JP Morgan Chase 2005 Annual Report Download - page 48

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Management’s discussion and analysis
JPMorgan Chase & Co.
46 JPMorgan Chase & Co. /2005 Annual Report
Selected metrics
Year ended December 31,(a)
(in millions, except headcount, ratios
and where otherwise noted) 2005 2004 2003
% of average managed outstandings:
Net interest income 8.65% 9.16% 9.95%
Provision for credit losses 5.39 5.31 5.72
Noninterest revenue 2.61 2.59 2.15
Risk adjusted margin(b) 5.88 6.45 6.38
Noninterest expense 3.67 4.25 4.29
Pre-tax income (ROO) 2.21 2.20 2.09
Operating earnings 1.40 1.39 1.35
Business metrics
Charge volume (in billions) $ 301.9 $ 193.6 $ 88.2
Net accounts opened (in thousands) 21,056 7,523 4,177
Credit cards issued (in thousands) 110,439 94,285 35,103
Number of registered
Internet customers (in millions) 14.6 13.6 3.7
Merchant acquiring business(c)
Bank card volume (in billions) $ 563.1 $ 396.2 $ 261.2
Total transactions (in millions)(d) 15,499 9,049 4,254
Selected ending balances
Loans:
Loans on balance sheets $ 71,738 $ 64,575 $ 17,426
Securitized loans 70,527 70,795 34,856
Managed loans $142,265 $ 135,370 $ 52,282
Selected average balances
Managed assets $141,933 $ 94,741 $ 51,406
Loans:
Loans on balance sheets $ 67,334 $ 38,842 $ 17,604
Securitized loans 69,055 52,590 33,169
Managed loans $136,389 $ 91,432 $ 50,773
Equity 11,800 7,608 3,440
Headcount 18,629 19,598 10,612
Credit quality statistics
Net charge-offs $ 7,100 $ 4,821 $ 2,996
Managed net charge-off rate 5.21% 5.27% 5.90%
Delinquency ratios
30+ days 2.79% 3.70% 4.68%
90+ days 1.27 1.72 2.19
Allowance for loan losses $ 3,274 $ 2,994 $ 1,225
Allowance for loan losses to
period-end loans 4.56% 4.64% 7.03%
(a) 2004 results include six months of the combined Firm’s results and six months of heritage
JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only.
(b) Represents Total net revenue less Provision for credit losses.
(c) Represents 100% of the merchant acquiring business.
(d) Prior periods have been restated to conform methodologies following the integration of
Chase Merchant Services and Paymentech merchant processing businesses.
The financial information presented below reconciles reported basis and
managed basis to disclose the effect of securitizations.
Year ended December 31,(a)
(in millions) 2005 2004 2003
Income statement data
Credit card income
Reported data for the period $ 6,069 $ 4,446 $ 2,309
Securitization adjustments (2,718) (2,267) (1,379)
Managed credit card income $ 3,351 $ 2,179 $ 930
Other income
Reported data for the period $ 212 $ 203 $ 125
Securitization adjustments —(86) (71)
Managed other income $ 212 $ 117 $ 54
Net interest income
Reported data for the period $ 5,309 $ 3,123 $ 1,732
Securitization adjustments 6,494 5,251 3,320
Managed net interest income $ 11,803 $ 8,374 $ 5,052
Total net revenue(b)
Reported data for the period $ 11,590 $ 7,847 $ 4,274
Securitization adjustments 3,776 2,898 1,870
Managed total net revenue $ 15,366 $ 10,745 $ 6,144
Provision for credit losses
Reported data for the period(c) $ 3,570 $ 1,953 $ 1,034
Securitization adjustments 3,776 2,898 1,870
Managed provision for credit losses $ 7,346 $ 4,851 $ 2,904
Balance sheet – average balances
Total average assets
Reported data for the period $ 74,753 $ 43,657 $ 19,041
Securitization adjustments 67,180 51,084 32,365
Managed average assets $141,933 $ 94,741 $ 51,406
Credit quality statistics
Net charge-offs
Reported net charge-offs data
for the period $ 3,324 $ 1,923 $ 1,126
Securitization adjustments 3,776 2,898 1,870
Managed net charge-offs $ 7,100 $ 4,821 $ 2,996
(a) 2004 results include six months of the combined Firm’s results and six months of heritage
JPMorgan Chase results. 2003 reflects the results of heritage JPMorgan Chase only.
(b) Includes noninterest revenue and Net interest income.
(c) 2005 includes a $100 million special provision related to Hurricane Katrina.
The following is a brief description of selected business
metrics within Card Services.
• Charge volume – Represents the dollar amount of cardmember
purchases, balance transfers and cash advance activity.
• Net accounts opened – Includes originations, portfolio purchases
and sales.
• Merchant acquiring business – Represents an entity that
processes payments for merchants. JPMorgan Chase is a partner in
Chase Paymentech Solutions, LLC.
• Bank card volume – Represents the dollar amount of transactions
processed for the merchants.
• Total transactions – Represents the number of transactions and
authorizations processed for the merchants.