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JPM Q3 2023 Presentation
JPM Q3 2023 Presentation
1 See note 3 on slide 12 6 On May 1, 2023, JPMorgan Chase acquired certain assets and assumed certain liabilities of First
2 Represents the estimated Basel III common equity Tier 1 (“CET1”) capital and ratio and Total Loss- Republic. All references in this presentation to “ex. FR” or “FR impact” refer to excluding or including the
Absorbing Capacity for the current period. See note 1 on slide 13 relevant effects of the First Republic acquisition, as well as subsequent related business and activities,
3 Standardized risk-weighted assets (“RWA”). Estimated for the current period. See note 1 on slide 13 as applicable
4 Cash and marketable securities represents HQLA and unencumbered marketable securities. Estimated 7 Includes the net impact of employee issuances
for the current period. See note 2 on slide 13 8 Last twelve months (“LTM”). Net of stock issued to employees
5 See note 1 on slide 12
1
3Q23 Financial results1
$B, EXCEPT PER SHARE DATA
2
Fortress balance sheet
$B, EXCEPT PER SHARE DATA STANDARDIZED CET1 RATIO (%)1
3Q23 2Q23 3Q22
1 75 bps
Risk-based capital metrics
4 bps 14.3%
(14 bps) 11 bps
CET1 capital $242 $236 $210
(30 bps)
CET1 capital ratio – Standardized 14.3% 13.8% 12.5% 13.8%
Tangible book value per share5 82.04 79.90 69.90 2Q23 Loans Market Risk Credit Risk 3Q23
ex. Loans
Note: Totals may not sum due to rounding 5 See note 3 on slide 12
1 Estimated for the current period. See note 1 on slide 13 6 Reflects Net Income Applicable to Common Equity
2 Estimated for the current period. Represents the supplementary leverage ratio (“SLR”) 7 Excludes AOCI on cash flow hedges and DVA related to structured notes
3 Estimated for the current period. Liquidity Coverage Ratio (“LCR”) represents the average LCR for 8 Includes net share repurchases and common dividends
the Firm and JPMorgan Chase Bank, N.A. (“Bank”). See note 2 on slide 13 9 Primarily reduction in CET1 capital deductions
4 See note 4 on slide 13
3
U.S. B3E NPR increases JPM’s required capital by 25%... but why?
⚫ As proposed, the U.S. B3E NPR1 increases the Firm’s RWA by 30% ($500B) and required capital by 25% ($50B)
⚫ $22.5B is directly linked to our 4.5% GSIB2 surcharge (4.5% x $500B), despite no change to our systemic risk footprint
⚫ The proposal increases the required capital for operational risk by $30B
⚫ We estimate our SCB already includes ~$15B3 capital for operational risk
$200B $50B
98 GSIB
$22.5B
GSIB 75
$30B Capital
added
55 SCB for B3E
$5B RWA
SCB4 50 ~$15B
Regulatory 98 Regulatory
75 $22.5B SCB
minimum minimum
5
Current Standardized B3E NPR Current 3 Proposed
JPM believes that an RWA change of this magnitude requires corresponding adjustments to SCB and GSIB
Note: Estimated B3E impacts based on our best understanding of the proposal applied to our balance sheet as of 2Q23 and does not incorporate any remediation. Numbers above have been rounded for ease of illustration. Estimated
RWA impact of >$500B has been rounded down to $500B
For footnotes see slide 14
4
The “19%”1 quoted by the Agencies does not tell the full story
⚫ Measured since the 2017 rules, JPM’s CET1 capital requirements will have increased by ~45% should the rule be enacted as proposed
⚫ JPM disagrees with the cost-benefit analysis and believes that increases of this magnitude are unwarranted
~45%
?
CECL6 in
CCAR
?
B3E NPR
GSIB: 4.0 to 4.5%
$50B / 25% GSIB
SA-CCR and
headwinds
SCB adoptions4 $8B / 4%
GSIB: 3.5 to 4.0% GSIB NPR5 ?
2017 rules 3 3Q23 Pre-NPR Post B3E and GSIB NPR Future
5
CCB CIB CB AWM Corp.
