Business segments
The Firm is managed on a line of business basis. There are four major reportable business segments – Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking and Asset Management. In addition, there is a Corporate/Private Equity segment. The business segments are determined based on the products and services provided, or the type of customer served, and they reflect the manner in which financial information is currently evaluated by management. Results of these lines of business are presented on a managed basis. For a definition of managed basis, see Explanation and Reconciliation of the Firm’s use of non-GAAP financial measures, on pages 82–83 of this Annual Report. For a further discussion concerning JPMorgan Chase’s business segments, see Business Segment Results on pages 84–85 of this Annual Report.
The following is a description of each of the Firm’s business segments, and the products and services they provide to their respective client bases.
Consumer & Community Banking
CCB serves consumers and businesses through personal service at bank branches and through ATMs, online, mobile and telephone banking. CCB is organized into Consumer & Business Banking, Mortgage Banking (including Mortgage Production, Mortgage Servicing and Real Estate Portfolios) and Card. Consumer & Business Banking offers deposit and investment products and services to consumers, and lending, deposit, and cash management and payment solutions to small businesses. Mortgage Banking includes mortgage origination and servicing activities, as well as portfolios comprised of residential mortgages and home equity loans, including the PCI portfolio acquired in the Washington Mutual transaction. Card issues credit cards to consumers and small businesses, provides payment services to corporate and public sector clients through its commercial card products, offers payment processing services to merchants, and provides auto and student loan services.
Corporate & Investment Bank
CIB offers a broad suite of investment banking, market-making, prime brokerage, and treasury and securities products and services to a global client base of corporations, investors, financial institutions, government and municipal entities. Within Banking, the CIB offers a full range of investment banking products and services in all major capital markets, including advising on corporate strategy and structure, capital-raising in equity and debt markets, as well as loan origination and syndication. Also included in Banking is Treasury Services, which includes transaction services, comprised primarily of cash management and liquidity solutions, and trade finance products. The Markets & Investor Services segment of the CIB is a global market-maker in cash securities and derivative instruments, and also offers sophisticated risk management solutions, prime brokerage, and research. Markets & Investor Services also includes the Securities Services business, a leading global custodian which holds, values, clears and services securities, cash and alternative investments for investors and broker-dealers, and manages depositary receipt programs globally.
Commercial Banking
CB delivers extensive industry knowledge, local expertise and dedicated service to U.S. and U.S. multinational clients, including corporations, municipalities, financial institutions and non-profit entities with annual revenue generally ranging from$20 million to $2.0 billion. CB provides financing to real estate investors and owners. Partnering with the Firm’s other businesses, CB provides comprehensive financial solutions, including lending, treasury services, investment banking and asset management to meet its clients’ domestic and international financial needs.
Asset Management
AM, with client assets of $2.3 trillion, is a global leader in investment and wealth management. AM clients include institutions, high-net-worth individuals and retail investors in every major market throughout the world. AM offers investment management across all major asset classes including equities, fixed income, alternatives and money market funds. AM also offers multi-asset investment management, providing solutions to a broad range of clients’ investment needs. For individual investors, AM also provides retirement products and services, brokerage and banking services including trusts and estates, loans, mortgages and deposits. The majority of AM’s client assets are in actively managed portfolios.
Corporate/Private Equity
The Corporate/Private Equity segment comprises Private Equity, Treasury and CIO, and Other Corporate, which includes corporate staff units and expense that is centrally managed. Treasury and CIO are predominantly responsible for measuring, monitoring, reporting and managing the Firm’s liquidity, funding and structural interest rate and foreign exchange risks, as well as executing the Firm’s capital plan. The major Other Corporate units include Real Estate, Central Technology, Legal, Compliance, Finance, Human Resources, Internal Audit, Risk Management, Oversight & Control, Corporate Responsibility and various Other Corporate groups. Other centrally managed expense includes the Firm’s occupancy and pension-related expense that are subject to allocation to the businesses.
Segment results
The following tables provide a summary of the Firm’s segment results for 2013, 2012 and 2011 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 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).
The increase in equity levels for the lines of businesses since December 31, 2012, is largely driven by the evolving regulatory requirements and higher capital targets the firm has established under Basel III Advanced approach.
