JP Morgan Chase 2010 Annual Report Download - page 4

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Dear Fellow Shareholders,
Your company earned a record $17 billion in 2010, up 48% from $12 billion in
2009. As points of reference: In 2008 — which, as you know, was a year filled
with unprecedented challenges — we earned $6 billion; and the year before, we
earned $15 billion, a then-record for us. The performance of our JPMorgan Chase
stock during this period of time — and over the past decade (including heritage
company Bank One) — is shown in the chart on page 4.
Our return on tangible equity for 2010 was 15%. Given your company’s earnings
power, these returns should be higher. In a more normal environment, we believe
we could earn approximately $22 billion to $24 billion. Your company’s earnings,
particularly because of the business we are in, will always be somewhat volatile.
The main reason for the dierence between what we should be earning and
what we are earning is the extraordinarily high losses we still are bearing on
mortgages and mortgage-related issues. These losses have been running at a
rate of approximately $4 billion a year, after-tax, and, while they should come
down over time, they, unfortunately, will continue at elevated levels for a while.
On the brighter side, we increased our annual dividend to $1 per share and
have re-established the ability to buy back stock if and when we think it’s
appropriate to do so.
Looking at these results in the context of the last three dicult years, what
particularly pleases me is how exceptionally our company performed, not
in absolute financial terms but in human terms. No matter how tough the
circumstances or how dicult the events, we were there for our clients and
our communities — providing credit and raising capital. We provided credit
and raised capital of approximately $1.6 trillion for our clients in 2010 alone.
Those clients included hospitals, schools, local governments, municipalities,
corporations, small businesses and individuals. While helping our clients
— large and small — prepare for the future, we continued to actively support the
economic recovery. At the same time, we continued to invest in your
company’s future and to build our businesses — opening branches and oces
and adding bankers across the globe, including hiring more than 8,000 people
in the United States alone. As a result, we gained market share and became a
better competitor in almost every single business.