3Q18 Financial Results October 12, 2018
3Q18 Financial highlights ROTCE1 Common equity Tier 12 Net payout LTM3 17% 12.0% 96% 3Q18 net income of $8.4B and EPS of $2.34 Managed revenue of $27.8B4 Expense of $15.6B and managed overhead ratio of 56%4 Fortress balance sheet Average core loans5 ex-CIB up 6% YoY and 2% QoQ Basel III Fully Phased-In CET1 capital of $185B2 and Standardized CET1 ratio of 12.0%2 Delivered strong capital return $6.9B6 distributed to shareholders in 3Q18, including $4.2B of net repurchases Common dividend of $0.80 per share 1 See note 2 on slide 10 2 Represents the estimated common equity Tier 1 (“CET1”) capital and ratio under the Basel III Fully Phased-In capital rules to which the Firm will be subject as of January 1, 2019. See note 6 on slide 10 3 Last twelve months (“LTM”). Net of stock issued to employees 4 See note 1 on slide 10 5 See note 7 on slide 10 1 6 Net of stock issued to employees
3Q18 Financial results1 $B, excluding EPS $ O/(U) 3Q18 2Q18 3Q17 Net interest income $14.1 $0.4 $0.9 Noninterest revenue 13.8 (1.0) 0.4 1 Managed revenue $B 3Q18 2Q18 3Q17 27.8 (0.6) 1.4 Net charge-offs $1.0 $1.3 $1.3 Expense Reserve build/(release) (0.1) (0.0) 0.2 15.6 (0.3) 1.1 Credit costs Credit costs $0.9 $1.2 $1.5 0.9 (0.3) (0.5) Reported net income 3Q18 Tax rate $8.4 $0.1 $1.6 Effective rate: 21.6% Net income applicable to common stockholders Managed rate: 25.5%1,5 $7.9 $0.1 $1.7 Reported EPS $2.34 $0.05 $0.58 2 3Q18 ROE O/H ratio ROE CCB 31% 53% 14% 14% 11% ROTCE2,3 CIB 14% 59% 17 17 13 CB 21% 38% 1,2 Overhead ratio – managed AWM 31% 73% 56 56 55 Memo: Adjusted expense 4 $15.6 ($0.4) $0.9 Memo: Adjusted overhead ratio 1,2,4 56% 56% 55% Firmwide total credit reserves of $14.2B Consumer reserves of $9.2B – build of $150mm in Card and release of $250mm in Home Lending PCI6 Wholesale reserves of $5.0B Note: Totals may not sum due to rounding 1 See note 1 on slide 10 2 Actual numbers for all periods, not over/(under) 3 See note 2 on slide 10 2 4 See note 3 on slide 10 5 Reflects fully taxable-equivalent adjustments (“FTE”) of $562mm in 3Q18, compared to $874mm in 3Q17 6 Purchased credit-impaired (“PCI”) loans represents certain loans that were acquired and deemed to be credit-impaired on the acquisition date
Fortress balance sheet and capital $B, except per share data 3Q18 2Q18 3Q17 Basel III Standardized Fully Phased-In1 CET1 capital $185 $185 $187 3Q18 Basel III CET1 capital ratio Advanced Fully 12.0% 12.0% 12.4% Phased-In of 12.9%1 Tier 1 capital $211 $210 $212 Tier 1 capital ratio 13.6% 13.6% 14.0% Total capital $238 $238 $242 Total capital ratio 15.4% 15.4% 16.0% Risk-weighted assets $1,547 $1,543 $1,510 Firm SLR2 6.5% 6.5% 6.6% Total assets (EOP) $2,615 $2,590 $2,563 Tangible common equity (EOP)3 $185 $185 $187 Tangible book value per share3 $55.68 $55.14 $54.03 1 Estimated for the current period. The prior year risk-weighted assets, as well as the ratios, have been revised to conform with the current period presentation. Reflects the capital rules to which the Firm will be subject as of January 1, 2019. See note 6 on slide 10 2 Estimated for the current period. Reflects the supplementary leverage ratio (“SLR”) which was effective as of January 1, 2018. See note 6 on slide 10 3 See note 2 on slide 10 3