KEY DRIVERS / STATISTICS ($B)3 KEY DRIVERS / STATISTICS ($B) – DETAIL BY BUSINESS
3Q23 ex. FR 3Q23 ex. FR
Reported FR impact ex. FR 2Q23 3Q22 Reported FR impact ex. FR 2Q23 3Q22
Average equity $55.5 $3.5 $52.0 $52.0 $50.0 Banking & Wealth Management
Business Banking average loans6 $19.5 - $19.5 $19.6 $21.3
ROE 41% 2% 40% 38% 34%
Business Banking loan originations 1.3 - 1.3 1.3 1.0
Overhead ratio 50 (1) 50 50 56
Client investment assets (EOP) 882.3 140.6 741.7 742.0 615.0
Average loans $564.3 $94.3 $470.0 $458.4 $442.7 Deposit margin 2.92% 0.07% 2.85% 2.82% 1.83%
Average deposits 1,143.5 66.7 1,076.8 1,110.1 1,174.2 Home Lending
Active mobile customers (mm) 4 53.2 n.a. 53.2 52.0 48.9 Average loans $264.0 $91.1 $172.9 $172.4 $176.9
7
5 Loan originations 11.0 0.7 10.3 10.1 12.1
Debit & credit card sales volume $426.3 $0.5 $425.8 $423.6 $395.8
Third-party mortgage loans serviced (EOP) 637.8 3.0 634.9 601.4 586.7
⚫ Ex. FR: Net charge-off/(recovery) rate (0.02)% 0.01% (0.04)% (0.07)% (0.14)%
Card Services & Auto
⚫ Average loans up 6% YoY and 3% QoQ
Card Services average loans $195.2 - $195.2 $187.0 $168.1
⚫ Average deposits down 8% YoY and 3% QoQ Auto average loans and leased assets 85.1 - 85.1 82.1 80.4
– EOP deposits down 9% YoY and 3% QoQ Auto loan and lease originations 10.2 - 10.2 12.0 7.5
⚫ Active mobile customers up 9% YoY Card Services net charge-off rate 2.49% - 2.49% 2.41% 1.40%
Card Services net revenue rate 9.60 - 9.60 9.11 9.92
⚫ Debit & credit card sales volume up 8% YoY
Card Services sales volume5 $296.2 - $296.2 $294.0 $272.3
⚫ Client investment assets up 21% YoY and flat QoQ
1 See note 1 on slide 12
2 See note 3 on slide 13
For additional footnotes see slide 14
6
CCB CIB CB AWM Corp.
7
CCB CIB CB AWM Corp.
Commercial Banking1
SELECTED INCOME STATEMENT DATA ($MM) FINANCIAL PERFORMANCE (ex. FR)
Commercial Real Estate Banking 921 273 648 (28) 24 ⚫ Expense of $1.4B, up 15% YoY, largely driven by an
increase in headcount including front office and technology
Other 26 - 26 (11) 20 investments, as well as higher volume-related expense,
Expense 1,375 18 1,357 57 177 including the impact of new client acquisition
⚫ Credit costs of $64mm
Credit costs 90 26 64 (425) (554)
⚫ NCOs of $50mm
Net income $1,935 $245 $1,690 $156 $744
⚫ Reserve build of $14mm, driven by updates to certain
commercial real estate pricing variables, largely offset by
KEY DRIVERS / STATISTICS ($B)2 other changes in the central scenario and the impact of net
3Q23 ex. FR
lending activity
Reported FR impact ex. FR 2Q23 3Q22
⚫ Average loans of $244B, up 6% YoY and up 1% QoQ
Average equity $30.0 $1.5 $28.5 $28.5 $25.0
⚫ C&I8 up 7% YoY and flat QoQ
ROE 25% 2% 23% 21% 14%
⚫ CRE8 up 6% YoY and up 1% QoQ
Overhead ratio 34 (3) 37 34 39
3
$2,045 - $2,045 $2,188 $1,568
⚫ Average deposits of $262B, down 7% YoY and 5% QoQ,
Payments revenue ($mm)
primarily driven by lower non-operating deposits
Investment Banking and Markets
$821 - $821 $767 $761
revenue, gross ($mm) 4
Average loans5 283.0 39.0 244.0 242.2 229.1
Average client deposits 262.1 - 262.1 275.2 281.3
Allowance for loan losses 4.7 0.6 4.2 4.2 3.1
Nonaccrual loans 0.9 - 0.9 1.0 0.8
6 7
Net charge-off/(recovery) rate 0.07% (0.01)% 0.08% 0.17% 0.07%
6
ALL/loans 1.68 (0.04) 1.72 1.72 1.32
8
CCB CIB CB AWM Corp.
