JPMorgan Chase & Co. Annual Report 2019

[Pages:25]2019 ANNUAL REPORT

Financial Highlights

As of or for the year ended December 31,

(in millions, except per share, ratio data and headcount)

2019 2018 2017

Selected income statement data

Total net revenue

$ 115,627 $ 109,029

$ 100,705

Total noninterest expense 65,497 63,394 59,515

Pre-provision profit 50,130 45,635 41,190

Provision for credit losses 5,585 4,871 5,290

Net income

$ 36,431 $ 32,474 $ 24,441

Per common share data

Net income per share:

Basic

$

Diluted

Book value Tangible book value (TBVPS)(a)

Cash dividends declared

10.75 $ 10.72 75.98 60.98

3.40

9.04 $ 9.00 70.35 56.33 2.72

6.35 6.31 67.04 53.56 2.12

Selected ratios

Return on common equity Return on tangible common equity (ROTCE)(a) Liquidity coverage ratio (average)(b) Common equity Tier 1 capital ratio(c) Tier 1 capital ratio(c) Total capital ratio(c)

15% 19 116 12.4 14.1 16.0

13% 17 113 12.0 13.7 15.5

10% 12 119 12.1 13.8 15.7

Selected balance sheet data (period-end)

Loans

$ 959,769 $ 984,554 $ 930,697

Total assets

2,687,379 2,622,532 2,533,600

Deposits

1,562,4311,470,666 1,443,982

Common stockholders' equity

234,337 230,447 229,625

Total stockholders' equity 261,330 256,515 255,693

Market data Closing share price Market capitalization Common shares at period-end

$ 139.40

$ 97.62 $ 106.94

429,913 319,780 366,301

3,084.0 3,275.8 3,425.3

Headcount 256,981 256,105 252,539

(a) TBVPS and ROTCE are each non-GAAP financial measures. Refer to Explanation and Reconciliation of the Firm's Use of Non-GAAP Financial Measures and Key Financial Performance Measures on pages 57?59 for additional information on these measures.

(b)Refer to Liquidity Risk Management on pages 93-98 for additional information on this measure. (c)The ratios presented are calculated under the Basel III Fully Phased-In Approach. Refer to Capital Risk Management on pages 85-92

for additional information on these measures.

JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $2.7 trillion and operations worldwide. The firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of customers in the United States and many of the world's most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands.

Information about J.P. Morgan's capabilities can be found at and about Chase's capabilities at . Information about JPMorgan Chase & Co. is available at .

$2B

AFFORDABLE HOUSING

$2 billion in financing for affordable housing projects in 2019

~63M

U.S. HOUSEHOLDS

Serving nearly 63 million U.S. households, including 4 million small

businesses

BUSINESS LEADERSHIP

Named to Fortune magazine's Most Admired Companies and

Change the World lists

~$50B

CLEAN FINANCING

Facilitated nearly $50 billion in clean financing in 2019

#1

CONSUMER BANK

#1 primary bank in our Consumer Bank footprint

#1

TRADITIONAL MIDDLE MARKET LENDER

# 1 traditional Middle Market Bookrunner in the U.S.

#1

INVESTMENT BANK

#1 globally in both investment banking fees and Markets revenue

#1

CREDIT CARD

#1 in total U.S. credit card sales volume and outstandings

88%

RANKED IN TOP TWO QUARTILES

88% of long-term mutual fund assets under management

ranked in the top two quartiles over 10 years

#1

MULTIFAMILY LENDER

#1 U.S. multifamily lender

#1

PRIVATE BANK #1 U.S. Private Bank

90%

YOU INVEST

90% of You Invest customers are first-time investors with Chase

Dear Fellow Shareholders,

Jamie Dimon, Chairman and Chief Executive Officer

As we prepare this year's annual letter to shareholders, the world is confronting one of the greatest health threats of a generation, one that profoundly impacts the global economy and all of its citizens. Our thoughts remain with the communities and individuals, including healthcare workers and first responders, most deeply hit by the COVID-19 crisis.