Consumer & Community Banking1 $mm Financial performance $ O/(U) Net income of $4.1B 3Q18 2Q18 3Q17 Revenue of $13.3B, up 10% YoY, driven by higher NII on higher Revenue $13,290 $793 $1,257 deposit and card margins and balance growth Consumer & Business Banking 6,385 254 977 Expense of $7.0B, up 7% YoY, driven by investments in Home Lending 1,306 (41) (252) technology and higher auto lease depreciation Card, Merchant Services & Auto 5,599 580 532 Expense 6,982 103 487 Credit costs of $980mm, down $537mm YoY Credit costs 980 (128) (537) Home Lending: $250mm PCI reserve release; net recovery Net charge-offs 1,080 (28) (137) largely driven by a loan sale Change in allowance (100) (100) (400) Card: reserve build of $150mm this quarter vs. a $300mm build Net income $4,086 $674 $1,533 in 3Q17 Key drivers/statistics ($B)2 Key drivers/statistics ($B) – detail by business Equity $51.0 $51.0 $51.0 3Q18 2Q18 3Q17 ROE 31% 26% 19% Consumer & Business Banking Overhead ratio 53 55 54 Average Business Banking loans $24.1 $23.9 $23.2 Average loans $479.6 $475.7 $469.8 Business Banking loan originations 1.6 1.9 1.7 Average deposits 674.2 673.8 645.7 Client investment assets (EOP) 298.4 283.7 262.5 Active mobile customers (mm) 32.5 31.7 29.3 Deposit margin 2.43% 2.36% 2.02% Debit & credit card sales volume $259.0 $255.0 $231.1 Home Lending Average loans $242.9 $241.5 $238.2 3 Average loans up 2% and core loans up 6% YoY Loan originations 22.5 21.5 26.9 EOP total loans serviced 798.6 802.6 821.6 Average deposits up 4% YoY Net charge-off/(recovery) rate4 (0.21)% (0.29)% 0.02% Card, Merchant Services & Auto Active mobile customers up 11% YoY Card average loans $146.3 $142.7 $141.2 Client investment assets up 14% YoY Auto average loans and leased assets 83.2 83.8 80.8 Auto loan and lease originations 8.1 8.3 8.8 Credit card sales up 12% YoY; merchant processing volume up Card net charge-off rate 2.91% 3.27% 2.87% 14% YoY Card Services net revenue rate 11.50 10.38 10.95 Credit Card sales volume5 $176.0 $174.0 $157.7 1 See note 1 on slide 10 Merchant processing volume 343.8 330.8 301.6 For additional footnotes see slide 11 4
Corporate & Investment Bank1 $mm Financial performance $ O/(U) Net income of $2.6B on revenue of $8.8B 3Q18 2Q18 3Q17 Banking revenue Revenue $8,805 ($1,118) $190 Investment banking revenue 1,731 (218) 1 IB revenue of $1.7B, flat YoY Treasury Services 1,183 2 125 – Ranked #1 in Global IB fees YTD 2018 Lending 331 10 – Treasury Services revenue of $1.2B, up 12% YoY, Total Banking 3,245 (206) 126 predominantly driven by higher rates and operating deposit Fixed Income Markets 2,844 (609) (320) growth Equity Markets 1,595 (364) 232 Securities Services 1,057 (46) 50 Markets & Investor Services revenue Credit Adjustments & Other 64 107 102 Markets revenue of $4.4B, down 2% YoY, or up 1% YoY Total Markets & Investor Services 5,560 (912) 64 excluding the impact of tax reform5 Expense 5,175 (228) 382 – Fixed Income Markets revenue of $2.8B, down 10% YoY, or Credit costs (42) (100) (16) down 6% YoY excluding the impact of tax reform5 Net income $2,626 ($572) $80 – Equity Markets revenue of $1.6B, up 17% YoY, with higher revenue across products, reflecting strong client activity Key drivers/statistics ($B)2 Securities Services revenue of $1.1B, up 5% YoY, driven by Equity $70.0 $70.0 $70.0 higher rates and operating deposit growth, as well as higher ROE 14% 17% 13% asset-based fees from new client activity Overhead ratio 59 54 56 Comp/revenue 27 27 27 Expense of $5.2B, up 8% YoY, predominantly due to higher legal IB fees ($mm) $1,823 $2,139 $1,844 expense, higher compensation expense largely driven by Average loans 122.7 119.9 112.5 investments in technology and bankers, and higher volume- 3 Average client deposits 434.8 433.6 421.6 related transaction costs Assets under custody ($T) 24.4 24.2 22.7 ALL/EOP loans ex-conduits and trade4 1.27% 1.27% 1.79% Credit costs benefit of $42mm driven by a net recovery related to Net charge-off/(recovery) rate4 (0.14) 0.40 0.07 a loan sale Average VaR ($mm) $33 $33 $30 1 See note 1 on slide 10 For additional footnotes see slide 11 5
