Dear Fellow Shareholders,
Seven years ago, the world was shaken by the global financial crisis. And since then, our company has been dealing with extraordinary challenges as a result of that crisis. We have endured an unprecedented economic, political and social storm — the impact of which will continue to be felt for years and possibly decades to come. What is most striking to me, in spite of all the turmoil, is that our company became safer and stronger — and it never stopped supporting clients, communities and the growth of economies around the world.
I feel extraordinarily privileged to work for this great company with such talented people. Our management team and our employees do outstanding work every single day — sometimes under enormous pressure — while dealing with an extreme number of complex business and regulatory issues. The way our people and our firm are able to address our challenges and admit our mistakes while continuing to grow our businesses and support our clients fills me with pride.
Our company earned a record $21.8 billion in net income on revenue footnote1 of $97.9 billion in 2014. In fact, we have delivered record results in the last four out of five years, and we hope to continue to deliver in the future. Our financial results reflected strong underlying performance across our businesses. Over the course of last year, our four franchises maintained — and even strengthened — our leadership positions and continued to gain market share, improve customer satisfaction and foster innovation. We also continued to deliver on our many commitments — including business simplification, regulatory requirements, controls, expense discipline and capital requirements.
We believe that, in 2014, we continued to deliver for our shareholders. The tables above show the growth in tangible book value per share, which we believe is a conservative measure of value. You can see that the tangible book value per share has grown far more than the Standard & Poor’s 500 Index (S&P 500) in both time periods. For Bank One shareholders since March 27, 2000, the stock has performed far better than most financial companies and the S&P 500. And since the JPMorgan Chase & Co. merger with Bank One on July 1, 2004, we have performed well versus other financial companies and slightly below the S&P 500. The details are shown in the table below.
However, our stock performance has not been particularly good in the last five years. While the business franchise has become stronger, I believe that legal and regulatory costs and future uncertainty regarding legal and regulatory costs have hurt our company and the value of our stock and have led to a price/earnings ratio lower than some of our competitors. We are determined to limit (we can never completely eliminate them) our legal costs over time, and as we do, we expect that the strength and quality of the underlying business will shine through.
JPMorgan Chase continued to support consumers and businesses and make a significant positive impact on our communities. In 2014, the firm provided credit and raised capital of more than $2.1 trillion for our clients. The firm also has hired nearly 8,700 military veterans since 2011 as a proud founding member of the 100,000 Jobs Mission, which recently has increased the goal to 300,000 jobs. Our firm was there to help small businesses — we provided $19 billion of credit to U.S. small businesses, which allowed them to develop new products, expand operations and hire more workers. In total, we provided $197 billion of credit to consumers. And we provided credit and raised capital of more than $75 billion for nonprofit and government entities, including states, municipalities, hospitals and universities. Our strength allows us to be there for our clients and communities in good times — and, more important, in bad times. In the face of many difficult challenges, we never stopped doing our job, and we demonstrated that the work we do matters. And we also continue to build our business by investing in infrastructure, systems, technology and new products and by adding bankers and branches around the world.
Our clients also exhibit their faith in us by entrusting us to take care of their money — either as deposits or as client assets entrusted to us — as shown in the chart below.
In this letter, I will discuss the issues highlighted below. I also encourage you to read the letters written by several of our business leaders about our main businesses, our critical operations and controls, and some of our corporate responsibility efforts.
As usual, this letter will describe some of our successes and opportunities, as well as our challenges and issues. The main sections of the letter are as follows:
- We have an outstanding franchise — our company has emerged as an endgame winner, but we need to earn it every day
- We build for the long term — we manage through–the–cycle, and we always are prepared for the toughest of times
- We will successfully navigate the new global financial architecture (and we are well on our way to having fortress controls)
- We have a solid strategy and believe our future outlook is very good — but, as usual, there still are a lot of things to think and worry about
- We have a fully engaged board, an exceptional management team and a strong corporate culture
- Represents managed revenue