JP Morgan Chase 2013 Annual Report Download - page 39

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CCB had double-digit growth in most
of our businesses. Consumer Banking
average deposits were up 11%, client
investment assets were up 19%,
Business Banking average deposits
were up 13%, credit card sales vol-
ume was up 10%, merchant process-
ing volume was up 14% and auto
originations were up 12%. These
numbers are the strongest we’ve
seen in years. The outlier was mort-
gage originations, which were down
8%, consistent with the industry.
Here are some highlights from our
individual business units:
• Consumer & Business Banking net
income of $2.9 billion was down
10% from 2012, but net revenue of
$17.3 billion was up 1%. Chase
Private Client (CPC) continues to
be a big success with our custom-
ers. We reached a record $189
billion in client investment assets.
Our net new investments per
household have grown 77% per
year since 2010. To date, we have
opened roughly 2,150 CPC loca-
tions to serve more than 200,000
clients. We remain the #1 SBA
lender for the fourth year in a row
even with Business Banking loan
originations down 21% from 2012.
• We are managing Mortgage Bank-
ing toward becoming a smaller,
higher-quality and less volatile
business. While Mortgage Produc-
tion was strong in the first half of
the year, our origination volume
dropped 37% in the second half as
rates increased. As a result, our
full-year net income was $3.1 bil-
lion, down 8% from 2012. Return
on equity was 16% for 2013.
Although these results are lower
than last year when production
volume was a record, we are
pleased that Mortgage Banking is
maintaining profitability.
• Card, Merchant Services & Auto
performed exceptionally well in
2013. Net income was up a very
strong 19% to $4.8 billion from
$4.0 billion in 2012, driven by
lower provision for credit losses.
Card Services sales volume of
$419.5 billion was up 10% year-
over-year, outperforming the
industry for the 23rd consecutive
quarter. Credit trends continue
to improve, and charge-o rates
continue to fall to historic lows.
Our 2013 net charge-o rate for
Credit Card of 3.14% was down
from 3.95% in 2012.
• Over the years, Chase has developed
a leading end-to-end payments
franchise. Merchant Servicing
processing volume of $750.1 billion
was up 14% year-over-year, and
transaction volume of 35.6 billion
was up 21%.
• In Auto, our average loans were up
5% year-over-year, and originations
were up 12%. The Auto net charge-
o rate of 0.31% was down from
0.39% in 2012. In 2013, we also
made the strategic decision to stop
student loan originations. Student
loan originations were becoming a
smaller and smaller part of our
business, and we chose to further
de-risk our franchise by getting out
of that product.
Expenses
CCB expenses were down by nearly
$1 billion, or 3%, during 2013, and
we will continue to drive out waste
and improve eciency. We are
pleased that we met or exceeded our
expense and headcount targets for
2013. Going forward, we have set a
more ambitious goal to exit 2016
with expenses nearly $4 billion
lower than they were in 2013. We
intend to meet that goal while mak-
ing further investments in controls,
technology and self-service channels.
We are keenly aware that every dol-
lar of our budget is a dollar of share-
holders’ money, and we intend to
manage our business with extreme
financial discipline while producing
strong, long-term returns.
2014 priorities
As we move into 2014, we recognize
that the environment in which we
operate has fundamentally changed.
Our core strategy includes further
strengthening our controls, invest-
ing in digital service and running
great community branches.
Further strengthening our controls
Controls remain the #1 priority for
the firm.
In 2014, CCB will invest approximately
$500 million more in technology-
related controls. That investment will
be directed at automating manual
processes and reducing complexity
for our employees and our customers.
We believe these investments will
more than pay for themselves with
fewer errors, more consistency and a
higher-quality service experience
for customers down the road.
Investing in digital service
Technology is changing our business
rapidly, and consumer adoption of
digital and mobile channels is stag-
gering. In just the past three years,
customer deposits made through
self-service channels increased from
38% to 53%. The number of active
mobile customers has more than
tripled from 2010. Technology is
driving service enhancements for
our customers that will not only
improve their banking experience
but will serve them more eciently
and lower our cost base.