Throughout our history, JPMorgan Chase has built its reputation on being there for clients, customers and communities in the most critical times. This unprecedented environment is no different. Our actions during this global crisis are essential to keeping the global economy going and will be remembered for years to come.

In these annual letters, I usually cover a range of topics, including a review of JPMorgan Chase's principles, priorities and performance, as well as the broader geopolitical issues facing our company and the most critical public policy issues

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1 Represents managed revenue.

2 Adjusted net income, a non-GAAP financial measure, excludes $2.4 billion from net income in 2017 as a result of the enactment of the Tax Cuts and Jobs Act.

affecting our country. When the time is right and the future is clearer, I will provide a more complete and current view on how this crisis might change our strategies around how we run the company, work with our clients and governments, and develop public policy solutions. However, right now, as we deal with the spiraling effects of this pandemic, I want to focus on what we as a bank can do to remain strong, resilient and well-positioned to support our colleagues, clients, customers and communities across the globe.

Looking back on the last two decades -- starting from my time as CEO of Bank One in 2000 -- the firm has weathered some unprecedented challenges, as we will with this current pandemic, but they did not stop us from accomplishing some extraordinary things. Once again, you should know how grateful and proud I am of our more than 200,000 employees around the world. I also want to thank Daniel Pinto, Gordon Smith, our Operating Committee, our Board of Directors and our senior leaders for the exceptional leadership they have shown under the most difficult of circumstances.

We entered this crisis in a position of strength. 2019 was another strong year for JPMorgan Chase, with the firm generating record revenue and net income, as well as setting numerous other records across our lines of business. We earned $36.4 billion in net income on revenue1 of $118.7 billion, reflecting strong underlying performance across our businesses. We now have delivered record results in nine of the last 10 years2 and are confident we will continue to do so in the future, though it should be expected that our earnings will be down meaningfully in 2020. Our largest businesses grew revenue and net income for the year, while the firm continued to make significant investments in products, people and technology. We grew core loans by 2%, increased deposits overall by 5% and generally broadened market share across our businesses, all while maintaining credit discipline and a fortress balance sheet. In total, we extended credit and raised capital of $2.3 trillion for businesses, institutional clients and U.S. customers.

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Earnings, Diluted Earnings per Share and Return on Tangible Common Equity 2004?2019

($ in billions, except per share and ratio data)

$36.4

Adjusted net income1

$32.5 $10.72

$26.9 $9.00

$24.4 $24.7 $24.4

24% 22%

$21.3

$21.7

$15.4 15% $14.4 10%

$19.0

$17.4

$17.9 15%

$6.00 $6.19

10% $11.7

15% 15%

13% 11%

$5.19

$5.29 13%

$4.48

$4.34

$6.31 17% 13% 12%

19%

Adjusted ROTCE1 was 13.6% for 2017

$4.00 $4.33 $8.5

6%

$3.96

$4.5 $1.52

$2.35

$5.6 $1.35

2004 2005 2006 2007 2008 Net income Diluted earnings per share

$2.26

2009 2010 2011 2012 2013 Return on tangible common equity (ROTCE)

2014

2015

2016

2017

2018

2019

1 Adjusted net income, a non-GAAP financial measure, excludes $2.4 billion from net income in 2017 as a result of the enactment of the Tax Cuts and Jobs Act.

