- Net income was up $22 million, or 5%, from the prior quarter and the current quarter included increased revenue from seasonal activity in securities lending and depositary receipts. These benefits were partially offset by a normalization of spreads in securities lending, as compared with the prior quarter.

- Net revenue was $2 billion, an increase of $278 million, or 16%, from the prior year.
- Worldwide Securities Services net revenue of $1.2 billion was a record, up $146 million, or 14%, from the prior year. The growth was driven by increased product usage by new and existing clients (largely in custody, funds services and depositary receipts), wider spreads in securities lending and higher levels of market volatility in foreign exchange driven by recent market conditions. These benefits were offset partially by spread compression on liability products.

- Treasury Services net revenue was a record $852 million, an increase of $132 million, or 18%, from the prior year. This increase reflected higher liability balances and wider market-driven spreads as well as growth in electronic and trade loan volumes.
- TSS firmwide net revenue, which includes Treasury Services net revenue recorded in other lines of business, grew to $2.7 billion, up $346 million, or 15%. Treasury Services firmwide net revenue grew to $1.6 billion, up $200 million, or 15%.
- Noninterest expense was $1.3 billion, an increase of $168 million, or 15%, from the prior year, reflecting higher expense related to business and volume growth as well as continued investment in new product platforms.

- TSS pretax margin was 33%, down from 34% in the prior quarter and up from 32% in the prior year.
- Average liability balances were $268.3 billion, up 23%.
- Assets under custody grew to $15.5 trillion, up 2%.

- Key new client relationships added in the second quarter:
- Chosen by Shell Asset Management to provide a combination of global custody, fund accounting and securities lending services to support $70 billion in pooled investments;
- Launched programs delivering unemployment benefits through JPMorgan debit cards for the states of Colorado and Michigan; and
- Served as lead arranger for Axiom Telecom on a $400 million trade finance facility.

Asset Management net income was $395 million, a decline of $98 million, or 20%, from the prior year driven largely by lower performance fees and higher expense offset partially by increased net revenue from growth in deposit and loan balances.

- Net revenue was $2.1 billion, a decrease of $73 million, or 3%, from the prior year.
- Noninterest revenue was $1.7 billion, a decline of $141 million, or 8%, due to lower performance fees and the effect of lower markets offset partially by increased revenue from net asset inflows, higher placement fees and the acquisition of Bear Stearns.
- Net interest income was $361 million, up $68 million, or 23%, from the prior year, predominantly due to higher deposit and loan balances.

- Private Bank revenue grew 18% to $765 million due to increased deposit and loan balances, higher placement fees and higher assets under management, partially offset by lower performance fees.
- Retail revenue declined 19% to $490 million due to net equity outflows.
- Institutional revenue declined 24% to $472 million due to lower performance fees, partially offset by growth in assets under management. Private Client Services revenue grew 10% to $299 million due to higher deposit and loan balances and growth in assets under management. Bear Stearns Brokerage added $38 million to revenue.

- Assets under supervision were $1.6 trillion, an increase of $139 billion, or 9%, from the prior year. Assets under management were $1.2 trillion, up $76 billion, or 7%, from the prior year. The increase was due largely to liquidity product inflows across all segments and the Bear Stearns acquisition offset partially by lower equity markets and equity product outflows. Custody, brokerage, administration and deposit balances were $426 billion, up $63 billion, driven by the acquisition of Bear Stearns Brokerage.
- The provision for credit losses was $17 million, compared with a benefit of $11 million in the prior year, reflecting an increase in loan balances and a lower level of recoveries.
- Noninterest expense was $1.4 billion, up $45 million, or 3%, from the prior year, largely driven by the Bear Stearns acquisition and increased headcount offset partially by lower performance-based compensation.

- Pretax margin was 31%, down from 37%.
- Assets under management were $1.2 trillion, up $76 billion, or 7%, including growth of $11 billion, or 9%, in alternative assets and $15 billion from the Bear Stearns acquisition.
- Assets under management net outflows were $3 billion for the second quarter of 2008. Net inflows were $110 billion for the past 12-month period.