Reported FR impact ex. FR 2Q23 3Q22 ⚫ Revenue of $4.6B, relatively flat YoY, driven by higher
management fees on strong net inflows and higher average
Revenue $5,005 $436 $4,569 ($71) $30
market levels, offset by lower performance fees and lower net
Asset Management 2,164 - 2,164 36 (45) interest income
Global Private Bank 2,841 436 2,405 (107) 75 ⚫ Expense of $3.1B, up 3% YoY, driven by continued growth in
private banking advisor teams and the impact of JPMAM
Expense 3,138 17 3,121 (42) 93
China and Global Shares
Credit costs (13) (31) 18 19 120
⚫ AUM of $3.2T was up 22% YoY and client assets of $4.6T
Net income $1,417 $342 $1,075 ($32) ($144) were up 21% YoY, driven by continued net inflows and higher
market levels
⚫ For the quarter, AUM had long-term net inflows of $20B
and liquidity net inflows of $40B
⚫ Average loans of $211B, down 3% YoY and flat QoQ
KEY DRIVERS / STATISTICS ($B)2
⚫ Average deposits of $202B, down 20% YoY and down 5%
3Q23 ex. FR QoQ
Reported FR impact ex. FR 2Q23 3Q22
Pretax margin 38 6 31 32 36
9
CCB CIB CB AWM Corp.
Corporate1
SELECTED INCOME STATEMENT DATA ($MM) FINANCIAL PERFORMANCE (ex. FR)
10
Outlook1
FIRMWIDE
Expect FY2023 adjusted expense of ~$84B excluding the FDIC special assessment related to systemic risk
2 determination, market dependent
– Adjusted expense excludes Firmwide legal expense ($1.3B year-to-date)
11
Notes on non-GAAP financial measures
1. In addition to analyzing the Firm’s results on a reported basis, management reviews Firmwide results, including the overhead ratio, on a “managed” basis; these
Firmwide managed basis results are non-GAAP financial measures. The Firm also reviews the results of the lines of business on a managed basis. The Firm’s
definition of managed basis starts, in each case, with the reported U.S. GAAP results and includes certain reclassifications to present total net revenue for the Firm and
each of the reportable business segments on a fully taxable-equivalent 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. These financial measures allow management to assess the
comparability of revenue from year-to-year arising from both taxable and tax-exempt sources. The corresponding income tax impact related to tax-exempt items is
recorded within income tax expense. These adjustments have no impact on net income as reported by the Firm as a whole or by the lines of business. For a
reconciliation of the Firm’s results from a reported to managed basis, refer to page 7 of the Earnings Release Financial Supplement. There are no reclassifications
associated with FR managed revenue
2. In addition to reviewing net interest income (“NII”) and noninterest revenue (“NIR”) on a managed basis, management also reviews these metrics excluding CIB
Markets (“Markets”, which is composed of Fixed Income Markets and Equity Markets). Markets revenue consists of principal transactions, fees, commissions and other
income, as well as net interest income. These metrics, which exclude Markets, are non-GAAP financial measures. Management reviews these metrics to assess the
performance of the Firm’s lending, investing (including asset-liability management) and deposit-raising activities, apart from any volatility associated with Markets
activities. In addition, management also assesses Markets business performance on a total revenue basis as offsets may occur across revenue lines. For example,
securities that generate net interest income may be risk-managed by derivatives that are reflected at fair value in principal transactions revenue. Management believes
these measures provide investors and analysts with alternative measures to analyze the revenue trends of the Firm. For a reconciliation of NII and NIR from reported
to excluding Markets, refer to page 29 of the Earnings Release Financial Supplement. For additional information on Markets revenue, refer to page 70 of the Firm’s
2022 Form 10-K
3. Tangible common equity (“TCE”), return on tangible common equity (“ROTCE”) and tangible book value per share (“TBVPS”), are each non-GAAP financial measures.
