JP Morgan Chase 2008 Annual Report Download - page 225

JPMorgan Chase & Co./ 2008 Annual Report 223
In the Firm’s wholesale portfolio, risk concentrations are evaluated
primarily by industry and geographic region, and monitored regularly
on both an aggregate portfolio level and on an individual customer
basis. Management of the Firm’s wholesale exposure is accom-
plished through loan syndication and participation, loan sales,
securitizations, credit derivatives, use of master netting agreements,
and collateral and other risk-reduction techniques. In the consumer
portfolio, concentrations are evaluated primarily by product and by
U.S. geographic region, with a key focus on trends and concentra-
tions at the portfolio level, where potential risk concentrations can
be remedied through changes in underwriting policies and portfolio
guidelines.
The Firm does not believe exposure to any one loan product with vary-
ing terms (e.g., interest-only payments for an introductory period,
option ARMs) or exposure to loans with high loan-to-value ratios
would result in a significant concentration of credit risk.Terms of loan
products and collateral coverage are included in the Firm’s assessment
when extending credit and establishing its allowance for loan losses.
For further information regarding on-balance sheet credit concentra-
tions by major product and geography, see Note 14 on pages
175–178 and Note 15 on pages 178–180 of this Annual Report. For
information regarding concentrations of off-balance sheet lending-
related financial instruments by major product, see Note 33 on pages
218–222 of this Annual Report.
The table below presents both on- and off-balance sheet wholesale- and consumer-related credit exposure as of December 31, 2008 and 2007.
2008 2007
On-balance sheet On-balance sheet
Credit Off-balance Credit Off-balance
December 31, (in millions) exposure Loans Derivatives sheet(c) exposure Loans Derivatives sheet(c)
Wholesale-related:
Real estate $ 83,799 $ 66,881 $ 2,289 $ 14,629 $ 38,295 $ 20,274 $ 893 $ 17,128
Banks and finance companies 75,577 19,055 33,457 23,065 65,288 16,776 12,502 36,010
Asset managers 49,256 9,640 18,806 20,810 38,554 8,534 7,763 22,257
Healthcare 38,032 7,004 3,723 27,305 30,746 5,644 885 24,217
State & municipal governments 35,954 5,873 9,427 20,654 31,425 5,699 3,205 22,521
Utilities 34,246 9,184 4,664 20,398 28,679 5,840 1,870 20,969
Retail & consumer services 32,714 8,433 3,079 21,202 23,969 6,665 517 16,787
Consumer products 29,766 10,081 2,225 17,460 29,941 8,915 1,084 19,942
Securities firms & exchanges 25,590 6,360 14,111 5,119 23,274 5,120 11,022 7,132
Oil & gas 24,746 8,796 2,220 13,730 26,082 10,348 1,570 14,164
Insurance 17,744 1,942 5,494 10,308 16,782 1,067 2,442 13,273
Technology 17,555 5,028 1,361 11,166 18,335 4,674 1,309 12,352
Media 17,254 7,535 1,248 8,471 16,253 4,909 1,268 10,076
Central government 15,259 555 10,537 4,167 9,075 583 3,989 4,503
Metals/mining 14,980 6,470 1,991 6,519 17,714 7,282 2,673 7,759
All other wholesale 278,114 75,252 47,994 154,868 298,803 77,097 24,144 197,562
Loans held-for-sale and loans at
fair value 13,955 13,955 — — 23,649 23,649 — —
Receivables from customers(a) 16,141 — — — —— ——
Total wholesale-related 820,682 262,044 162,626 379,871 736,864 213,076 77,136 446,652
Consumer-related:
Home equity 238,633 142,890 —95,743 169,023 94,832 —74,191
Prime mortgage 99,200 94,121 —5,079 47,382 39,988 —7,394
Subprime mortgage 22,090 22,090 ——15,489 15,473 —16
Option ARMs 40,661 40,661 ———— ——
Auto loans 47,329 42,603 —4,726 50,408 42,350 —8,058
Credit card(b) 728,448 104,746 —623,702 799,200 84,352 —714,848
All other loans 45,972 33,715 —12,257 36,743 25,314 —11,429
Loans held-for-sale 2,028 2,028 ——3,989 3,989 ——
Total consumer-related 1,224,361 482,854 —741,507 1,122,234 306,298 —815,936
Total exposure $ 2,045,043 $ 744,898 $ 162,626 $ 1,121,378 $1,859,098 $ 519,374 $ 77,136 $ 1,262,588
(a) Primarily represents margin loans to prime and retail brokerage customers which are included in accrued interest and accounts receivable on the Consolidated Balance Sheets.
(b) Excludes $85.6 billion and $72.7 billion of securitized credit card receivables at December 31, 2008 and 2007, respectively.
(c) Represents lending-related financial instruments.