- Assets under management that ranked in the top two quartiles for investment performance were 76% over five years, 70% over three years and 51% over one year.
- Customer assets in 4 and 5 Star rated funds were 40%.
- Average loans of $39.3 billion were up $10.6 billion, or 37%.
- Average deposits of $70 billion were up $14 billion, or 25%.

Net loss for Corporate / Private Equity was $422 million, compared with net income of $382 million in the prior year.

- Net loss included the after-tax effects of Bear Stearns merger-related items amounting to a net loss of $540 million. These items included losses of $423 million, which represent JPMorgan Chase’s 49.4% ownership in Bear Stearns’ losses from April 8 to May 30, 2008, which were reflected in net revenue. In addition, other merger-related items of $117 million ($188 million pretax) were reflected almost entirely in noninterest expense.

- Net income for Private Equity was $99 million, compared with $702 million in the prior year.
- Net revenue was $197 million, a decrease of $1.1 billion, reflecting Private Equity gains of $220 million, compared with gains of $1.3 billion in the prior year.
- Noninterest expense was $44 million, a decline of $154 million from the prior year, reflecting lower compensation expense.

- Excluding the after-tax effect of Bear Stearns merger-related items of negative $540 million, net income for Corporate was $19 million, compared with a net loss of $320 million in the prior year.
- Net revenue was $452 million, compared with a negative $231 million in the prior year, reflecting a higher level of securities gains, predominantly related to a gain of $668 million from the sale of MasterCard shares, and a wider net interest spread. These benefits were offset partially by trading-related losses. The current-quarter provision for credit losses includes an increase in the allowance for loan losses of $170 million for prime mortgage.
- Noninterest expense was $170 million, a decrease of $135 million, or 44%, from the prior year. The decrease reflected reduced litigation expense and the absence of prior-year merger expense related to the Bank One merger.

- Private Equity portfolio was $7.7 billion, up from $6.5 billion in the prior year and $6.6 billion in the prior quarter. The portfolio represented 8.9% of total stockholders’ equity less goodwill, up from 8.8% in the prior year and 8.3% in the prior quarter.

JPMorgan Chase net income was $2 billion, a decrease of $2.2 billion, or 53%, from the prior year.

- The decline in earnings was driven by a higher provision for credit losses and increased noninterest expense.
- Managed net revenue was $19.7 billion, a decrease of $141 million, or 1%, from the prior year.
- Noninterest revenue of $9.5 billion was down $2.6 billion, or 22%, due to lower principal transactions revenue, which reflected net markdowns on leveraged lending funded and unfunded commitments and mortgage-related markdowns, and lower levels of private equity gains. In addition, the firm’s share of Bear Stearns’ losses from April 8 to May 30 2008, and lower investment banking fees contributed to the decline in noninterest revenue. The decline was offset partially by a gain on the sale of MasterCard shares. Net interest income was $10.2 billion, up $2.5 billion, or 33%, due to higher trading-related net interest income and higher loan and deposit balances.

- The managed provision for credit losses was $4.3 billion, up $2.2 billion, or 102%, from the prior year.
- The total consumer-managed provision for credit losses was $3.8 billion, compared with $1.9 billion in the prior year, reflecting increases in the allowance for credit losses predominantly related to subprime mortgage, prime mortgage and credit card loans, as well as higher net charge-offs.
- Consumer-managed net charge-offs were $2.9 billion, compared with $1.6 billion, resulting in a managed net charge-off rate of 3.08% and 1.90%, respectively.

- The wholesale provision for credit losses was $505 million, compared with $198 million in the prior year, due to an increase in the allowance for credit losses reflecting the effect of a weakening credit environment and loan growth.
- Wholesale net charge-offs were $41 million, compared with net recoveries of $29 million, resulting in net charge-off rates of 0.08% and a net recovery rate of 0.07%, respectively. The firm had total nonperforming assets of $6.6 billion at June 30, 2008, up from the prior-year level of $2.6 billion.
- Noninterest expense was $12.2 billion, up $1.1 billion, or 10%, from the prior year. The increase was driven by higher compensation expense, the acquisition of Bear Stearns (including merger-related costs) and higher mortgage production and servicing expense.