UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2007		Commission file number 1-5805

JPMORGAN CHASE & CO.

Delaware		13-2624428
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
270 Park Avenue, New York, New York		10017
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (212) 270-6000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes þ No

Number of shares of common stock outstanding as of October 31, 2007: 3,359,043,795

FORM 10-Q
TABLE OF CONTENTS

				Page
Part I – Financial information
Item 1		Consolidated Financial Statements — JPMorgan Chase & Co.:
		Consolidated statements of income (unaudited) for the three and nine months ended September 30, 2007 and 2006			68
		Consolidated balance sheets at September 30, 2007 (unaudited), and December 31, 2006			69
		Consolidated statements of changes in stockholders’ equity and comprehensive income (unaudited) for the nine months ended September 30, 2007 and 2006			70
		Consolidated statements of cash flows (unaudited) for the nine months ended September 30, 2007 and 2006			71
		Notes to consolidated financial statements (unaudited)			72
		Consolidated average balance sheets, interest and rates (unaudited) for the three and nine months ended September 30, 2007 and 2006			112
		Glossary of Terms and Line of Business Metrics			114
Item 2		Management’s Discussion and Analysis of Financial Condition and Results of Operations:
		Consolidated Financial Highlights			3
		Introduction			4
		Executive Overview			6
		Consolidated Results of Operations			9
		Explanation and Reconciliation of the Firm’s Use of Non-GAAP Financial Measures			13
		Business Segment Results			16
		Balance Sheet Analysis			42
		Capital Management			45
		Off-Balance Sheet Arrangements and Contractual Cash Obligations			47
		Risk Management			48
		Supervision and Regulation			65
		Critical Accounting Estimates Used by the Firm			66
		Accounting and Reporting Developments			66
		Forward-Looking Statements			119
Item 3		Quantitative and Qualitative Disclosures About Market Risk			120
Item 4		Controls and Procedures			120
Part II – Other information
Item 1		Legal Proceedings			120
Item 1A		Risk Factors			121
Item 2		Unregistered Sales of Equity Securities and Use of Proceeds			121
Item 3		Defaults Upon Senior Securities			122
Item 4		Submission of Matters to a Vote of Security Holders			122
Item 5		Other Information			122
Item 6		Exhibits			122
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32: CERTIFICATIONS

JPMORGAN CHASE & CO.
CONSOLIDATED FINANCIAL HIGHLIGHTS

(unaudited)																						Nine months ended
(in millions, except per share, headcount and ratio data)																						September 30,
As of or for the period ended,		3Q07				2Q07				1Q07				4Q06				3Q06				2007				2006
Selected income statement data
Noninterest revenue(a)		$	8,786			$	12,593			$	12,850			$	10,501			$	10,166			$	34,229			$	30,256
Net interest income			7,326				6,315				6,118				5,692				5,379				19,759				15,550
Total net revenue			16,112				18,908				18,968				16,193				15,545				53,988				45,806
Provision for credit losses			1,785				1,529				1,008				1,134				812				4,322				2,136
Noninterest expense			9,327				11,028				10,628				9,885				9,796				30,983				28,958
Income tax expense			1,627				2,117				2,545				1,268				1,705				6,289				4,969
Income from continuing operations			3,373				4,234				4,787				3,906				3,232				12,394				9,743
Income from discontinued operations(b)			—				—				—				620				65				—				175
Net income		$	3,373			$	4,234			$	4,787			$	4,526			$	3,297			$	12,394			$	9,918
Per common share
Basic earnings per share:
Income from continuing operations		$	1.00			$	1.24			$	1.38			$	1.13			$	0.93			$	3.63			$	2.81
Net income			1.00				1.24				1.38				1.31				0.95				3.63				2.86
Diluted earnings per share:
Income from continuing operations		$	0.97			$	1.20			$	1.34			$	1.09			$	0.90			$	3.52			$	2.73
Net income			0.97				1.20				1.34				1.26				0.92				3.52				2.78
Cash dividends declared per share			0.38				0.38				0.34				0.34				0.34				1.10				1.02
Book value per share			35.72				35.08				34.45				33.45				32.75
Common shares outstanding
Average: Basic			3,376	#			3,415	#			3,456	#			3,465	#			3,469	#			3,416	#			3,472	#
Diluted			3,478				3,522				3,560				3,579				3,574				3,520				3,572
Common shares at period end			3,359				3,399				3,416				3,462				3,468
Share price(c)
High		$	50.48			$	53.25			$	51.95			$	49.00			$	47.49			$	53.25			$	47.49
Low			42.16				47.70				45.91				45.51				40.40				42.16				37.88
Close			45.82				48.45				48.38				48.30				46.96
Market capitalization			153,901				164,659				165,280				167,199				162,835
Financial ratios
Return on common equity (“ROE”):(d)
Income from continuing operations			11	%			14	%			17	%			14	%			11	%			14	%			12	%
Net income			11				14				17				16				12				14				12
Return on assets (“ROA”):(d)
Income from continuing operations			0.91				1.19				1.41				1.14				0.98				1.16				1.02
Net income			0.91				1.19				1.41				1.32				1.00				1.16				1.02
Overhead ratio			58				58				56				61				63				57				63
Tier 1 capital ratio			8.4				8.4				8.5				8.7				8.6
Total capital ratio			12.5				12.0				11.8				12.3				12.1
Selected balance sheet data (period-end)
Total assets		$	1,479,575			$	1,458,042			$	1,408,918			$	1,351,520			$	1,338,029
Loans			486,320				465,037				449,765				483,127				463,544
Deposits			678,091				651,370				626,428				638,788				582,115
Long-term debt			173,696				159,493				143,274				133,421				126,619
Total stockholders’ equity			119,978				119,211				117,704				115,790				113,561
Headcount			179,847	#			179,664	#			176,314	#			174,360	#			171,589	#
Credit quality metrics
Allowance for credit losses		$	8,971			$	8,399			$	7,853			$	7,803			$	7,524
Nonperforming assets(e)			3,181				2,586				2,421				2,341				2,300
Allowance for loan losses to total loans(f)			1.76	%			1.71	%			1.74	%			1.70	%			1.65	%
Net charge-offs		$	1,221			$	985			$	903			$	930			$	790			$	3,109			$	2,112
Net charge-off rate(d)(f)			1.07	%			0.90	%			0.85	%			0.84	%			0.74	%			0.94	%			0.69	%
Wholesale net charge-off (recovery) rate(d)(f)		0.19					(0.07	)			(0.02	)			0.07				(0.03	)			0.04				(0.04	)
Managed card net charge-off rate(d)			3.64				3.62				3.57				3.45				3.58				3.61				3.29

