JP Morgan Chase 2014 Annual Report Download - page 70

Management’s discussion and analysis
68 JPMorgan Chase & Co./2014 Annual Report
CONSOLIDATED RESULTS OF OPERATIONS
The following section provides a comparative discussion of
JPMorgan Chase’s Consolidated Results of Operations on a
reported basis for the three-year period ended December 31,
2014. Factors that relate primarily to a single business
segment are discussed in more detail within that business
segment. For a discussion of the Critical Accounting Estimates
Used by the Firm that affect the Consolidated Results of
Operations, see pages 161–165.
Revenue
Year ended December 31,
(in millions) 2014 2013 2012
Investment banking fees $ 6,542 $ 6,354 $ 5,808
Principal transactions(a) 10,531 10,141 5,536
Lending- and deposit-related
fees 5,801 5,945 6,196
Asset management,
administration and
commissions 15,931 15,106 13,868
Securities gains 77 667 2,110
Mortgage fees and related
income 3,563 5,205 8,687
Card income 6,020 6,022 5,658
Other income(b) 2,106 3,847 4,258
Noninterest revenue 50,571 53,287 52,121
Net interest income 43,634 43,319 44,910
Total net revenue $ 94,205 $ 96,606 $ 97,031
(a) Included funding valuation adjustments ((“FVA”) effective 2013)) and
debit valuation adjustments (“DVA”) on over-the-counter (“OTC”)
derivatives and structured notes, measured at fair value. FVA and DVA
gains/(losses) were $468 million and $(1.9) billion for the years
ended December 31, 2014 and 2013, respectively. DVA losses were
($930) million for the year ended December 31, 2012.
(b) Included operating lease income of $1.7 billion, $1.5 billion and $1.3
billion for the years ended December 31, 2014, 2013 and 2012,
respectively.
2014 compared with 2013
Total net revenue for 2014 was down by $2.4 billion, or
2%, compared with the prior year, predominantly due to
lower mortgage fees and related income, and lower other
income. The decrease was partially offset by higher asset
management, administration and commissions revenue.
Investment banking fees increased compared with the prior
year, due to higher advisory and equity underwriting fees,
largely offset by lower debt underwriting fees. The increase
in advisory fees was driven by the combined impact of a
greater share of fees for completed transactions, and
growth in industry-wide fee levels. The increase in equity
underwriting fees was driven by higher industry-wide
issuance. The decrease in debt underwriting fees was
primarily related to lower bond underwriting compared with
a stronger prior year, and lower loan syndication fees on
lower industry-wide fee levels. Investment banking fee
share and industry-wide data are sourced from Dealogic, an
external vendor. For additional information on investment
banking fees, see CIB segment results on pages 92–96, CB
segment results on pages 97–99, and Note 7.
Principal transactions revenue, which consists of revenue
primarily from the Firm’s client-driven market-making and
private equity investing activities, increased compared with
the prior year as the prior year included a $1.5 billion loss
related to the implementation of the FVA framework for OTC
derivatives and structured notes. The increase was also due
to higher private equity gains as a result of higher net gains
on sales. The increase was partially offset by lower fixed
income markets revenue in CIB, primarily driven by credit-
related and rates products, as well as the impact of business
simplification initiatives. For additional information on
principal transactions revenue, see CIB and Corporate
segment results on pages 92–96 and pages 103–104,
respectively, and Note 7.
Lending- and deposit-related fees decreased compared with
the prior year, reflecting the impact of business
simplification initiatives and lower trade finance revenue in
CIB. For additional information on lending- and deposit-
related fees, see the segment results for CCB on pages 81–
91, CIB on pages 92–96 and CB on pages 97–99.
Asset management, administration and commissions
revenue increased compared with the prior year, reflecting
higher asset management fees driven by net client inflows
and the effect of higher market levels in AM and CCB. The
increase was offset partially by lower commissions and
other fee revenue in CCB as a result of the exit of a non-core
product in the second half of 2013. For additional
information on these fees and commissions, see the
segment discussions of CCB on pages 81–91, AM on pages
100–102, and Note 7.
Securities gains decreased compared with the prior year,
reflecting lower repositioning activity related to the Firm’s
investment securities portfolio. For additional information,
see the Corporate segment discussion on pages 103–104
and Note 12.
Mortgage fees and related income decreased compared
with the prior year. The decrease was predominantly due to
lower net production revenue driven by lower volumes due
to higher levels of mortgage interest rates, and tighter
margins. The decline in net production revenue was
partially offset by a lower loss on the risk management of
mortgage servicing rights (“MSRs”). For additional
information, see the segment discussion of CCB on pages
85–87 and Note 17.
Card income remained relatively flat but included higher net
interchange income on credit and debit cards due to growth
in sales volume, offset by higher amortization of new
account origination costs. For additional information on
credit card income, see CCB segment results on
pages 81–91.