Segment results and reconciliation(a)
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of or the year ended December 31, (in millions, except ratios) | Consumer & Community Banking(b) | | Corporate & Investment Bank | | Commercial Banking |
2013 | 2012 | 2011 | | 2013 | 2012 | 2011 | | 2013 | 2012 | 2011 |
Noninterest revenue | $ | 17,552 |
| $ | 20,813 |
| $ | 15,314 |
| | $ | 23,810 |
| $ | 23,104 |
| $ | 22,523 |
| | $ | 2,298 |
| $ | 2,283 |
| $ | 2,195 |
|
Net interest income | 28,474 |
| 29,071 |
| 30,305 |
| | 10,415 |
| 11,222 |
| 11,461 |
| | 4,675 |
| 4,542 |
| 4,223 |
|
Total net revenue | 46,026 |
| 49,884 |
| 45,619 |
| | 34,225 |
| 34,326 |
| 33,984 |
| | 6,973 |
| 6,825 |
| 6,418 |
|
Provision for credit losses | 335 |
| 3,774 |
| 7,620 |
| | (232 | ) | (479 | ) | (285 | ) | | 85 |
| 41 |
| 208 |
|
Noninterest expense | 27,842 |
| 28,827 |
| 27,637 |
| | 21,744 |
| 21,850 |
| 21,979 |
| | 2,610 |
| 2,389 |
| 2,278 |
|
Income/(loss) before income tax expense/(benefit) | 17,849 |
| 17,283 |
| 10,362 |
| | 12,713 |
| 12,955 |
| 12,290 |
| | 4,278 |
| 4,395 |
| 3,932 |
|
Income tax expense/(benefit) | 7,100 |
| 6,732 |
| 4,257 |
| | 4,167 |
| 4,549 |
| 4,297 |
| | 1,703 |
| 1,749 |
| 1,565 |
|
Net income/(loss) | $ | 10,749 |
| $ | 10,551 |
| $ | 6,105 |
| | $ | 8,546 |
| $ | 8,406 |
| $ | 7,993 |
| | $ | 2,575 |
| $ | 2,646 |
| $ | 2,367 |
|
Average common equity | $ | 46,000 |
| $ | 43,000 |
| $ | 41,000 |
| | $ | 56,500 |
| $ | 47,500 |
| $ | 47,000 |
| | $ | 13,500 |
| $ | 9,500 |
| $ | 8,000 |
|
Total assets | 452,929 |
| 467,282 |
| 486,697 |
| | 843,577 |
| 876,107 |
| 845,095 |
| | 190,782 |
| 181,502 |
| 158,040 |
|
Return on average common equity | 23 | % | 25 | % | 15 | % | | 15 | % | 18 | % | 17 | % | | 19 | % | 28 | % | 30 | % |
Overhead ratio | 60 |
| 58 |
| 61 |
| | 64 |
| 64 |
| 65 |
| | 37 |
| 35 |
| 35 |
|
| |
(a) | Managed basis starts with the reported U.S. GAAP results and includes certain reclassifications as discussed below that do not have any impact on net income as reported by the lines of business or by the Firm as a whole. |
| |
(b) | The 2012 and 2011 data for certain income statement line items (predominantly net interest income, compensation and noncompensation expense) and balance sheet items were revised to reflect the transfer of certain technology and operations, as well as real estate-related functions and staff, from Corporate/Private Equity to CCB, effective January 1, 2013. |
| |
(c) | 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. |
(table continued from previous page)
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Asset Management | | Corporate/Private Equity(b) | | Reconciling Items(c) | | Total |
2013 | 2012 | 2011 | | 2013 | 2012 | 2011 | | 2013 | 2012 | 2011 | | 2013 | 2012 | 2011 |
$ | 9,029 |
| $ | 7,847 |
| $ | 7,895 |
| | $ | 3,093 |
| $ | 190 |
| $ | 3,621 |
| | $ | (2,495 | ) | $ | (2,116 | ) | $ | (2,003 | ) | | $ | 53,287 |
| $ | 52,121 |
| $ | 49,545 |
|
2,291 |
| 2,099 |
| 1,648 |
| | (1,839 | ) | (1,281 | ) | 582 |
| | (697 | ) | (743 | ) | (530 | ) | | 43,319 |
| 44,910 |
| 47,689 |
|
11,320 |
| 9,946 |
| 9,543 |
| | 1,254 |
| (1,091 | ) | 4,203 |
| | (3,192 | ) | (2,859 | ) | (2,533 | ) | | 96,606 |
| 97,031 |
| 97,234 |
|
65 |
| 86 |
| 67 |
| | (28 | ) | (37 | ) | (36 | ) | | — |
| — |
| — |
| | 225 |
| 3,385 |
| 7,574 |
|
8,016 |
| 7,104 |
| 7,002 |
| | 10,255 |
| 4,559 |
| 4,015 |
| | — |
| — |
| — |
| | 70,467 |
| 64,729 |
| 62,911 |
|
3,239 |
| 2,756 |
| 2,474 |
| | (8,973 | ) | (5,613 | ) | 224 |
| | (3,192 | ) | (2,859 | ) | (2,533 | ) | | 25,914 |
| 28,917 |
| 26,749 |
|
1,208 |
| 1,053 |
| 882 |
| | (2,995 | ) | (3,591 | ) | (695 | ) | | (3,192 | ) | (2,859 | ) | (2,533 | ) | | 7,991 |
| 7,633 |
| 7,773 |
|
$ | 2,031 |
| $ | 1,703 |
| $ | 1,592 |
| | $ | (5,978 | ) | $ | (2,022 | ) | $ | 919 |
| | $ | — |
| $ | — |
| $ | — |
| | $ | 17,923 |
| $ | 21,284 |
| $ | 18,976 |
|
$ | 9,000 |
| $ | 7,000 |
| $ | 6,500 |
| | $ | 71,409 |
| $ | 77,352 |
| $ | 70,766 |
| | $ | — |
| $ | — |
| $ | — |
| | $ | 196,409 |
| $ | 184,352 |
| $ | 173,266 |
|
122,414 |
| 108,999 |
| 86,242 |
| | 805,987 |
| 725,251 |
| 689,718 |
| | NA |
| NA |
| NA |
| | 2,415,689 |
| 2,359,141 |
| 2,265,792 |
|
23 | % | 24 | % | 25 | % | | NM |
| NM |
| NM |
| | NM |
| NM |
| NM |
| | 9 | % | 11 | % | 11 | % |
71 |
| 71 |
| 73 |
| | NM |
| NM |
| NM |
| | NM |
| NM |
| NM |
| | 73 |
| 67 |
| 65 |
|
