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MANAGEMENT’S DISCUSSION AND ANALYSIS
JPMorgan Chase & Co.
68 JPMorgan Chase & Co. / 2006 Annual Report
Wholesale credit exposure – selected industry concentration
The Firm focuses on the management and the diversification of its industry
concentrations. At December 31, 2006, the top 10 industries
remained
unchanged from December 31, 2005. The increase in Banks and finance compa-
Wholesale credit exposure – selected industry concentration
Collateral
Noninvestment-grade held against
December 31, 2006 Credit Investment Net charge-offs/ Credit derivative
(in millions, except ratios) exposure(c) grade Noncriticized Criticized (recoveries) derivative hedges(d) receivables(e)
Top 10 industries(a)
Banks and finance companies $ 61,792 84% $ 9,733 $ 74 $ (12) $ (7,847) $ (1,452)
Real estate 32,102 57 13,702 243 9 (2,223) (26)
Healthcare 28,998 83 4,618 284 (1) (3,021) (5)
State and municipal governments 27,485 98 662 23 — (801) (12)
Consumer products 27,114 72 7,327 383 22 (3,308) (14)
Utilities 24,938 88 2,929 183 (6) (4,123) (2)
Asset managers 24,570 88 2,956 31 — — (750)
Securities firms and exchanges 23,127 93 1,527 5 — (784) (1,207)
Retail and consumer services 22,122 70 6,268 278 (3) (2,069) (226)
Oil and gas 18,544 76 4,356 38 — (2,564) —
All other 317,468 80 58,971 3,484 (31) (23,993) (2,897)
Total excluding HFS $ 608,260 81% $ 113,049 $ 5,026 $ (22) $ (50,733) $ (6,591)
Held-for-sale(b) 22,507
Total exposure $ 630,767
Collateral
Noninvestment-grade held against
December 31, 2005 Credit Investment Net charge-offs/ Credit derivative
(in millions, except ratios) exposure(c) grade Noncriticized Criticized (recoveries) derivative hedges(d) receivables(e)
Top 10 industries(a)
Banks and finance companies $ 50,924 87% $ 6,462 $ 232 $ (16) $ (9,490) $ (1,482)
Real estate 29,974 55 13,226 276 — (560) (2)
Healthcare 25,435 79 4,977 243 12 (581) (7)
State and municipal governments 25,328 98 409 40 — (597) (1)
Consumer products 25,678 71 6,791 590 2 (927) (28)
Utilities 20,482 90 1,841 295 (4) (1,624) —
Asset managers 17,358 82 2,949 103 (1) (25) (954)
Securities firms and exchanges 17,094 89 1,833 15 — (2,009) (1,525)
Retail and consumer services 19,920 75 4,654 288 12 (989) (5)
Oil and gas 18,200 77 4,267 9 — (1,007) —
All other 282,802 82 47,966 3,081 (82) (12,073) (1,996)
Total excluding HFS $ 533,195 81% $ 95,375 $ 5,172 $ (77) $ (29,882) $ (6,000)
Held-for-sale(b) 17,552
Total exposure $ 550,747
(a) Rankings are based upon exposure at December 31, 2006.
(b) HFS loans primarily relate to securitization and syndication activities.
(c) Credit exposure is net of risk participations and excludes the benefit of credit derivative hedges and collateral held against Derivative receivables or Loans.
(d) Represents notional amounts only; these credit derivatives do not qualify for hedge accounting under SFAS 133.
(e) Represents other liquid securities collateral held by the Firm as of December 31, 2006 and 2005, respectively.
nies, Utilities, Asset managers, and Securities firms and exchanges reflects the
overall growth in wholesale exposure. Below are summaries of the top 10
industry concentrations as of December 31, 2006 and 2005.