(a)		The Firm adopted SFAS 157 in the first quarter of 2007. See Note 3 on page 73 of this Form 10-Q for additional information.
(b)		On October 1, 2006, JPMorgan Chase & Co. completed the exchange of selected corporate trust businesses for the consumer, business banking and middle-market banking businesses of The Bank of New York Company Inc. The results of operations of these corporate trust businesses are reported as discontinued operations for each 2006 period.
(c)		JPMorgan Chase’s common stock is listed and traded on the New York Stock Exchange, the London Stock Exchange Limited and the Tokyo Stock Exchange. The high, low and closing prices of JPMorgan Chase’s common stock are from The New York Stock Exchange Composite Transaction Tape.
(d)		Ratios are based upon annualized amounts.
(e)		Excludes purchased wholesale loans held-for-sale.
(f)		End-of-period and average Loans at fair value and loans held-for-sale were excluded when calculating the allowance coverage ratios and net charge-off rates, respectively.

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section of the Form 10-Q provides management’s discussion and analysis (“MD&A”) of the financial condition and results of operations for JPMorgan Chase. See the Glossary of terms on pages 114–116 for definitions of terms used throughout this Form 10-Q. The MD&A included in this Form 10-Q contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. These risks and uncertainties could cause JPMorgan Chase’s results to differ materially from those set forth in such forward-looking statements. Certain of such risks and uncertainties are described herein (see Forward-looking Statements on page 119 of this Form 10-Q and the JPMorgan Chase Annual Report on Form 10-K for the year ended December 31, 2006, as amended (“2006 Annual Report” or “2006 Form 10-K”), Part I, Item 1A: Risk factors to which reference is hereby made).

INTRODUCTION
JPMorgan Chase & Co. (“JPMorgan Chase” or the “Firm”), a financial holding company incorporated under Delaware law in 1968, is a leading global financial services firm and one of the largest banking institutions in the United States of America (“U.S.”), with $1.5 trillion in assets, $120.0 billion in stockholders’ equity and operations worldwide. The Firm is a leader in investment banking, financial services for consumers and businesses, financial transaction processing and asset management. Under the JPMorgan and Chase brands, the Firm serves millions of customers in the U.S. and many of the world’s most prominent corporate, institutional and government clients.

JPMorgan Chase’s principal bank subsidiaries are JPMorgan Chase Bank, National Association (“JPMorgan Chase Bank, N.A.”), a national banking association with branches in 17 states; and Chase Bank USA, National Association (“Chase Bank USA, N.A.”), a national bank that is the Firm’s credit card issuing bank. JPMorgan Chase’s principal nonbank subsidiary is J.P. Morgan Securities Inc., the Firm’s U.S. investment banking firm.

