JP Morgan Chase 2013 Annual Report Download - page 103

JPMorgan Chase & Co./2013 Annual Report 109
CORPORATE/PRIVATE EQUITY
The Corporate/Private Equity segment comprises
Private Equity, Treasury and Chief Investment Office
(“CIO”), and Other Corporate, which includes corporate
staff units and expense that is centrally managed.
Treasury and CIO are predominantly responsible for
measuring, monitoring, reporting and managing the
Firm’s liquidity, funding and structural interest rate
and foreign exchange risks, as well as executing the
Firm’s capital plan. The major Other Corporate units
include Real Estate, Central Technology, Legal,
Compliance, Finance, Human Resources, Internal Audit,
Risk Management, Oversight & Control, Corporate
Responsibility and various Other Corporate groups.
Other centrally managed expense includes the Firm’s
occupancy and pension-related expense that are
subject to allocation to the businesses.
Selected income statement data(a)
Year ended December 31,
(in millions, except headcount) 2013 2012 2011
Revenue
Principal transactions $ 563 $ (4,268) $ 1,434
Securities gains 666 2,024 1,600
All other income 1,864 2,434 587
Noninterest revenue 3,093 190 3,621
Net interest income (1,839) (1,281) 582
Total net revenue(b) 1,254 (1,091) 4,203
Provision for credit losses (28) (37) (36)
Noninterest expense
Compensation expense 2,299 2,221 1,966
Noncompensation expense(c) 13,208 6,972 6,325
Subtotal 15,507 9,193 8,291
Net expense allocated to other
businesses (5,252) (4,634) (4,276)
Total noninterest expense 10,255 4,559 4,015
Income before income tax
expense/(benefit) (8,973) (5,613) 224
Income tax expense/(benefit) (2,995) (3,591) (695)
Net income/(loss) $ (5,978) $ (2,022) $ 919
Total net revenue
Private equity $ 589 $ 601 $ 836
Treasury and CIO (792) (3,064) 3,196
Other Corporate(a) 1,457 1,372 171
Total net revenue $ 1,254 $ (1,091) $ 4,203
Net income/(loss)
Private equity $ 285 $ 292 $ 391
Treasury and CIO (676) (2,093) 1,349
Other Corporate(a) (5,587) (221) (821)
Total net income/(loss) $ (5,978) $ (2,022) $ 919
Total assets (period-end)(a) $805,987 $ 725,251 $ 689,718
Headcount(a) 20,717 17,758 16,653
(a) The 2012 and 2011 data for certain income statement line items
(predominantly net interest income, compensation, and non
compensation) were revised to reflect the transfer of certain
technology and operations, as well as real estate-related functions and
staff from Corporate/Private Equity to CCB, effective January 1, 2013.
For further information on this transfer, see footnote (a) on page 86 of
this Annual Report.
(b) Included tax-equivalent adjustments, predominantly due to tax-exempt
income from municipal bond investments of $480 million, $443
million and $298 million for the years ended December 31, 2013,
2012 and 2011, respectively.
(c) Included litigation expense of $10.2 billion, $3.7 billion and $3.2
billion for the years ended December 31, 2013, 2012 and 2011,
respectively.
2013 compared with 2012
Net loss was $6.0 billion, compared with a net loss of $2.0
billion in the prior year.
Private Equity reported net income of $285 million,
compared with net income of $292 million in the prior year.
Net revenue was of $589 million, compared with $601
million in the prior year.
Treasury and CIO reported a net loss of $676 million,
compared with a net loss of $2.1 billion in the prior year.
Net revenue was a loss of $792 million, compared with a
loss of $3.1 billion in the prior year. Net revenue in the
current year includes $659 million of net securities gains
from the sales of available-for-sale investment securities,
compared with securities gains of $2.0 billion and $888
million of pretax extinguishment gains related to the
redemption of trust preferred capital debt securities in the
prior year. The extinguishment gains were related to
adjustments applied to the cost basis of the trust preferred
securities during the period they were in a qualified hedge
accounting relationship. The prior year loss also reflected
$5.8 billion of losses incurred by CIO from the synthetic
credit portfolio for the six months ended June 30, 2012,
and $449 million of losses from the retained index credit
derivative positions for the three months ended September
30, 2012. Current year net interest income was a loss of
$1.4 billion compared with a loss of $683 million in the
prior year, primarily due to low interest rates and limited
reinvestment opportunities. Net interest income improved
in the fourth quarter of 2013 due to higher interest rates
and better reinvestment opportunities.
Other Corporate reported a net loss of $5.6 billion,
compared with a net loss of $221 million in the prior year.
Current year noninterest revenue was $1.8 billion
compared with $1.8 billion in the prior year. Current year
noninterest revenue included gains of $1.3 billion and $493
million on the sales of Visa shares and One Chase
Manhattan Plaza, respectively. Noninterest revenue in the
prior year included a $1.1 billion benefit for the Washington
Mutual bankruptcy settlement and a $665 million gain for
the recovery on a Bear Stearns-related subordinated loan.
Noninterest expense of $9.7 billion was up $5.9 billion
compared to the prior year. The current year included
$10.2 billion of legal expense, including reserves for
litigation and regulatory proceedings compared with $3.7
billion of expense for additional litigation reserves, largely
for mortgage-related matters, in the prior year.