JP Morgan Chase 2015 Annual Report Download - page 54

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Creating new tools to manage our
balance sheet, liquidity and interest
rate risk
Treasury and the Chief Investment
Oce are central to managing the
firm’s balance sheet. Together with
our lines of business, we achieved a
tremendous amount in 2015; most
notably, we overdelivered on our
strategic eorts to decrease non-
operating deposits and meaningfully
reduce the firm’s GSIB capital sur-
charge from 4.5% to an estimated
3.5% – with no material impact to
our firm or our clients and, impor-
tantly, securing a new grounding
point for the firm.
We devoted significant attention to
studying our current business mix to
respond strategically to evolving regu-
latory requirements and to maximize
shareholder value. We introduced a
comprehensive firmwide balance
sheet framework designed to objec-
tively analyze and consider our busi-
ness activities relative to some 20 con-
straints, ranging from liquidity and
regulatory capital to GSIB and CCAR.
This framework now is being lever-
aged in strategic review and planning
sessions across the firm.
2015 featured the first rate hike by the
Federal Reserve in nearly a decade, an
event for which we have been prepar-
ing; and, while the future is never cer-
tain, we are increasingly smarter and
better prepared to manage against
whatever scenario plays out. We
expanded our capacity to run interest
rate scenarios and further industrial-
ized our processes and risk engines,
securing the foundation of our risk
management practices. In a continuing
eort to evolve our deposit pricing
framework, we completed a series of
granular reviews of our deposit models
and recalibrated to better capture
interest rate sensitivities and potential
migration outcomes as rates normalize.
In 2015, we implemented our firmwide
intraday liquidity framework, a pro-
gram that was launched last year. We
have substantially improved our ability
to manage real-time liquidity risk and
reduced the amount of intraday liquid-
ity facilities by nearly $1 trillion. We
can now, quite literally with the click of
a button, view, monitor and manage in
real time cash payments coming in or
leaving the firm. More broadly, we
remain compliant with all regulatory
required and internally measured
liquidity risk scenarios, with appropri-
ately conservative liquidity buers.
We are a technology company
Technology is the lifeblood of our
organization, and it drives the deliv-
ery of the secure products, platforms
and services our customers and
clients value and trust. We serve
nearly 40 million digital customers
and process $1 trillion in merchant
transactions annually. Each day, we
process $5 trillion of payments, as
well as trade and settle $1.5 trillion of
securities. We see technology as an
essential core competency and a key
dierentiator to drive future growth
in all of our businesses.
As one of the largest, most systemi-
cally important financial institu-
tions in the world, we are not only
a benchmark for safety and sound-
ness, we have a responsibility to
play a leadership role in advancing
the industry and its business prac-
tices. To meet the evolving needs of
our customers and clients, as well as
the global financial system more
broadly, we are committed to con-
tinually developing new solutions
while maintaining a robust and
secure infrastructure.
As the firm’s Chief Operating Ocer,
I am responsible for many critical
functions across the firm, including
Treasury, the Chief Investment
Oce, Global Technology, Opera-
tions, Corporate Strategy, Global Real
Estate, Oversight & Control, Compli-
ance, Global Security & Military
Aairs and Regulatory Aairs,
among others. The Chief Operating
Oce (COO) drives progress on ini-
tiatives that are vital to the firm’s
long-term success.
Matt Zames
Investing in Our Future