JP Morgan Chase 2015 Annual Report Download - page 316

Notes to consolidated financial statements
306 JPMorgan Chase & Co./2015 Annual Report
Segment results
The following tables provide a summary of the Firm’s
segment results as of or for the years ended December 31,
2015, 2014 and 2013 on a managed basis. Total net
revenue (noninterest revenue and net interest income) for
each of the segments is presented on a fully taxable-
equivalent (“FTE”) basis. Accordingly, revenue from
investments that receive tax credits and tax-exempt
securities is presented in the managed results on a basis
comparable to taxable investments and securities. This non-
GAAP financial measure allows management to assess the
comparability of revenue arising from both taxable and tax-
exempt sources. The corresponding income tax impact
related to tax-exempt items is recorded within income tax
expense/(benefit).
Preferred stock dividend allocation
As part of its funds transfer pricing process, the Firm
allocates substantially all of the cost of its outstanding
preferred stock to its reportable business segments, while
retaining the balance of the cost in Corporate. This cost is
included as a reduction to net income applicable to common
equity to be consistent with the presentation of firmwide
results.
Business segment capital allocation changes
On at least an annual basis, the Firm assesses the level of
capital required for each line of business as well as the
assumptions and methodologies used to allocate capital to
its lines of business, and updates the equity allocations to
its lines of business as refinements are implemented. Each
business segment is allocated capital by taking into
consideration stand-alone peer comparisons, regulatory
capital requirements (as estimated under Basel III Advanced
Fully Phased-In rules) and economic risk. The amount of
capital assigned to each business is referred to as equity.
Segment results and reconciliation
As of or for the year ended
December 31,
(in millions, except ratios)
Consumer & Community Banking Corporate & Investment Bank Commercial Banking
2015 2014 2013 2015 2014 2013 2015 2014 2013
Noninterest revenue $ 15,592 $ 15,937 $ 17,552 $ 23,693 $ 23,420 $ 23,736 $ 2,365 $ 2,349 $ 2,298
Net interest income 28,228 28,431 28,985 9,849 11,175 10,976 4,520 4,533 4,794
Total net revenue 43,820 44,368 46,537 33,542 34,595 34,712 6,885 6,882 7,092
Provision for credit losses 3,059 3,520 335 332 (161) (232) 442 (189) 85
Noninterest expense 24,909 25,609 27,842 21,361 23,273 21,744 2,881 2,695 2,610
Income/(loss) before income tax expense/(benefit) 15,852 15,239 18,360 11,849 11,483 13,200 3,562 4,376 4,397
Income tax expense/(benefit) 6,063 6,054 7,299 3,759 4,575 4,350 1,371 1,741 1,749
Net income/(loss) $ 9,789 $ 9,185 $ 11,061 $ 8,090 $ 6,908 $ 8,850 $ 2,191 $ 2,635 $ 2,648
Average common equity $ 51,000 $ 51,000 $ 46,000 $ 62,000 $ 61,000 $ 56,500 $ 14,000 $ 14,000 $ 13,500
Total assets 502,652 455,634 452,929 748,691 861,466 843,248 200,700 195,267 190,782
Return on common equity 18% 18% 23% 12% 10% 15% 15% 18% 19%
Overhead ratio 57 58 60 64 67 63 42 39 37
(a) Segment managed results reflect revenue on a FTE basis with the corresponding income tax impact recorded within income tax expense/(benefit). These adjustments are
eliminated in reconciling items to arrive at the Firm’s reported U.S. GAAP results.