JP Morgan Chase 2015 Annual Report Download - page 79

JPMorgan Chase & Co./2015 Annual Report 69
EXECUTIVE OVERVIEW
This executive overview of the MD&A highlights selected
information and may not contain all of the information that is
important to readers of this Annual Report. For a complete
description of the trends and uncertainties, as well as the
risks and critical accounting estimates affecting the Firm and
its various lines of business, this Annual Report should be
read in its entirety.
Financial performance of JPMorgan Chase
Year ended December 31,
(in millions, except per share
data and ratios) 2015 2014 Change
Selected income statement data
Total net revenue $ 93,543 $ 95,112 (2)%
Total noninterest expense 59,014 61,274 (4)
Pre-provision profit 34,529 33,838 2
Provision for credit losses 3,827 3,139 22
Net income 24,442 21,745 12
Diluted earnings per share 6.00 5.29 13
Return on common equity 11% 10%
Capital ratios(a)
CET1 11.8 10.2
Tier 1 capital 13.5 11.6
(a) Ratios presented are calculated under the transitional Basel III rules
and represent the Collins Floor. See Capital Management on pages
149–158 for additional information on Basel III.
Summary of 2015 Results
JPMorgan Chase reported record full-year 2015 net income
of $24.4 billion, and record earnings per share of $6.00, on
net revenue of $93.5 billion. Net income increased by $2.7
billion compared with net income of $21.7 billion in 2014.
ROE for the year was 11%, up from 10% in the prior year.
The increase in net income in 2015 was driven by lower taxes
and lower noninterest expense, partially offset by lower net
revenue and a higher provision for credit losses. The decline
in net revenue was predominantly driven by lower Corporate
private equity gains, lower CIB revenue reflecting the impact
of business simplification, and lower CCB Mortgage Banking
revenue. These decreases were partially offset by a benefit
from a legal settlement in Corporate and higher operating
lease income, predominantly in CCB.
The decrease in noninterest expense was driven by lower CIB
expense, reflecting the impact of business simplification, and
lower CCB expense as a result of efficiencies, predominantly
reflecting declines in headcount-related expense and lower
professional fees, partially offset by investments in the
business. As a result of these changes, the Firm’s overhead
ratio in 2015 was lower compared with the prior year.
The provision for credit losses increased from the prior year
as a result of an increase in the wholesale provision,
reflecting the impact of downgrades, including in the Oil &
Gas portfolio. The consumer provision declined, reflecting
lower net charge-offs due to continued discipline in credit
underwriting, as well as improvement in the economy driven
by increasing home prices and lower unemployment levels.
This was partially offset by a lower reduction in the allowance
for loan losses.
Total firmwide allowance for credit losses in 2015 was $14.3
billion, resulting in a loan loss coverage ratio of 1.37%,
excluding the PCI portfolio, compared with 1.55% in the
prior year. The Firm’s allowance for loan losses to retained
nonaccrual loans, excluding the PCI portfolio and credit card,
was 117% compared with 106% in 2014. Firmwide, net
charge-offs were $4.1 billion for the year, down $673 million
from 2014. Nonperforming assets at year-end were $7.0
billion, down $933 million.
The Firm’s results reflected solid underlying performance
across its four major reportable business segments, with
continued strong lending and consumer deposit growth.
Firmwide average core loans increased by 12% compared
with the prior year. Within CCB, Consumer & Business Banking
average deposits increased 9% over the prior year. The Firm
had nearly 23 million active mobile customers at year end,
an increase of 20% over the prior year. Credit card sales
volume (excluding Commercial Card) was up 7% for the year
and merchant processing volume was up 12%. The CIB
maintained its #1 ranking in Global Investment Banking Fees
according to Dealogic. CB had record average loans, with an
11% increase compared with the prior year. CB also had
record gross investment banking revenue of $2.2 billion, up
10% from the prior year. AM had positive net long-term