JP Morgan Chase 2006 Annual Report Download - page 5

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Here are some examples of what we can achieve by
working well together. In all of these cases, the manage-
ment team came together – to review facts and critically
analyze and reanalyze issues – in order to find the right
answers for our clients and our company. We developed
and executed a game plan without the destructive poli-
tics, silly game-playing and selfish arguments about rev-
enue-sharing that can destroy healthy collaboration and
undermine progress.
Establishing the Corporate Bank
Previously, our investment bankers played the lead role
in managing our firm’s relationships with large clients,
even when a client might require non-investment-bank-
ing products and services, such as cash management,
custody, asset management, certain credit and derivatives
products, and others. The product salespeople outside
our Investment Bank operated somewhat independently
from the investment bankers. As a result, we were not
managing our relationships with many of our largest
clients in an integrated and coordinated way. Too many
people were selling their own products without feeling
accountable for JPMorgan Chase’s overall relationship
with the client.
Now, we have addressed this issue with dedicated
corporate bankers who cover the treasurer’s offices of our
largest, longest-standing and most important clients.
These corporate bankers, in partnership with our invest-
ment bankers, are focused on developing our entire rela-
tionship with our clients – orchestrating the coverage
effort with regular account planning, client reviews and
coordinated calling. This effort ultimately should add
hundreds of millions of dollars to revenue and create
happier clients.
Building the mortgage business – in Home Lending and
the Investment Bank
Home Lending is one of the largest originators and ser-
vicers of mortgages in the United States. Separately, our
Investment Bank has been working hard to build out its
mortgage capabilities as the mortgage business overall
has been undergoing fundamental change, i.e., mort-
gages are increasingly being packaged and sold to institu-
tional investors rather than being held by the company
that originates them.
Historically, our two businesses, Home Lending and
the Investment Bank, barely worked together. In 2004,
almost no Home Lending mortgages were sold through
our Investment Bank. This past year, however, our
Investment Bank sold 95% of the non-agency mortgages
(approximately $25 billion worth) originated by Home
Lending. As a result, Home Lending materially increased
its product breadth and volume because it could distrib-
ute and price more competitively. This arrangement
obviously helped our sales efforts, and the Investment
Bank was able to build a better business with a clear,
competitive advantage. In 2006, our Investment Bank
moved up several places in the league-table rankings for
mortgages. (Importantly, Home Lending maintained its
high underwriting standards; more on this later.) We
believe that we now have the opportunity to become one
of America’s best mortgage companies.
Growing credit card sales through retail branches
In 2006, we opened more than one million credit card
accounts through our retail branches, up 74% over
2005. Retail and Card Services teams drove this progress
by working together and analyzing every facet of the
business, including product design, marketing, credit
reporting, systems and staffing. It started slowly, but as
we’ve learned together and innovated, we’ve been able to
add increasingly more profitable new accounts. We have
the ability to provide – almost instantaneously – preap-
proved credit to customers while they are opening other
banking accounts with us. And, while respecting cus-
tomer privacy, we now can offer better pricing because
we can underwrite using both credit card and retail
customer information. Over time, this competitive
advantage will enable us to add more value and produce
better results for customers and for JPMorgan Chase.