JPMorgan Chase’s activities are organized, for management reporting purposes, into six business segments, as well as Corporate. The Firm’s wholesale businesses comprise the Investment Bank, Commercial Banking, Treasury & Securities Services and Asset Management segments. The Firm’s consumer businesses comprise the Retail Financial Services and Card Services segments. A description of the Firm’s business segments, and the products and services they provide to their respective client bases, follows.

Investment Bank
JPMorgan is one of the world’s leading investment banks, with deep client relationships and broad product capabilities. The Investment Bank’s clients are corporations, financial institutions, governments and institutional investors. The Firm offers a full range of investment banking products and services in all major capital markets, including advising on corporate strategy and structure, capital raising in equity and debt markets, sophisticated risk management, market-making in cash securities and derivative instruments, and research. The Investment Bank (“IB”) also commits the Firm’s own capital to proprietary investing and trading activities.

Retail Financial Services
Retail Financial Services (“RFS”), which includes the Regional Banking, Mortgage Banking and Auto Finance reporting segments, helps meet the financial needs of consumers and businesses. RFS provides convenient consumer banking through the nation’s fourth-largest branch network and third-largest ATM network. RFS is a top-five mortgage originator and servicer, the second-largest home equity originator, the largest noncaptive originator of automobile loans and one of the largest student loan originators.

RFS serves customers through 3,096 bank branches, 8,943 ATMs and 280 mortgage offices, and through relationships with more than 15,000 auto dealerships and 4,300 schools and universities. Over 13,000 branch salespeople assist customers, across a 17-state footprint from New York to Arizona, with checking and savings accounts, mortgage, home equity and business loans, investments and insurance. More than 1,200 additional mortgage officers provide home loans throughout the country.

Card Services
With 154 million cards in circulation and $149.1 billion in managed loans, Chase Card Services (“CS”) is one of the nation’s largest credit card issuers. Customers used Chase cards for $259.1 billion worth of transactions in the nine months ended September 30, 2007.

Chase offers a wide variety of general-purpose cards to satisfy the needs of individual consumers, small businesses and partner organizations, including cards issued with AARP, Amazon, Continental Airlines, Marriott, Southwest Airlines, Sony, United Airlines, the Walt Disney Company and many other well-known brands and organizations. Chase also issues private-label cards with Circuit City, Kohl’s, Sears Canada and BP.

Chase Paymentech Solutions, LLC, a joint venture with JPMorgan Chase and First Data Corporation, is the largest processor of MasterCard and Visa payments in the world, having handled 14.3 billion transactions in the nine months ended September 30, 2007.

Commercial Banking
Commercial Banking (“CB”) serves more than 30,000 clients, including corporations, municipalities, financial institutions and not-for-profit entities. These clients generally have annual revenue ranging from $10 million to $2 billion. Commercial bankers serve clients nationally throughout the RFS footprint and in offices located in other major markets.

Commercial Banking offers its clients industry knowledge, experience, a dedicated service model, comprehensive solutions and local expertise. The Firm’s broad platform positions CB to deliver extensive product capabilities – including lending, treasury services, investment banking and asset management – to meet its clients’ U.S. and international financial needs.

Treasury & Securities Services
Treasury & Securities Services (“TSS”) is a global leader in providing transaction, investment and information services to support the needs of institutional clients worldwide. TSS is one of the largest cash management providers in the world and a leading global custodian. Treasury Services (“TS”) provides a variety of cash management products, trade finance and logistics solutions, wholesale card products, and liquidity management capabilities to small and midsized companies, multinational corporations, financial institutions and government entities. TS partners with the Commercial Banking, Retail Financial Services and Asset Management business segments to serve clients firmwide. As a result, certain TS revenues are included in other segments’ results. Worldwide Securities Services (“WSS”) stores, values, clears and services securities and alternative investments for investors and broker-dealers; and manages Depositary Receipt programs globally.

Asset Management
With assets under supervision of $1.5 trillion, Asset Management (“AM”) is a global leader in investment and wealth management. AM clients include institutions, retail investors and high-net-worth individuals in every major market throughout the world. AM offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity, including both money market instruments and bank deposits. AM also provides trust and estate and banking services to high-net-worth clients, and retirement services for corporations and individuals. The majority of AM’s client assets are in actively managed portfolios.

