) has extensive relationships
with corporations, financial institutions, governments and institutional
investors worldwide. The Firm provides a full range of investment banking
products and services in all major capital markets, including advising on
corporate strategy and structure, capital raising in equity and debt markets,
sophisticated risk management, and market-making in cash securities and
derivative instruments. The Investment Bank also commits the Firm’s own
capital to proprietary investing and trading activities.
Retail Financial Services
Retail Financial Services (“RFS”) includes Home Finance, Consumer & Small
Business Banking, Auto & Education Finance and Insurance. Through this
group of businesses, the Firm provides consumers and small businesses with a
broad range of financial products and services including deposits, investments,
loans and insurance. Home Finance is a leading provider of consumer real
estate loan products and is one of the largest originators and servicers of home
mortgages. Consumer & Small Business Banking offers one of the largest
branch networks in the United States, covering 17 states with 2,641 branches
and 7,312 automated teller machines (“ATMs”). Auto & Education Finance is
This section of the Annual Report provides management’s discussion
and analysis (“MD&A” ) of the financial condition and results of opera-
tions for JPMorgan Chase. See the Glossary of terms on pages 134–135
for definitions of terms used throughout this Annual Report. The M D&A
included in this Annual Report contains statements that are forward-
looking w ithin the meaning of the Private Securities Litigation Reform
Act of 1995. Such statements are based upon the current beliefs and
expectations of JPMorgan Chase’s management and are subject to
significant risks and uncertainties. These risks and uncertainties could
cause JPMorgan Chase’s results to differ materially from those set forth in
such forward-looking statements. Certain of such risks and uncertainties
are described herein (see Forw ard-looking statements on page 135 of
this Annual Report) and in the JPMorgan Chase Annual Report on
Form 10–K (“ Form 10–K”) for the year ended December 31, 2005, in
Part I, Item 1A: Risk factors, to w hich reference is hereby made.
Management’s discussion and analysis
JPMorgan Chase & Co.