JP Morgan Chase 2010 Annual Report Download - page 67

JPMorgan Chase & Co./2010 Annual Report
67
BUSINESS SEGMENT RESULTS
The Firm is managed on a line of business basis. The business
segment financial results presented reflect the current organization
of JPMorgan Chase. There are six major reportable business
segments: Investment Bank, Retail Financial Services, Card Services,
Commercial Banking, Treasury & Securities Services and Asset
Management, as well as a Corporate/Private Equity segment.
The business segments are determined based on the products and
services provided, or the type of customer served, and reflect the
manner in which financial information is currently evaluated by
management. Results of these lines of business are presented on a
managed basis.
Description of business segment reporting methodology
Results of the business segments are intended to reflect each segment
as if it were essentially a stand-alone business. The management
reporting process that derives business segment results allocates
income and expense using market-based methodologies. Business
segment reporting methodologies used by the Firm are discussed
below. The Firm continues to assess the assumptions, methodologies
and reporting classifications used for segment reporting, and further
refinements may be implemented in future periods.
Revenue sharing
When business segments join efforts to sell products and services
to the Firm’s clients, the participating business segments agree to
share revenue from those transactions. The segment results reflect
these revenue-sharing agreements.
Funds transfer pricing
Funds transfer pricing is used to allocate interest income and
expense to each business and transfer the primary interest rate risk
exposures to the Treasury group within the Corporate/Private Equity
business segment. The allocation process is unique to each
business segment and considers the interest rate risk, liquidity risk
and regulatory requirements of that segment’s stand-alone peers.
This process is overseen by senior management and reviewed by
the Firm’s Asset-Liability Committee (“ALCO”). Business segments
may be permitted to retain certain interest rate exposures subject to
management approval.
JPMorgan Chase
Investment
Bank
Retail
Financial
Services
Card
Services
Commercial
Banking
Treasury &
Securities
Services
Asset
Management
Businesses:
• Investment
Banking
- Advisory
- Debt and equity
underwriting
• Market-making
and trading
- Fixed income
- Equities
• Corporate lending
• Prime Services
• Research
Businesses:
• Retail Banking
- Consumer and
Business
Banking (includ-
ing Business
Banking loans)
• Mortgage
Banking, Auto &
Other Consumer
Lending:
- Mortgage
production
and servicing
- Auto, student
and other loan
originations and
balances
• Real Estate
Portfolios:
- Residential
mortgage loans
- Home equity
loans and
originations
Businesses:
• Credit Card
• Merchant
Acquiring
Businesses:
• Middle Market
Banking
• Commercial Term
Lending
• Mid-Corporate
Banking
• Real Estate
Banking
Businesses:
• Treasury Services
• Worldwide
Securities Services
Businesses:
• Private Banking
• Investment
Management:
- Institutional
- Retail
• Highbridge