Investor Relations

4Q12 Quarterly Results: J.P. Morgan Asset Management

Discussion of Results:
Net income was $483 million, an increase of $181 million, or 60%, from the prior year. These results reflected higher net revenue, partially offset by higher noninterest expense.

Net revenue was a record $2.8 billion, an increase of $469 million, or 21%, from the prior year. Noninterest revenue was $2.2 billion, up $363 million, or 20%, from the prior year due to higher performance fees, the effect of higher market levels and net client inflows. Net interest income was $552 million, up by $106 million, or 24%, due to higher loan and deposit balances.

Revenue from Private Banking was $1.4 billion, up 19% from the prior year. Revenue from Institutional was $729 million, up 31%. Revenue from Retail was $583 million, up 13%.

Assets under supervision were $2.1 trillion, an increase of $174 billion, or 9%, from the prior year. Assets under management were $1.4 trillion, an increase of $90 billion, or 7%, due to the effect of higher market levels and net inflows to long-term products, partially offset by net outflows from liquidity products. Custody, brokerage, administration and deposit balances were $669 billion, up $84 billion, or 14%, due to the effect of higher market levels and custody and brokerage inflows.

The provision for credit losses was $19 million, compared with $24 million in the prior year.

Noninterest expense was $1.9 billion, an increase of $191 million, or 11%, from the prior year, due to higher performance-based compensation and higher headcount-related2 expense.

Key Metrics and Business Updates:
(All comparisons refer to the prior-year quarter except as noted)

• Pretax margin¹ was 29%, up from 22% in the prior year.
• Return on equity was 27% on $7.0 billion of average allocated capital.
• For the 12 months ended December 31, 2012, assets under management reflected net inflows of $17 billion, driven by net inflows of $60 billion to long-term products and net outflows of $43 billion from liquidity products. For the quarter, net inflows were $32 billion reflecting net inflows of $24 billion to liquidity products and net inflows of $8 billion to long-term products.
• Net long-term client flows were positive for the fifteenth consecutive quarter.
• Assets under management ranked in the top two quartiles for investment performance were 76% over 5 years, 74% over 3 years and 67% over 1 year.
• Customer assets in 4 and 5 Star–rated funds were 47% of all rated mutual fund assets.
• Record assets under supervision were $2.1 trillion, up 9% from the prior year and 3% from the prior quarter
• Record average loans were $76.5 billion, up 40% from the prior year and 7% from the prior quarter.
• Record end-of-period loans were $80.2 billion, up 39% from the prior year and 7% from the prior quarter.
• Record average deposits were $133.7 billion, up 10% from the prior year and 5% from the prior quarter.

To learn more about JPMorgan Chase & Co.’s earnings, please visit Investor Relations.

¹Additional notes on financial measures:

Asset Management pretax margin represents income before income tax expense divided by total net revenue, which is, in management's view, a comprehensive measure of pretax performance derived by measuring earnings after all costs are taken into consideration. It is, therefore, another basis that management uses to evaluate the performance of AM against the performance of their respective peers.