JP Morgan Chase 2012 Annual Report Download - page 89

JPMorgan Chase & Co./2012 Annual Report 99
ASSET MANAGEMENT
Asset Management, with client assets of $2.1 trillion, is
a global leader in investment and wealth management.
AM clients include institutions, high-net-worth
individuals and retail investors in every major market
throughout the world. AM offers investment
management across all major asset classes including
equities, fixed income, alternatives and money market
funds. AM also offers multi-asset investment
management, providing solutions to a broad range of
clients’ investment needs. For individual investors, AM
also provides retirement products and services,
brokerage and banking services including trust and
estate, loans, mortgages and deposits. The majority of
AM’s client assets are in actively managed portfolios.
Selected income statement data
Year ended December 31,
(in millions, except ratios) 2012 2011 2010
Revenue
Asset management,
administration and commissions $ 7,041 $ 6,748 $ 6,374
All other income 806 1,147 1,111
Noninterest revenue 7,847 7,895 7,485
Net interest income 2,099 1,648 1,499
Total net revenue 9,946 9,543 8,984
Provision for credit losses 86 67 86
Noninterest expense
Compensation expense 4,405 4,152 3,763
Noncompensation expense 2,608 2,752 2,277
Amortization of intangibles 91 98 72
Total noninterest expense 7,104 7,002 6,112
Income before income tax
expense 2,756 2,474 2,786
Income tax expense 1,053 882 1,076
Net income $ 1,703 $ 1,592 $ 1,710
Revenue by client segment
Private Banking $ 5,426 $ 5,116 $ 4,860
Institutional 2,386 2,273 2,180
Retail 2,134 2,154 1,944
Total net revenue $ 9,946 $ 9,543 $ 8,984
Financial ratios
Return on common equity 24% 25% 26%
Overhead ratio 71 73 68
Pretax margin ratio 28 26 31
2012 compared with 2011
Net income was $1.7 billion, an increase of $111 million, or
7%, from the prior year. These results reflected higher net
revenue, partially offset by higher noninterest expense and
a higher provision for credit losses.
Net revenue was $9.9 billion, an increase of $403 million,
or 4%, from the prior year. Noninterest revenue was $7.8
billion, down $48 million, or 1%, due to lower loan-related
revenue and the absence of a prior-year gain on the sale of
an investment. These decreases were predominantly offset
by net client inflows, higher valuations of seed capital
investments, the effect of higher market levels, higher
brokerage revenue and higher performance fees. Net
interest income was $2.1 billion, up $451 million, or 27%,
due to higher loan and deposit balances.
Revenue from Private Banking was $5.4 billion, up 6% from
the prior year due to higher net interest income from loan
and deposit balances and higher brokerage revenue,
partially offset by lower loan-related fee revenue. Revenue
from Institutional was $2.4 billion, up 5% due to net client
inflows and the effect of higher market levels. Revenue
from Retail was $2.1 billion, down 1% due to the absence
of a prior-year gain on the sale of an investment,
predominantly offset by higher valuations of seed capital
investments and higher performance fees.
The provision for credit losses was $86 million, compared
with $67 million in the prior year.
Noninterest expense was $7.1 billion, an increase of $102
million, or 1%, from the prior year, due to higher
performance-based compensation and higher headcount-
related expense, partially offset by the absence of non-
client-related litigation expense.
2011 compared with 2010
Net income was $1.6 billion, a decrease of $118 million, or
7%, from the prior year. These results reflected higher
noninterest expense, largely offset by higher net revenue
and a lower provision for credit losses.
Net revenue was $9.5 billion, an increase of $559 million,
or 6%, from the prior year. Noninterest revenue was $7.9
billion, up $410 million, or 5%, due to net inflows to
products with higher margins and the effect of higher
market levels, partially offset by lower performance fees
and lower loan-related revenue. Net interest income was
$1.6 billion, up $149 million, or 10%, due to higher
deposit and loan balances, partially offset by narrower
deposit spreads.
Revenue from Private Banking was $5.1 billion, up 5% from
the prior year due to higher deposit and loan balances and
higher brokerage revenue, partially offset by narrower
deposit spreads and lower loan-related revenue. Revenue
from Institutional was $2.3 billion, up 4% due to net
inflows to products with higher margins and the effect of
higher market levels. Revenue from Retail was $2.2 billion,
up 11% due to net inflows to products with higher margins
and the effect of higher market levels.
The provision for credit losses was $67 million, compared
with $86 million in the prior year.
Noninterest expense was $7.0 billion, an increase of $890
million, or 15%, from the prior year, due to higher
headcount-related expense and non-client-related litigation,
partially offset by lower performance-based compensation.