OTHER BUSINESS EVENTS

Investment in SLM Corporation
On April 16, 2007, an investor group, comprised of JPMorgan Chase Bank, N.A. and three other firms (the “investor group”), announced an Agreement and Plan of Merger (the “merger agreement”) to acquire SLM Corporation (“Sallie Mae”) for $60 per share in cash. On September 26, 2007, the investor group advised Sallie Mae that if the conditions to the closing of the merger agreement were required to be measured at that time, the conditions to closing would not be satisfied because Sallie Mae had suffered a Material Adverse Effect as defined in the merger agreement. On October 2, 2007, the investor group advised Sallie Mae that it would be willing to revise its offer, and proposed a revised purchase price for Sallie Mae, composed of $50 in cash and warrants with a payout of up to an additional $10 per share. That offer was rejected by Sallie Mae and, on October 8, 2007, Sallie Mae filed a lawsuit in Delaware Chancery Court against the investor group. The lawsuit seeks a declaration that, among other things, the investor group repudiated the merger agreement, that no Material Adverse Effect has occurred and that Sallie Mae may terminate the Agreement and collect a $900 million termination fee (the “reverse termination fee”), of which JPMorgan Chase’s portion would be approximately $224 million. On October 15, 2007, the investor group filed an Answer and Counterclaims to Sallie Mae’s lawsuit. In addition, the investor group has waived Sallie Mae’s obligations to comply with certain of its agreements and covenants under the merger agreement, including Sallie Mae’s agreements to refrain from negotiating with other possible buyers, and has waived its right to receive the reverse termination fee from Sallie Mae in the event that another buyer acquires Sallie Mae. A trial date has not yet been set.

Headquarters for the Investment Bank in London and New York
On May 3, 2007, JPMorgan Chase announced plans to build a new investment banking headquarters in London. The building will have more than one million square feet with at least five trading floors of approximately 70,000 useable square feet each. The Firm is expecting the building to open late 2012. On June 14, 2007, JPMorgan Chase announced it will build a new 1.3 million square-foot global investment banking headquarters in the World Trade Center complex in New York City. The Firm expects the building to open by late 2012.

Master Liquidity Enhancement Conduit
On October 15, 2007, JPMorgan Chase and several other financial institutions announced an agreement in principle to create a “master liquidity enhancement conduit” (“M-LEC”) and provide liquidity support for it in order to enhance liquidity in the market for asset-backed commercial paper and medium-term notes issued by structured investment vehicles. The financial institutions are working toward the finalization of the various terms.

EXECUTIVE OVERVIEW
This overview of management’s discussion and analysis highlights selected information and may not contain all of the information that is important to readers of this Form 10-Q. For a more complete understanding of events, trends and uncertainties, as well as the liquidity, capital, credit and market risks, and the critical accounting estimates, affecting the Firm and its various lines of business, this Form 10-Q should be read in its entirety.

Financial performance of JPMorgan Chase

		Three months ended September 30,												Nine months ended September 30,
(in millions, except per share and ratio data)		2007				2006				Change				2007				2006				Change
Selected income statement data
Total net revenue		$	16,112			$	15,545				4	%		$	53,988			$	45,806				18	%
Provision for credit losses			1,785				812				120				4,322				2,136				102
Total noninterest expense			9,327				9,796				(5	)			30,983				28,958				7
Income from continuing operations			3,373				3,232				4				12,394				9,743				27
Income from discontinued operations			—				65			NM					—				175			NM
Net income			3,373				3,297				2				12,394				9,918				25
Diluted earnings per share
Income from continuing operations		$	0.97			$	0.90				8	%		$	3.52			$	2.73				29	%
Net income			0.97				0.92				5				3.52				2.78				27
Return on common equity
Income from continuing operations			11	%			11	%							14	%			12	%
Net income			11				12								14				12

Business overview
The Firm reported 2007 third-quarter Net income of $3.4 billion, or $0.97 per share, compared with Net income of $3.3 billion, or $0.92 per share, for the third quarter of 2006. Return on common equity for the quarter was 11% compared with 12% in the prior year.

Net income for the first nine months of 2007 was $12.4 billion, or $3.52 per share, compared with $9.9 billion, or $2.78 per share, in the prior year. Return on common equity was 14% for the first nine months of 2007, compared with 12% for the prior-year period.

In the first quarter of 2007, the Firm adopted SFAS 157 (“Fair Value Measurements”) and SFAS 159 (“Fair Value Option”). For a discussion of SFAS 157 and SFAS 159, see Note 3 on pages 73–80 and Note 4 on pages 80–83 of this Form 10-Q.

