Quarterly Results

4Q11 Quarterly Results: J.P. Morgan Asset Management

Discussion of Results:
Net income was $302 million, a decrease of $205 million, or 40%, from the prior year. These results reflected lower net revenue, partially offset by lower noninterest expense.

Net revenue was $2.3 billion, a decrease of $329 million, or 13%, from the prior year. Noninterest revenue was $1.8 billion, down by $394 million, or 18%, due to lower performance fees, lower loan-related revenue, the effect of lower market levels and lower valuations of seed capital investments. Net interest income was $446 million, up by $65 million, or 17%, due to higher deposit and loan balances, partially offset by narrower deposit spreads.

Revenue from Private Banking was $1.2 billion, down 12% from the prior year. Revenue from Institutional was $558 million, down 17%. Revenue from Retail was $514 million, down 9%.

Assets under supervision were $1.9 trillion, an increase of $81 billion, or 4%, from the prior year. Assets under management were $1.3 trillion, an increase of $38 billion, or 3%, from the prior year. Both increases were due to net inflows to long-term and liquidity products, partially offset by the impact of lower market levels. Custody, brokerage, administration and deposit balances were $585 billion, up by $43 billion, or 8%, due to deposit and custody inflows.

The provision for credit losses was $24 million, compared with $23 million in the prior year.

Noninterest expense was $1.8 billion, a decrease of $25 million, or 1%, largely resulting from lower performance-based compensation, predominantly offset by higher headcount-related2 expense.

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

• Pretax margin^* was 22%, down from 31%.
• Assets under management reflected net inflows of $71 billion for the 12 months ended December 31, 2011. For the quarter, net inflows were $58 billion reflecting net inflows of $53 billion to liquidity products and $5 billion to long-term products.
• Assets under management ranked in the top two quartiles for investment performance were 78% over 5 years, 72% over 3 years and 48% over 1 year.
• Customer assets in 4 and 5 Star–rated funds were 43% of all rated mutual fund assets.
• Average loans were $54.7 billion, up 29% from the prior year and 4% from the prior quarter.
• End-of-period loans were $57.6 billion, up 31% from the prior year and 6% from the prior quarter.
• Average deposits were $121.5 billion, up 36% from the prior year and 9% from the prior quarter.

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

^*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 TSS and AM against the performance of their respective competitors.

Any forecasts or opinions expressed are J.P. Morgan's own at the date of this material and may be subject to change.

J.P. Morgan Asset Management is the marketing name for the investment management businesses of JPMorgan Chase & Co. and its affiliates worldwide.