JP Morgan Chase 2015 Annual Report Download - page 104

Management’s discussion and analysis
94 JPMorgan Chase & Co./2015 Annual Report
CORPORATE & INVESTMENT BANK
The Corporate & Investment Bank, which consists of
Banking and Markets & Investor Services, offers a
broad suite of investment banking, market-making,
prime brokerage, and treasury and securities products
and services to a global client base of corporations,
investors, financial institutions, government and
municipal entities. Banking offers a full range of
investment banking products and services in all major
capital markets, including advising on corporate
strategy and structure, capital-raising in equity and
debt markets, as well as loan origination and
syndication. Banking also includes Treasury Services,
which provides transaction services, consisting of cash
management and liquidity solutions. Markets &
Investor Services is a global market-maker in cash
securities and derivative instruments, and also offers
sophisticated risk management solutions, prime
brokerage, and research. Markets & Investor Services
also includes Securities Services, a leading global
custodian which provides custody, fund accounting and
administration, and securities lending products
principally for asset managers, insurance companies
and public and private investment funds.
Selected income statement data
Year ended December 31,
(in millions) 2015 2014 2013
Revenue
Investment banking fees $ 6,736 $ 6,570 $ 6,331
Principal transactions(a) 9,905 8,947 9,289
Lending- and deposit-related fees 1,573 1,742 1,884
Asset management,
administration and commissions 4,467 4,687 4,713
All other income 1,012 1,474 1,519
Noninterest revenue 23,693 23,420 23,736
Net interest income 9,849 11,175 10,976
Total net revenue(b) 33,542 34,595 34,712
Provision for credit losses 332 (161) (232)
Noninterest expense
Compensation expense 9,973 10,449 10,835
Noncompensation expense 11,388 12,824 10,909
Total noninterest expense 21,361 23,273 21,744
Income before income tax
expense 11,849 11,483 13,200
Income tax expense 3,759 4,575 4,350
Net income $ 8,090 $ 6,908 $ 8,850
(a) Included FVA and debt valuation adjustment (“DVA”) on OTC derivatives and
structured notes, measured at fair value. FVA and DVA gains/(losses) were
$687 million and $468 million and $(1.9) billion for the years ended
December 31, 2015, 2014 and 2013, respectively.
(b) Included tax-equivalent adjustments, predominantly due to income tax
credits related to alternative energy investments; income tax credits and
amortization of the cost of investments in affordable housing projects; as
well as tax-exempt income from municipal bond investments of $1.7 billion,
$1.6 billion and $1.5 billion for the years ended December 31, 2015, 2014
and 2013, respectively.
Selected income statement data
Year ended December 31,
(in millions, except ratios) 2015 2014 2013
Financial ratios
Return on common equity 12% 10% 15%
Overhead ratio 64 67 63
Compensation expense as
percentage of total net
revenue 30 30 31
Revenue by business
Investment banking(a) $ 6,376 $ 6,122 $ 5,922
Treasury Services(b) 3,631 3,728 3,693
Lending(b) 1,461 1,547 2,147
Total Banking(a) 11,468 11,397 11,762
Fixed Income Markets(a) 12,592 14,075 15,976
Equity Markets(a) 5,694 5,044 4,994
Securities Services 3,777 4,351 4,100
Credit Adjustments & Other(c) 11 (272) (2,120)
Total Markets & Investor
Service(a) 22,074 23,198 22,950
Total net revenue $33,542 $ 34,595 $34,712
(a) Effective in 2015, Investment banking revenue (formerly Investment
banking fees) incorporates all revenue associated with investment banking
activities, and is reported net of investment banking revenue shared with
other lines of business; previously such shared revenue had been reported
in Fixed Income Markets and Equity Markets. Prior period amounts have
been revised to conform with the current period presentation.
(b) Effective in 2015, Trade Finance revenue was transferred from Treasury
Services to Lending. Prior period amounts have been revised to conform
with the current period presentation.
(c) Consists primarily of credit valuation adjustments (“CVA”) managed by the
credit portfolio group, and FVA and DVA on OTC derivatives and structured
notes. Results are presented net of associated hedging activities and net of
CVA and FVA amounts allocated to Fixed Income Markets and Equity
Markets.