The rate of growth in the global economy slowed in the third quarter, but still expanded by approximately 4% annually, while inflation broadly remained well-contained. The industrial economies continued to grow by approximately 2% annually (with the U.S. economy growing at 3.9%). The developing economies continued to grow, although at a slightly slower rate than their recent level of 8% annual growth. Global financial markets were mixed during the quarter, and capital markets activity declined from the historically high levels of the first six months of 2007, as concerns about losses on U.S. subprime mortgage investments triggered a flight to quality in the capital markets and credit markets experienced spread widening and lower levels of liquidity. In spite of these challenges, both U.S. and international equity markets posted gains during the quarter: the S&P 500 and international indices were up, on average, approximately 1% and 5%, respectively. The U.S. Treasury market rallied, with rates dropping approximately 100 basis points during the quarter. In September of 2007, the Federal Reserve Board lowered the federal funds rate from 5.25% to 4.75% in an effort to help offset the adverse effects of the market disruption.

The Firm’s performance benefited from investments in all of its businesses, which has driven organic revenue growth and improved operating margins over time. These benefits were tempered by the capital markets environment, which experienced significantly wider spreads and reduced levels of liquidity in the mortgage and corporate credit markets, resulting in lower earnings in the Investment Bank. In addition, continued weakness in the housing markets led to an increased Provision for credit losses and, as a result, lower earnings in Retail Financial Services. The Firm’s other businesses each posted improved results versus the prior year with Asset Management and Treasury & Securities Services reporting record earnings; Card Services and Commercial Banking growing earnings at a double-digit pace; and Private Equity realizing strong results.

The discussion that follows highlights the current-quarter performance of each business segment compared with the prior-year quarter and discusses results on a managed basis unless otherwise noted. For more information about managed basis, see Explanation and reconciliation of the Firm’s use of non-GAAP financial measures on pages 13–16 of this Form 10-Q .

Investment Bank net income decreased from the prior year, driven by lower net revenue as well as a higher Provision for credit losses, partially offset by lower noninterest expense. Investment banking fees decreased, reflecting lower debt underwriting fees offset partially by record advisory fees. Fixed Income Markets revenue declined due to markdowns on leveraged lending funded loans and unfunded commitments and markdowns on collateralized debt obligation (“CDO”)

warehouses and unsold positions. In addition, Fixed Income Markets declined due to weak credit-trading performance and significantly lower commodities results, compared with a strong prior-year quarter. These lower results in Fixed Income Markets were offset partially by record revenue in both rates and currencies. Equity Markets revenue decreased from the prior year, as weaker trading results were offset partially by strong client revenue across businesses. The Provision for credit losses was up, driven by an increase in the allowance for credit losses, primarily related to portfolio growth. The decrease in noninterest expense was due primarily to lower performance-based compensation expense.

Retail Financial Services net income decreased from the prior year due to lower results in Regional Banking, primarily related to an increase in the Provision for credit losses. Total net revenue increased due primarily to the absence of a prior-year negative valuation adjustment to the mortgage servicing right (“MSR”) asset, the Bank of New York transaction and higher deposit-related fees. Total net revenue also benefited from the classification of certain mortgage loan origination costs as expense, due to the adoption of SFAS 159, and wider spreads on loans. These benefits were offset partially by markdowns on the mortgage warehouse and pipeline and a continued shift to narrower–spread deposit products. The increase in the Provision for credit losses was due primarily to an increase in the allowance for credit losses related to the home equity portfolio. Total noninterest expense increased due to the Bank of New York transaction; the classification of certain loan origination costs as expense, due to the adoption of SFAS 159; and investments in the retail distribution network.

Card Services net income increased from the prior year, benefiting from higher revenue, partially offset by an increase in the Provision for credit losses. Total net revenue increased, reflecting a higher level of fees, higher average loan balances and increased net interchange income. These benefits were offset partially by the discontinuation of certain billing practices (including the elimination of certain over-limit fees and the two-cycle billing method for calculating finance charges) and a narrower loan spread. The Managed provision for credit losses increased, reflecting a higher level of net charge-offs. Credit quality was stable in the quarter. Total noninterest expense was up slightly, primarily due to higher volume-related expense.

Commercial Banking grew net income over the prior-year period, as an increase in Total net revenue and a decrease in Total noninterest expense were offset partially by a higher Provision for credit losses. Total net revenue increased due to double-digit growth in liability and loan balances, reflecting organic growth and the Bank of New York transaction. These increases were offset partially by a continued shift to narrower-spread liability products and spread compression in the loan and liability portfolios. The increase in Provision for credit losses largely reflected portfolio activity and growth in loan balances. Total noninterest expense decreased, as lower performance-based compensation expense was offset partially by higher volume-related expense.

