JP Morgan Chase 2013 Annual Report Download - page 47

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Ultimately, there are many reasons
why clients choose us. They recognize
the quality of our professionals,
the value of our brand, our financial
strength and stability, our global reach
and the ease of dealing with one firm
for all of their financial services needs.
2013 results
Although the economy remained
fragile and competition intensified in
2013, we continued to stay focused,
invest in our business and maintain
our risk discipline. Commercial
Banking delivered revenue of $7.0
billion and net income of $2.6 billion,
up 2% and down 3%, respectively,
from 2012. Demonstrating our strong
partnerships across the company, we
had record-setting revenue in several
areas, including investment banking
revenue2 of $1.7 billion, Card
Services revenue2 of $438 million
and International Banking revenue
of $261 million.
Even as many of our clients remained
cautious, paying down debt and
increasing liquidity, Commercial
Banking continued to perform and
has delivered 14 consecutive quarters
of overall loan growth. Importantly,
we achieved these results while adher-
ing to our strict credit standards, and
our net charge-o rate of 0.03% was
one of the best in the industry. A solid
credit culture and strong risk disci-
pline have been critical to the success
and stability of our franchise.
We continued to see our Middle
Market Banking expansion strategy
deliver steady results. Since 2006, we
have successfully entered 16 major
new markets across the country.
Commercial Banking’s growth in the
Florida market is one of many excel-
lent examples highlighting this prog-
ress. Five years ago, we entered the
state with 20 employees and seven
Middle Market Banking clients.
By 2013, our Florida business had 77
employees, 250 clients, and more
than $1.3 billion in loans and $1.2
billion in deposits. Over time, we
believe this to be a tremendous
opportunity to expand and deepen
our Middle Market Banking fran-
chise. Our long-term success will
depend upon continuous investment,
patience and the determination to
stick to our strategy.
Since 2008, we have concentrated on
selectively building our real estate
loan portfolios, and the success of
our real estate business remains a
highlight. Commercial Term Lending
saw record loan growth and contin-
ued to be the top multifamily lender
in the U.S. Real Estate Banking had a
record $9 billion in loan originations
last year, and we continued to see
excellent opportunities to support
our clients and grow our portfolio.
Exemplifying our strong focus on
local communities, Community
Development Banking remained
quite active. The team completed
transactions that financed the devel-
opment of more than 8,200 units of
aordable housing across the U.S.,
as well as other community-based
projects, including charter schools,
health clinics and grocers.
Overall, return on equity for the
business was 19%. We achieved
these returns despite a materially
higher capital allocation and contin-
ual significant investments to grow
our franchise and improve our com-
pliance capabilities and controls.
While we are proud of these results
and our business is strong, we are
committed to making Commercial
Banking even better.
Looking ahead
As the U.S. economy continues to
improve and our clients gain the
confidence to increase borrowing for
new projects and growth initiatives,
we stand ready to support them.
With greater economic activity, we
expect to see more M&A and capital
markets transactions, and we will
work closely with the Corporate &
Investment Bank to assist in these
eorts. Our corporate clients are
increasingly expanding outside the
U.S., and we are well-placed to help
them. In addition, to help our cli-
ents navigate transformational
changes in key industries, we have
invested in specialized teams cover-
ing areas that include healthcare,
energy and technology.
A top priority across the firm is
ensuring we fully meet the letter
and spirit of all regulations govern-
ing our business. We will continue
to improve our regulatory and
compliance processes, and we have
asked several of our key executives
to lead those eorts full time.
In 2013, the Commercial Banking
team rose to the occasion and over-
came market uncertainty and regula-
tory challenges. I want to thank
our dedicated professionals for their
continued commitment and hard
work. I am incredibly proud of what
we have accomplished.
We have a solid foundation built
upon our people and the extraordi-
nary capabilities and scope of our
firm. I believe we have the strategy
and resources in place to continue
to deliver dynamic opportunities for
our employees, a great experience
for our clients and strong returns for
our shareholders.
Douglas Petno
CEO, Commercial Banking