JP Morgan Chase 2015 Annual Report Download - page 92

Management’s discussion and analysis
82 JPMorgan Chase & Co./2015 Annual Report
Net interest income excluding markets-based activities
(formerly core net interest income)
In addition to reviewing net interest income on a managed
basis, management also reviews net interest income
excluding CIB’s markets-based activities to assess the
performance of the Firm’s lending, investing (including
asset-liability management) and deposit-raising activities.
The data presented below are non-GAAP financial measures
due to the exclusion of CIB’s markets-based net interest
income and related assets. Management believes this
exclusion provides investors and analysts with another
measure by which to analyze the non-markets-related
business trends of the Firm and provides a comparable
measure to other financial institutions that are primarily
focused on lending, investing and deposit-raising activities.
Net interest income excluding CIB markets-based
activities data
Year ended December 31,
(in millions, except rates) 2015 2014 2013
Net interest income –
managed basis(a)(b) $ 44,620 $ 44,619 $ 44,016
Less: Markets-based net
interest income 4,813 5,552 5,492
Net interest income
excluding markets(a) $ 39,807 $ 39,067 $ 38,524
Average interest-earning
assets $2,088,242 $2,049,093 $1,970,231
Less: Average markets-
based interest-earning
assets 493,225 510,261 504,218
Average interest-
earning assets
excluding markets $1,595,017 $1,538,832 $1,466,013
Net interest yield on
average interest-earning
assets – managed basis 2.14% 2.18% 2.23%
Net interest yield on
average markets-based
interest-earning assets 0.97 1.09 1.09
Net interest yield on
average interest-earning
assets excluding
markets 2.50% 2.54% 2.63%
(a) Interest includes the effect of related hedging derivatives. Taxable-equivalent
amounts are used where applicable.
(b) For a reconciliation of net interest income on a reported and managed basis, see
reconciliation from the Firm’s reported U.S. GAAP results to managed basis on
page 80.
2015 compared with 2014
Net interest income excluding CIB’s markets-based activities
increased by $740 million in 2015 to $39.8 billion, and
average interest-earning assets increased by $56.2 billion
to $1.6 trillion. The increase in net interest income in 2015
predominantly reflected higher average loan balances and
lower interest expense on deposits. The increase was
partially offset by lower loan yields and lower investment
securities net interest income. The increase in average
interest-earning assets largely reflected the impact of
higher average deposits with banks. These changes in net
interest income and interest-earning assets resulted in the
net interest yield decreasing by 4 basis points to 2.50% for
2015.
2014 compared with 2013
Net interest income excluding CIB’s markets-based activities
increased by $543 million in 2014 to $39.1 billion, and
average interest-earning assets increased by $72.8 billion
to $1.5 trillion. The increase in net interest income in 2014
predominantly reflected higher yields on investment
securities, the impact of lower interest expense, and higher
average loan balances. The increase was partially offset by
lower yields on loans due to the run-off of higher-yielding
loans and new originations of lower-yielding loans. The
increase in average interest-earning assets largely reflected
the impact of higher average balance of deposits with
banks. These changes in net interest income and interest-
earning assets resulted in the net interest yield decreasing
by 9 basis points to 2.54% for 2014.