Treasury & Securities Services achieved record net income, driven by record Total net revenue, partially offset by higher noninterest expense. Total net revenue growth was driven by increased product usage by new and existing clients, market appreciation, growth in electronic volumes and higher liability balances. These benefits were offset partially by spread compression and a continued shift to narrower-spread liability products. Total noninterest expense increased, due primarily to higher expense related to business and volume growth, as well as investment in new product platforms.

Asset Management generated record net income, reflecting record Total net revenue, partially offset by higher noninterest expense. Total net revenue benefited largely from increased assets under management, higher performance and placement fees, increases in deposit and loan balances and wider deposit spreads. The Provision for credit losses increased, reflecting a higher level of recoveries in the prior year. Total noninterest expense increased, due largely to higher compensation, primarily performance-based, and investments in all business segments.

Corporate segment net income increased from the prior year, benefiting from higher Total net revenue and lower noninterest expense. The increase in Total net revenue was driven primarily by higher private equity gains, higher trading-related gains and a gain from the sale of MasterCard shares. Partially offsetting the increased revenue was a narrower net interest spread. Total noninterest expense decreased due to lower compensation expense and continuing business efficiencies.

Income from discontinued operations was $65 million in the third quarter of 2006. Discontinued operations (included in the Corporate segment results) include the income statement activity of selected corporate trust businesses sold to The Bank of New York.

JPMorgan Chase realized approximately $740 million (pretax) of merger savings during the quarter ended September 30, 2007, which is an annualized rate of approximately $2.96 billion. Merger costs of $61 million were expensed during the third quarter of 2007, bringing the total amount expensed since the merger announcement to $3.7 billion (including capitalized costs). In the third quarter of 2007, the Firm successfully completed the in-sourcing of its credit card processing platform and the conversion of the wholesale deposit system. The wholesale deposit conversion was the largest in the Firm’s history, involving approximately $180 billion in customer balances, and was the last significant merger integration event.

The Managed provision for credit losses was $2.4 billion, up by $944 million, or 67%, from the prior year. The wholesale Provision for credit losses was $351 million, compared with $35 million in the prior year, reflecting an increase in the allowance for credit losses, primarily related to portfolio growth. Wholesale net charge-offs were $82 million, compared with net recoveries of $11 million, resulting in net charge-off rates of 0.19% and recoveries of 0.03%, respectively. The total consumer Managed provision for credit losses was $2.0 billion, compared with $1.4 billion in the prior year, primarily reflecting an increase in the allowance for credit losses related to the home equity portfolio and growth in the subprime mortgage portfolio. Consumer managed net charge-offs were $1.7 billion, compared with $1.4 billion, resulting in managed net charge-off rates of 1.96% and 1.69%, respectively. The Firm had total nonperforming assets of $3.2 billion at September 30, 2007, up by $881 million, or 38%, from the prior-year level of $2.3 billion.

The Firm had, at September 30, 2007, Total stockholders’ equity of $120.0 billion and a Tier 1 capital ratio of 8.4%. The Firm purchased $2.1 billion, or 47.0 million shares, of common stock during the quarter.

Business outlook
The following forward-looking statements are based upon the current beliefs and expectations of JPMorgan Chase’s management and are subject to significant risks and uncertainties. These risks and uncertainties could cause JPMorgan Chase’s results to differ materially from those set forth in such forward-looking statements.

JPMorgan Chase’s outlook for the fourth quarter of 2007 should be viewed against the backdrop of the global economy, financial markets activity (including interest rate movements), the geopolitical environment, the competitive environment and client activity levels. Each of these interlinked factors will affect the performance of the Firm’s lines of business.

The Investment banking fee pipeline was lower at September 30, 2007, than it was at June 30, 2007, due largely to a lower level of debt underwriting activity. In light of current capital market and economic conditions, management remains cautious with regard to the realization of this pipeline. Capital market conditions are still being affected by the disruption in the mortgage market, as well as by overall lower levels of liquidity and wider credit spreads, all of which could potentially lead to reduced levels of client activity, difficulty in syndicating leveraged loans, lower investment banking fees and lower trading revenue. While there have been some successfully completed leveraged finance transactions during the fourth quarter of 2007, the Firm continues to hold a substantial amount of leveraged loans and unfunded commitments as held-for-sale ($40.6 billion as of September 30, 2007). These positions are difficult to hedge effectively and further markdowns could result if market conditions worsen for this asset class. The Firm’s CDO and subprime mortgage warehouse and trading positions could also be negatively affected by market conditions during the fourth quarter of 2007.

