JP Morgan Chase 2013 Annual Report Download - page 100

Management’s discussion and analysis
106 JPMorgan Chase & Co./2013 Annual Report
ASSET MANAGEMENT
Asset Management, with client assets of $2.3 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 trusts and
estates, 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) 2013 2012 2011
Revenue
Asset management,
administration and commissions $ 8,232 $ 7,041 $ 6,748
All other income 797 806 1,147
Noninterest revenue 9,029 7,847 7,895
Net interest income 2,291 2,099 1,648
Total net revenue 11,320 9,946 9,543
Provision for credit losses 65 86 67
Noninterest expense
Compensation expense 4,875 4,405 4,152
Noncompensation expense 3,002 2,608 2,752
Amortization of intangibles 139 91 98
Total noninterest expense 8,016 7,104 7,002
Income before income tax
expense 3,239 2,756 2,474
Income tax expense 1,208 1,053 882
Net income $ 2,031 $ 1,703 $ 1,592
Revenue by client segment
Private Banking $ 6,020 $ 5,426 $ 5,116
Institutional 2,536 2,386 2,273
Retail 2,764 2,134 2,154
Total net revenue $11,320 $ 9,946 $ 9,543
Financial ratios
Return on common equity 23% 24% 25%
Overhead ratio 71 71 73
Pretax margin ratio 29 28 26
2013 compared with 2012
Net income was $2.0 billion, an increase of $328 million, or
19%, from the prior year, reflecting higher net revenue,
largely offset by higher noninterest expense.
Net revenue was $11.3 billion, an increase of $1.4 billion,
or 14%, from the prior year. Noninterest revenue was $9.0
billion, up $1.2 billion, or 15%, from the prior year, due to
net client inflows, the effect of higher market levels and
higher performance fees. Net interest income was $2.3
billion, up $192 million, or 9%, from the prior year, due to
higher loan and deposit balances, partially offset by
narrower loan and deposit spreads.
Revenue from Private Banking was $6.0 billion, up 11%
from the prior year due to higher net interest income from
loan and deposit balances and higher brokerage revenue.
Revenue from Retail was $2.8 billion, up 30% due to net
client inflows and the effect of higher market levels.
Revenue from Institutional was $2.5 billion, up 6% due to
higher valuations of seed capital investments, the effect of
higher market levels and higher performance fees.
The provision for credit losses was $65 million, compared
with $86 million in the prior year.
Noninterest expense was $8.0 billion, an increase of $912
million, or 13%, from the prior year, primarily due to higher
headcount-related expense driven by continued front office
expansion efforts, higher performance-based compensation
and costs related to the control agenda.
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.