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JPMorgan Chase Reports Fourth-Quarter 2012 Net Income Of $5.7 Billion, Or $1.39 Per Share, On Revenue1 Of $24.4 Billion

Stocks in this article: JPM

Markets & Investor Services revenue was $4.5 billion, up 16% from the prior year. Fixed Income and Equity Markets combined revenue was $4.1 billion, up 19% from the prior year, driven by solid client revenue and improved performance in credit-related products. The portion of the synthetic credit portfolio transferred from the Chief Investment Office in Corporate to the CIB on July 2, 2012 experienced a modest loss during the current quarter, which was included in Fixed Income Markets revenue. Securities Services revenue was $995 million, up 2% from the prior year. Credit Adjustments & Other was a net loss of $586 million, compared with a loss of $532 million in the prior year; both periods were driven predominantly by the impact of DVA.

The provision for credit losses was a benefit of $445 million, compared with a provision for credit losses in the prior year of $291 million. The current-period benefit was primarily driven by recoveries and a reduction in the allowance for credit losses, both related to certain restructured nonperforming loans. The ratio of the allowance for loan losses to end-of-period loans retained was 1.19%, compared with 1.35% in the prior year. Excluding the impact of the consolidation of Firm-administered multi-seller conduits and trade finance loans, the ratio of the allowance for loan losses to end-of-period loans retained was 2.52% 1, compared with 3.06% 1 in the prior year.

Noninterest expense was $5.0 billion, up 10% from the prior year, driven by higher compensation expense on stronger revenue performance. The compensation ratio for the current quarter was 27%, excluding the impact of DVA 1.

Key Metrics and Business Updates: (All comparisons refer to the prior-year quarter except as noted, and all rankings are according to Dealogic)

  • Ranked #1 in Global Investment Banking Fees for the year ended December 31, 2012.
  • Ranked #1 in Global Debt, Equity and Equity-related; #1 in Global Long-Term Debt; #1 in Global Syndicated Loans; #2 in Global Announced M&A; and #4 in Global Equity and Equity-related, based on volume, for the year ended December 31, 2012.
  • Average client deposits and other third-party liabilities were $366.5 billion, up 1% from the prior year.
  • Assets under custody were a record $18.8 trillion, up 12% from the prior year.
  • International revenue was $3.5 billion, up 10% from the prior year, representing 46% of total revenue (47% 1 of total revenue excluding DVA).
  • Return on equity was 17% on $47.5 billion of average allocated capital (20% 1 excluding DVA).
  • End-of-period total loans were $115.3 billion, up 1% from the prior year and 3% from the prior quarter. Nonaccrual loans were $617 million, down 49% from the prior year and 23% from the prior quarter.
  • End-of-period trade finance loans were $35.8 billion, down 2% from the prior year.

COMMERCIAL BANKING (CB)

 
Results for CB($ millions)         3Q12   4Q11
  4Q12   3Q12   4Q11   $ O/(U)   O/(U) %   $ O/(U)   O/(U) %
Net Revenue   $1,745   $1,732   $1,687   $13   1%   $58   3%
Provision for Credit Losses   (3)   (16)   40   13   81   (43)   NM
Noninterest Expense   599   601   579   (2)   -   20   3
Net Income   $692   $690   $643   $2   -   $49   8%

Discussion of Results:

Net income was $692 million, an increase of $49 million, or 8%, from the prior year. The improvement was driven by an increase in net revenue and lower provision for credit losses, partially offset by higher noninterest expense.

Net revenue was a record $1.7 billion, an increase of $58 million, or 3%, from the prior year. Net interest income was $1.2 billion, an increase of $51 million, or 5%, driven by growth in loan balances, partially offset by spread compression on loan products. Noninterest revenue was $578 million, up $7 million, or 1%, compared with the prior year.

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