Future economic conditions may also cause the Provision for credit losses to increase over time. The consumer Provision for credit losses could increase as a result of a higher level of losses in Retail Financial Services’ home equity loan portfolio and growth in the retained subprime mortgage loan portfolio. Given the potential stress on the consumer from continued downward pressure on housing prices and the elevated inventory of unsold houses nationally, management remains cautious with respect to the home equity portfolio. Management currently expects that quarterly losses related to the home equity portfolio to increase over the next few quarters, to a range of $250 million to $270 million per quarter, or a net charge-off rate of 1.05% to 1.10%. In addition, the consumer provision could increase due to a higher level of net charge-offs in Card Services, as losses continue to return to a more normal level, which could be in the range of 4.00% to 4.50% of managed loans by the end of 2008. The wholesale Provision for credit losses may also increase over time as a result of loan growth, customer activity and changes in underlying credit conditions. In addition, a weaker overall economy may lead to an increase in both the wholesale and consumer provision for credit losses.

Management continues to believe that the net loss in Treasury and Other Corporate on a combined basis will be approximately $50 million to $100 million per quarter over time; and that private equity results, which are dependent upon the capital markets, could continue to be volatile. Firmwide, Total noninterest expense is anticipated to reflect investments in each business, recent acquisitions and divestitures and other operating efficiencies. Management continues to believe that annual merger savings will reach approximately $3.0 billion by the end of 2007. Management currently expects total merger costs (including costs associated with the Bank of New York transaction) will be approximately $3.8 billion, and that all remaining costs will be incurred by the end of 2007.

CONSOLIDATED RESULTS OF OPERATIONS
The following section provides a comparative discussion of JPMorgan Chase’s consolidated results of operations on a reported basis. Factors that relate primarily to a single business segment are discussed in more detail within that business segment than they are in this consolidated section. For a discussion of the Critical accounting estimates used by the Firm that affect the Consolidated results of operations, see page 66 of this Form 10-Q and pages 83–85 of the JPMorgan Chase 2006 Form 10-K.

Total net revenue
The following table presents the components of Total net revenue.

		Three months ended September 30,												Nine months ended September 30,
(in millions)		2007				2006				Change				2007				2006				Change
Investment banking fees		$	1,336			$	1,416				(6	)%		$	4,973			$	3,955				26	%
Principal transactions			237				2,737				(91	)			8,274				8,187				1
Lending & deposit-related fees			1,026				867				18				2,872				2,573				12
Asset management, administration and commissions			3,663				2,842				29				10,460				8,682				20
Securities gains (losses)			237				40				493				16				(578	)		NM
Mortgage fees and related income			221				62				256				1,220				516				136
Credit card income			1,777				1,567				13				5,054				5,268				(4	)
Other income			289				635				(54	)			1,360				1,653				(18	)
Noninterest revenue			8,786				10,166				(14	)			34,229				30,256				13
Net interest income			7,326				5,379				36				19,759				15,550				27
Total net revenue		$	16,112			$	15,545				4			$	53,988			$	45,806				18

Total net revenue for the third quarter of 2007 was $16.1 billion, up by $567 million, or 4%, from the prior year. This increase was the result of higher Net interest income; record Asset management, administration and commissions revenue; strong private equity gains (included in Principal transactions revenue); and higher Credit card income. These improvements were partly offset by a significant decline in trading revenue within Principal transactions revenue, reflecting markdowns on leveraged lending funded loans and unfunded commitments and lower fixed income trading results. For the first nine months of 2007, Total net revenue was $54.0 billion, up by $8.2 billion, or 18%, from the prior year. The increase was driven by higher Net interest income; very strong private equity gains; record Asset management, administration and commissions revenue; and record Investment banking fees. Lower trading revenue in the 2007 third quarter partially offset these increases.

Investment banking fees in the third quarter of 2007 declined slightly from the comparable period last year, reflecting lower debt underwriting fees offset partially by record advisory fees. In the first nine months of 2007, Investment banking fees were a record for the Firm, reflecting record fees for advisory and debt and equity underwriting. For a further discussion of Investment banking fees, which are primarily recorded in IB, see the IB segment results on pages 17–20 of this Form 10-Q.