Commercial Banking1 $mm Financial performance $ O/(U) Net income of $1.1B 3Q18 2Q18 3Q17 Revenue of $2.3B, up 6% YoY Revenue $2,271 ($45) $125 Middle Market Banking 935 16 87 Net interest income of $1.7B, up 9% YoY, driven by higher Corporate Client Banking 749 (58) 61 deposit margins Commercial Term Lending 339 (5) (28) Gross IB revenue of $581mm, flat YoY Real Estate Banking 175 5 18 Other 73 (3) (13) Expense of $853mm, up 7% YoY on investments in banker Expense 853 9 53 coverage and technology Credit costs (15) (58) 32 Net income $1,089 $2 $208 Credit costs benefit of $15mm Net recovery of 3 bps 2 Key drivers/statistics ($B) Average loan balances of $207B, up 4% YoY and 1% QoQ 4 Equity $20.0 $20.0 $20.0 C&I up 4% YoY and flat QoQ ROE 21% 21% 17% CRE4 up 3% YoY and up 1% QoQ Overhead ratio 38 36 37 Gross IB Revenue ($mm) $581 $739 $578 Average client deposits of $168B, down 5% YoY Average loans 207.2 205.6 200.2 Average client deposits 168.2 170.7 176.2 Allowance for loan losses 2.6 2.6 2.6 Nonaccrual loans 0.5 0.5 0.7 Net charge-off/(recovery) rate3 (0.03)% 0.07% 0.04% ALL/loans3 1.28 1.27 1.30 1 See note 1 on slide 10 For additional footnotes see slide 11 6
Asset & Wealth Management1 $mm Financial performance $ O/(U) Net income of $724mm 3Q18 2Q18 3Q17 Revenue of $3.6B, up 3% YoY, driven by higher management Revenue $3,559 ($13) $87 fees and strong banking results Asset Management 1,827 1 13 Wealth Management 1,732 (14) 74 Expense of $2.6B, up 7% YoY, driven by investments in advisors Expense 2,585 19 177 and technology Credit costs 23 21 15 Net income $724 ($31) $50 AUM of $2.1T, up 7% YoY Client assets of $2.9T, up 7% YoY Key drivers/statistics ($B)2 Net inflows of $8B into long-term products and $14B into liquidity Equity $9.0 $9.0 $9.0 products ROE 31% 33% 29% Average loan balances of $141B, up 12% YoY Pretax margin 27 28 30 Assets under management (AUM) $2,077 $2,028 $1,945 Average deposit balances of $133B, down 8% YoY Client assets 2,867 2,799 2,678 Average loans 140.6 136.7 125.4 Average deposits 133.0 139.6 144.5 1 See note 1 on slide 10 2 Actual numbers for all periods, not over/(under) 7
Corporate1 $mm Financial performance $ O/(U) Treasury and CIO 3Q18 2Q18 3Q17 Net Income of $96mm, up $21mm YoY, primarily driven by Treasury and CIO $96 $249 $21 higher rates Other Corporate (241) (258) (244) Net income ($145) ($9) ($223) Other Corporate Net loss of $241mm includes markdowns of certain legacy private equity investments totaling ~$220mm pre-tax, partially offset by a net legal benefit 1 See note 1 on slide 10 8
Outlook Firmwide Expect FY2018 net interest income to be $55.5B+/-, market dependent Expect FY2018 noninterest revenue growth of 7-8%, market dependent Expect FY2018 adjusted expense of $63.5B+/- Expect FY2018 effective income tax rate to be ~20% Expect FY2018 average core loan growth of 6-7%, excluding CIB loans 9
Notes 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 (“FTE”) 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 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, see page 7 of the Earnings Release Financial Supplement. 2. 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 MSRs), net of related deferred tax liabilities. For a reconciliation from common stockholders’ equity to TCE, see page 9 of the Earnings Release Financial Supplement. ROTCE measures the Firm’s net income applicable to common equity as a percentage of average TCE. TBVPS represents the Firm’s TCE at period-end divided by common shares at period-end. Book value per share was $69.52, $68.85 and $66.95 at September 30, 2018, June 30, 2018 and September 30, 2017, respectively. TCE, ROTCE and TBVPS are utilized by the Firm, as well as investors and analysts, in assessing the Firm’s use of equity. 