TCE represents the Firm’s common stockholders’ equity (i.e., total stockholders’ equity less preferred stock) less goodwill and identifiable intangible assets (other than
mortgage servicing rights), net of related deferred tax liabilities. For a reconciliation from common stockholders’ equity to TCE, refer to page 10 of the Earnings
Release Financial Supplement. ROTCE measures the Firm’s net income applicable to common equity as a percentage of average TCE. ROTCE ex. FR uses the same
average TCE. TBVPS represents the Firm’s TCE at period-end divided by common shares at period-end. Book value per share was $100.30, $98.11 and $87.00 at
September 30, 2023, June 30, 2023 and September 30, 2022, respectively. TCE, ROTCE and TBVPS are utilized by the Firm, as well as investors and analysts, in
assessing the Firm’s use of equity
4. Adjusted expense and adjusted overhead ratio are each non-GAAP financial measures. Adjusted expense represents noninterest expense excluding Firmwide legal
expense of $665mm, $420mm and $47mm for the three months ended September 30, 2023, June 30, 2023 and September 30, 2022, respectively. There was no legal
expense excluded from FR adjusted expense for the three months ended September 30, 2023 and June 30, 2023. The adjusted overhead ratio measures the Firm’s
adjusted expense as a percentage of managed net revenue. Management believes this information helps investors understand the effect of these items on reported
results and provides an alternate presentation of the Firm’s performance
12
Additional notes
1. Reflects the Current Expected Credit Losses ("CECL") capital transition provisions. Beginning January 1, 2022, the $2.9B CECL capital benefit is being phased out at
25% per year over a three-year period. As of September 30, 2023 and June 30, 2023, CET1 capital and Total Loss-Absorbing Capacity reflected the remaining $1.4B
CECL benefit; as of September 30, 2022, CET1 capital reflected a $2.2B benefit. Refer to Capital Risk Management on pages 48-53 of the Firm’s Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2023 and on pages 86-96 of the Firm’s 2022 Form 10-K for additional information
2. Total excess high-quality liquid assets (“HQLA”) represent the average eligible unencumbered liquid assets that are in excess of what is required to meet the estimated
Firm and Bank total net cash outflows over a prospective 30 calendar-day period of significant stress under the LCR rule. HQLA and unencumbered marketable
securities, includes end-of-period HQLA, excluding regulatory prescribed haircuts under the LCR rule where applicable, for both the Firm and the excess HQLA-eligible
securities included as part of the excess liquidity at JPMorgan Chase Bank, N.A., which are not transferable to non-bank affiliates and thus excluded from the Firm’s
LCR. Also includes other end-of-period unencumbered marketable securities, such as equity and debt securities. Does not include borrowing capacity at Federal Home
Loan Banks and the discount window at the Federal Reserve Bank. Refer to Liquidity Risk Management on pages 54-61 of the Firm’s Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 2023 and on pages 97-104 of the Firm’s 2022 Form 10-K for additional information
3. In the first quarter of 2023, the allocations of revenue and expense to CCB associated with a Merchant Services revenue sharing agreement were discontinued and are
now retained in Payments in CIB. Prior-period amounts have been revised to conform with the current presentation
4. The 3Q22 prior-period amount has been revised to conform with the current presentation, which uses end-of-period HQLA and end-of-period unencumbered
marketable securities. Previous presentations used average Firm HQLA (consistent with the LCR metric) and end-of-period unencumbered marketable securities
13
Additional notes on slides 4-7
Slide 4 – U.S. B3E NPR increases JPM’s required capital by 25%... but why?
Slide 5 – The “19%” quoted by the Agencies does not tell the full story
1. 19% capital increase for Category I and II bank holding companies, as stated in the B3E NPR
2. Assumes flat balance sheet based on estimated 3Q23 Standardized RWA
3. Based on 2017 rule set the firm had an effective GSIB surcharge of 3.5% and a Capital Conservation Buffer (“CCB”) of 2.5%
4. Current Standardized Approach for Counterparty Credit Risk (“SA-CCR”) impact is assumed to be 50% of the Day 1 adoption impact which we reported as a 1Q22
Standardized RWA increase of $40B; and current SCB 2.9% vs. CCB of 2.5%
5. Estimated impacts from the GSIB Notice of Proposed Rulemaking (“NPR”) based on our best understanding of the proposal. The impact incorporates the benefit of a
higher B3E RWA on the short-term wholesale funding (“STWF”) component of the GSIB surcharge
6. Current Expected Credit Losses (“CECL”)
14
Additional notes on slide 8
Slide 8 – Commercial Banking
15
Forward-looking statements
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are based on the current beliefs and expectations of JPMorgan Chase &
Co.’s management and are subject to significant risks and uncertainties. Actual results may differ from those set
forth in the forward-looking statements. Factors that could cause JPMorgan Chase & Co.’s actual results to differ
materially from those described in the forward-looking statements can be found in JPMorgan Chase & Co.’s
Annual Report on Form 10-K for the year ended December 31, 2022, and Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2023, which have been filed with the Securities and Exchange Commission and
is available on JPMorgan Chase & Co.’s website (https://jpmorganchaseco.gcs-web.com/financial-
information/sec-filings), and on the Securities and Exchange Commission’s website (www.sec.gov). JPMorgan
Chase & Co. does not undertake to update any forward-looking statements.
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