Tangible Book Value and Average Stock Price per Share 2004?2019

High: $140.08 Low: $ 95.94

$113.80 $110.72

$92.01

$38.70 $36.07 $15.35 $16.45

$43.93 $18.88

$47.75 $21.96

$39.83 $22.52

$40.36 $39.36 $35.49

$33.62 $27.09 $30.12

$63.83 $58.17 $51.88

$39.22

$48.13

$44.60

$38.68 $40.72

$65.62 $51.44

$53.56 $56.33

$60.98

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

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JPMorgan Chase stock is owned by large institutions, pension plans, mutual funds and directly by individual investors. However, it is important to remember that in almost all cases, the ultimate beneficiaries are individuals in our communities. Approximately 100 million people in the United States own stock, and a large percentage of these individuals, in one way or another, own JPMorgan Chase stock. Many of these people are veterans, teachers, police officers, firefighters, retirees, or those saving for a home, school or retirement. Your management team goes to work every day recognizing the enormous responsibility that we have to perform for our shareholders.

While we don't run the company worrying about the stock price in the short run, in the long run our stock price is a measure of the progress we have made over the years. This progress is a function of continual investments, in good and bad times, to build our capabilities -- our people, systems and products. These important investments drive the future prospects of our company and position it to grow and prosper for decades. Whether looking back over five years, 10 years or since the JPMorgan Chase and Bank One merger (15 years ago), our stock has significantly outperformed the Standard & Poor's 500 Index and the Standard & Poor's Financials Index.

Bank One/JPMorgan Chase & Co. tangible book value per share performance vs. S&P 500 Index

Performance since becoming CEO of Bank One (3/27/2000--12/31/2019)1

Compounded annual gain Overall gain

Bank One (A)

11.5% 688.3%

S&P 500 Index (B)

5.9% 210.8%

Relative Results (A) -- (B)

5.6% 477.5%

Performance since the Bank One and JPMorgan Chase & Co. merger (7/1/2004--12/31/2019)

Compounded annual gain Overall gain

JPMorgan Chase & Co. (A)

S&P 500 Index (B)

Relative Results (A) -- (B)

12.2% 499.2%

9.2% 290.2%

3.0% 209.0%

Tangible book value over time captures the company's use of capital, balance sheet and profitability. In this chart, we are looking at heritage Bank One shareholders and JPMorgan Chase & Co. shareholders. The chart shows the increase in tangible book value per share; it is an after-tax number that assumes all dividends were retained vs. the Standard & Poor's 500 Index (S&P 500 Index), which is a pretax number that includes reinvested dividends.

1 On March 27, 2000, Jamie Dimon was hired as CEO of Bank One.

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Stock total return analysis

Performance since becoming CEO of Bank One (3/27/2000--12/31/2019)1

Compounded annual gain Overall gain

Bank One

S&P 500 Index S&P Financials Index

12.8% 988.2%

5.9% 210.8%

4.4% 132.9%

Performance since the Bank One and JPMorgan Chase & Co. merger (7/1/2004--12/31/2019)

Compounded annual gain Overall gain

JPMorgan Chase & Co.

S&P 500 Index S&P Financials Index

11.5% 441.9%

9.2% 290.2%

4.1% 85.6%

Performance for the period ended December 31, 2019

Compounded annual gain

One year Five years Ten years

47.3% 20.5% 15.6%

31.5% 11.7% 13.6%

32.1% 11.1% 12.2%

These charts show actual returns of the stock, with dividends reinvested, for heritage shareholders of Bank One and JPMorgan Chase & Co. vs. the Standard & Poor's 500 Index (S&P 500 Index) and the Standard & Poor's Financials Index (S&P Financials Index).

1 On March 27, 2000, Jamie Dimon was hired as CEO of Bank One.

The results shown above use our stock price as of December 31, 2019. If you compare that with our stock price as of March 31, 2020, you would see a dramatic change. For example, the overall stock price gain from the date of the JPMorgan Chase and Bank One merger was 442% at the end of last year, but it dropped to 252% three months later. While that's still far better than many companies' performance, it illustrates the volatility of returns.

Unlike past letters, the placement of charts about the performance of our lines of business and our fortress balance sheet is different -- they can be found in an appendix following this letter to peruse at your leisure. Instead, I am going to focus my comments in the rest of this letter on issues that relate to our current crisis. And while I enjoy sharing my opinion on many other matters, I will avoid doing so this year.

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