3. Adjusted expense and adjusted overhead ratio are each non-GAAP financial measures. Adjusted expense excluded Firmwide legal expense/(benefit) of $20 million, $0 million and $(107) million for the three months ended September 30, 2018, June 30, 2018 and September 30, 2017, respectively. The adjusted overhead ratio measures the Firm’s adjusted expense as a percentage of adjusted 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. 4. Net charge-offs and net charge-off rates exclude the impact of purchased credit-impaired (“PCI”) loans. 5. CIB calculates the ratio of the allowance for loan losses to end-of-period loans excluding the impact of consolidated Firm-administered multi-seller conduits and trade finance loans, to provide a more meaningful assessment of CIB’s allowance coverage ratio. Notes on key performance measures 6. The Basel III regulatory capital, risk-weighted assets and capital ratios (which become fully phased-in effective January 1, 2019), and the Basel III supplementary leverage ratio (“SLR”) (which was fully-phased in effective January 1, 2018), are all considered key regulatory capital measures. The capital adequacy of the Firm is evaluated against the Basel III approach (Standardized or Advanced) that results, for each quarter, in the lower ratio (the “Collins Floor”). These measures are used by management, bank regulators, investors and analysts to assess and monitor the Firm’s capital position. For additional information on these measures, including the Collins Floor, see Capital Risk Management on pages 82-91 of the Firm’s Annual Report on Form 10-K for the year ended December 31, 2017, and pages 43-47 of the Firm’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018. 7. Core loans represent loans considered central to the Firm’s ongoing businesses; core loans exclude loans classified as trading assets, runoff portfolios, discontinued portfolios and portfolios the Firm has an intent to exit. 10
Notes Additional Notes on slide 4 – Consumer & Community Banking 2. Actual numbers for all periods, not over/(under) 3. Firmwide mortgage origination volume was $24.5B, $23.7B and $29.2B for the three months ended September 30, 2018, June 30, 2018 and September 30, 2017, respectively 4. Excludes the impact of PCI loans, including PCI write-offs of $58mm, $73mm and $20mm for the three months ended September 30, 2018, June 30, 2018 and September 30, 2017, respectively. See note 4 on slide 10. The net charge-off/(recovery) rates for the three months ended September 30, 2018 and June 30, 2018 include recoveries from loan sales 5. Excludes Commercial Card Additional Notes on slide 5 – Corporate & Investment Bank 2. Actual numbers for all periods, not over/(under) 3. Client deposits and other third-party liabilities pertain to the Treasury Services and Securities Services businesses 4. Loans held-for-sale and loans at fair value were excluded when calculating the loan loss coverage ratio and net charge-off/(recovery) rate. ALL/EOP loans as reported was 0.91%, 0.89% and 1.17% at September 30, 2018, June 30, 2018 and September 30, 2017, respectively. See note 5 on slide 10 5. Reflects a reduction of approximately $140mm in FTE adjustments compared with the prior year quarter, resulting from the enactment of the Tax Cuts and Jobs Act Additional Notes on slide 6 – Commercial Banking 2. Actual numbers for all periods, not over/(under) 3. Loans held-for-sale and loans at fair value were excluded when calculating the net charge-off/(recovery) rate and loan loss coverage ratio 4. Commercial and Industrial (“C&I”) and Commercial Real Estate (“CRE”) groupings for CB are generally based on client segments and do not align with regulatory definitions 11
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, 2017, and Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, 2018 and March 31, 2018, which have been filed with the Securities and Exchange Commission and are 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. 12