JP Morgan Chase 2010 Annual Report Download - page 59

JPMorgan Chase & Co./2010 Annual Report
59
CONSOLIDATED RESULTS OF OPERATIONS
This following section provides a comparative discussion of
JPMorgan Chase’s Consolidated Results of Operations on a
reported basis for the three-year period ended December 31, 2010.
Factors that related primarily to a single business segment are
discussed in more detail within that business segment. For a
discussion of the Critical Accounting Estimates used by the Firm
that affect the Consolidated Results of Operations, see pages 149–
154 of this Annual Report.
Revenue
Year ended December 31,
(in millions)
2010
2009 2008
Investment banking fees
$
6,190
$ 7,087
$ 5,526
Principal transactions
10,894
9,796 (10,699)
Lending- and deposit-related fees
6,340
7,045 5,088
Asset management, admin
i
stration
and commissions 13,499 12,540 13,943
Securities gains
2,965
1,110 1,560
Mortgage fees and related income
3,870
3,678 3,467
Credit card income
5,891
7,110 7,419
Other income
2,044
916 2,169
Noninterest revenue
51,693
49,282 28,473
Net interest income
51,001
51,152 38,779
Total net revenue
$
102,694
$100,434 $ 67,252
2010 compared with 2009
Total net revenue for 2010 was $102.7 billion, up by $2.3 billion,
or 2%, from 2009. Results for 2010 were driven by a higher level
of securities gains and private equity gains in Corporate/Private
Equity, higher asset management fees in AM and administration
fees in TSS, and higher other income in several businesses, partially
offset by lower credit card income.
Investment banking fees decreased from 2009 due to lower
equity underwriting and advisory fees, partially offset by higher
debt underwriting fees. Competitive markets combined with flat
industry-wide equity underwriting and completed M&A volumes,
resulted in lower equity underwriting and advisory fees; while
strong industry-wide loan syndication and high-yield bond
volumes drove record debt underwriting fees in IB. For additional
information on investment banking fees, which are primarily
recorded in IB, see IB segment results on pages 69–71 of this
Annual Report.
Principal transactions revenue, which consists of revenue from the
Firm’s trading and private equity investing activities, increased
compared with 2009. This was driven by the Private Equity
business, which had significant private equity gains in 2010,
compared with a small loss in 2009, reflecting improvements in
market conditions. Trading revenue decreased, reflecting lower
results in Corporate, offset by higher revenue in IB primarily
reflecting gains from the widening of the Firm’s credit spread on
certain structured and derivative liabilities. For additional
information on principal transactions revenue, see IB and
Corporate/Private Equity segment results on pages 69–71 and 89–
90, respectively, and Note 7 on pages 199–200 of this Annual
Report.
Lending- and deposit-related fees decreased in 2010 from 2009
levels, reflecting lower deposit-related fees in RFS associated, in
part, with newly-enacted legislation related to non-sufficient funds
and overdraft fees; this was partially offset by higher lending-
related service fees in IB, primarily from growth in business volume,
and in CB, primarily from higher commitment and letter-of-credit
fees. For additional information on lending- and deposit-related
fees, which are mostly recorded in IB, RFS, CB and TSS, see
segment results for IB on pages 69–71, RFS on pages 72–78, CB
on pages 82–83 and TSS on pages 84–85 of this Annual Report.
Asset management, administration and commissions revenue
increased from 2009. The increase largely reflected higher asset
management fees in AM, driven by the effect of higher market
levels, net inflows to products with higher margins and higher
performance fees; and higher administration fees in TSS, reflecting
the effects of higher market levels and net inflows of assets under
custody. This increase was partially offset by lower brokerage
commissions in IB, as a result of lower market volumes. For
additional information on these fees and commissions, see the
segment discussions for AM on pages 86–88 and TSS on pages
84–85 of this Annual Report.
Securities gains were significantly higher in 2010 compared with
2009, resulting primarily from the repositioning of the portfolio in
response to changes in the interest rate environment and to
rebalance exposure. For additional information on securities gains,
which are mostly recorded in the Firm’s Corporate segment, see the
Corporate/Private Equity segment discussion on pages 89–90 of
this Annual Report.
Mortgage fees and related income increased in 2010 compared
with 2009, driven by higher mortgage production revenue,
reflecting increased mortgage origination volumes in RFS and AM,
and wider margins, particularly in RFS. This increase was largely
offset by higher repurchase losses in RFS (recorded as contra-
revenue), which were attributable to higher estimated losses
related to repurchase demands, predominantly from GSEs. For
additional information on mortgage fees and related income, which
is recorded primarily in RFS, see RFS’s Mortgage Banking, Auto &
Other Consumer Lending discussion on pages 74–77 of this Annual
Report. For additional information on repurchase losses, see the
repurchase liability discussion on pages 98–101 and Note 30 on
pages 275–280 of this Annual Report.
Credit card income decreased during 2010, predominantly due to
the impact of the accounting guidance related to VIEs, effective
January 1, 2010, that required the Firm to consolidate the assets
and liabilities of its Firm-sponsored credit card securitization trusts.
Adoption of the new guidance resulted in the elimination of all
servicing fees received from Firm-sponsored credit card
securitization trusts (which was offset by related increases in net