JP Morgan Chase 2013 Annual Report Download - page 82

Management’s discussion and analysis
88 JPMorgan Chase & Co./2013 Annual Report
Consumer & Business Banking
Selected income statement data(a)
Year ended December 31,
(in millions, except ratios) 2013 2012 2011
Revenue
Lending- and deposit-related
fees $ 2,942 $ 3,068 $ 3,160
Asset management,
administration and
commissions 1,815 1,638 1,561
Card income 1,495 1,353 2,024
All other income 492 498 473
Noninterest revenue 6,744 6,557 7,218
Net interest income 10,566 10,594 10,732
Total net revenue 17,310 17,151 17,950
Provision for credit losses 347 311 419
Noninterest expense 12,162 11,490 11,336
Income before income tax
expense 4,801 5,350 6,195
Net income $ 2,881 $ 3,203 $ 3,699
Return on common equity 26% 36% 39%
Overhead ratio 70 67 63
Overhead ratio, excluding core
deposit intangibles(b) 69 66 62
Equity (period-end and
average) $ 11,000 $ 9,000 $ 9,500
(a) The 2012 and 2011 data for certain income statement line items were
revised to reflect the transfer of certain functions and staff from
Corporate/Private Equity to CCB, effective January 1, 2013.
(b) Consumer & Business Banking (“CBB”) uses the overhead ratio
(excluding the amortization of core deposit intangibles (“CDI”)), a non-
GAAP financial measure, to evaluate the underlying expense trends of
the business. Including CDI amortization expense in the overhead ratio
calculation would result in a higher overhead ratio in the earlier years
and a lower overhead ratio in later years; this method would therefore
result in an improving overhead ratio over time, all things remaining
equal. This non-GAAP ratio excluded CBB’s CDI amortization expense
related to prior business combination transactions of $163 million,
$200 million, and $238 million for the years ended December 31,
2013, 2012 and 2011, respectively.
2013 compared with 2012
Consumer & Business Banking net income was $2.9 billion,
a decrease of $322 million, or 10%, compared with the
prior year, due to higher noninterest expense, partially
offset by higher noninterest revenue.
Net revenue was $17.3 billion, up 1% compared with the
prior year. Net interest income was $10.6 billion, flat
compared with the prior year, driven by higher deposit
balances, offset by lower deposit margin. Noninterest
revenue was $6.7 billion, an increase of 3%, driven by
higher investment sales revenue and debit card revenue,
partially offset by lower deposit-related fees.
The provision for credit losses was $347 million, compared
with $311 million in the prior year.
Noninterest expense was $12.2 billion, up 6% from the
prior year, reflecting continued investments in the business,
and costs related to the control agenda.
2012 compared with 2011
Consumer & Business Banking net income was $3.2 billion,
a decrease of $496 million, or 13%, compared with the
prior year. The decrease was driven by lower net revenue
and higher noninterest expense, partially offset by lower
provision for credit losses.
Net revenue was $17.2 billion, down 4% from the prior
year. Net interest income was $10.6 billion, down 1% from
the prior year, driven by the impact of lower deposit
margins, predominantly offset by higher deposit balances.
Noninterest revenue was $6.6 billion, down 9% from the
prior year, driven by lower debit card revenue, reflecting the
impact of the Durbin Amendment.
The provision for credit losses was $311 million, compared
with $419 million in the prior year. The current-year
provision reflected a $100 million reduction in the
allowance for loan losses. Net charge-offs were $411 million
compared with $494 million in the prior year.
Noninterest expense was $11.5 billion, up 1% from the
prior year, resulting from investment in the sales force and
new branch builds.
Selected metrics
As of or for the year
ended December 31,
(in millions, except
ratios) 2013 2012 2011
Business metrics
Business banking
origination volume $ 5,148 $ 6,542 $ 5,827
Period-end loans 19,416 18,883 17,652
Period-end deposits:(a)
Checking 187,182 170,354 147,821
Savings 238,223 216,422 191,891
Time and other 26,022 31,753 36,746
Total period-end
deposits 451,427 418,529 376,458
Average loans 18,844 18,104 17,121
Average deposits:(a)
Checking 176,005 153,422 136,602
Savings 229,341 204,449 182,587
Time and other 29,227 34,224 41,577
Total average deposits 434,573 392,095 360,766
Deposit margin 2.32% 2.57% 2.82%
Average assets(a) $ 37,174 $ 34,431 $ 32,886
(a) The 2012 and 2011 data for certain balance sheet line items were
revised to reflect the transfer of certain functions and staff from
Corporate/Private Equity to CCB, effective January 1, 2013.