Principal transactions revenue consists of trading revenue and private equity gains. In the third quarter of 2007, the Firm recognized a net loss of $548 million from trading activities primarily reflecting markdowns of $1.3 billion (net of fees) on $40.6 billion of leveraged lending funded loans and unfunded commitments, as well as markdowns of $339 million (net of risk management results) on $6.8 billion of CDO warehouses and unsold positions. For the first nine months of 2007, trading revenue was lower by $2.4 billion compared with the same period last year, primarily reflecting markdowns of $1.4 billion (net of fees) on leveraged lending funded loans and unfunded commitments, as well as markdowns of $358 million (net of risk management results) on CDO warehouses and unsold positions. In addition, trading revenue was also impacted by weak credit trading and significantly lower commodities results, compared with a strong prior year, partially offset by record revenue in rates and currencies, and strong equity trading results across all products. IB’s Credit Portfolio results increased from the third quarter of 2006 due to higher trading revenue from risk management activities; in addition, for the first nine months of 2007, IB’s Credit Portfolio benefited from an adjustment to the valuation of the Firm’s derivative liabilities measured at fair value, to reflect the credit quality of the Firm as part of the adoption of SFAS 157. Private equity gains in the third quarter and first nine months of 2007 increased compared with the same periods in 2006, reflecting a higher level of gains and the classification of certain private equity carried interest as Compensation expense. Also favorably affecting the first nine months of 2007 was a fair value adjustment in the first quarter of 2007 on nonpublic private equity investments resulting from the adoption of SFAS 157. For a further discussion of Principal transactions revenue, see the IB and Corporate segment results on pages 17–20 and 40–41, respectively, and Note 5 on pages 83–85 of this Form 10-Q.

Lending & deposit-related fees rose from the third quarter and first nine months of 2006 as a result of higher deposit-related fees and the Bank of New York transaction. For a further discussion of Lending & deposit-related fees, which are partly recorded in RFS and CB, see the RFS segment results on pages 21–28 and the CB segment results on pages 33–34 of this Form 10-Q.

Asset management, administration and commissions revenue reached record levels in the third quarter and first nine months of 2007, primarily due to an increase in assets under management and higher performance and placement fees in AM. The growth in assets under management, which reached $1.2 trillion at the end of the third quarter of 2007, up 24% from the prior year, was the result of net asset inflows into the Institutional, Retail and Private Bank segments and market appreciation. Also contributing to the rise in Asset management, administration and commissions revenue were higher assets under custody in TSS, driven by new business and market appreciation. In addition, other service fees were higher due to a combination of new clients and increased product usage by existing clients. In addition, commissions revenue increased due to higher brokerage transaction volume (primarily included within Fixed Income and Equity Markets revenue of IB) and higher investment sales volume in RFS; these were partly offset by the sale of the insurance business in the third quarter of 2006, and a charge in the first quarter of 2007 resulting from accelerated surrenders of customer annuities. For additional information on these fees and commissions, see the segment discussions for IB on pages 17–20, RFS on pages 21–28, TSS on pages 35–36, and AM on pages 37–39, of this Form 10-Q.

The favorable variances in Securities gains (losses) for the third quarter and first nine months of 2007 when compared with the same periods in 2006 were primarily the result of a $115 million gain from the sale of MasterCard shares; higher gains from marketable securities received from loan workouts in IB; and improvements in the results of Treasury’s portfolio-repositioning activities. For a further discussion of Securities gains (losses), which are mostly recorded in the Firm’s Treasury business, see the Corporate segment discussion on pages 40–41 of this Form 10-Q.

Mortgage fees and related income increased from the third quarter and first nine months of 2006. Net mortgage servicing improved due primarily to the absence of a prior-year negative valuation adjustment of $235 million to the MSR asset and growth in third-party loans serviced. In the quarter-to-quarter comparison, production revenue declined as markdowns of $186 million on the mortgage warehouse and pipeline were offset partially by an increase in mortgage loan originations and the classification of certain loan origination costs as expense (loan origination costs previously netted against revenue commenced being recorded as an expense in the first quarter of 2007 due to the adoption of SFAS 159). For the first nine months of 2007, production revenue was up from the same period in 2006 as a result of increased mortgage loan originations, and the classification of certain loan origination costs as expense (loan origination costs previously netted against revenue are currently recorded as expense due to the adoption of SFAS 159). These increases were offset partially by markdowns of $186 million on the mortgage warehouse and pipeline. Mortgage fees and related income exclude the impact of NII and AFS securities gains and losses related to mortgage activities. For a discussion of Mortgage fees and related income, which is recorded primarily in RFS’s Mortgage Banking business, see the Mortgage Banking discussion on pages 26–27 of this Form 10-Q.

Credit card income rose from the third quarter of 2006 due primarily to an increase in net interchange income, which benefited from higher charge volume; and an increase in servicing fees earned in connection with securitization activities, which were favorably affected by higher net interest income earned on the securitized credit card loans. For the first nine months of 2007, Credit card income decreased due primarily to lower servicing fees earned in connection with securitization activities, which were affected unfavorably by lower net interest income earned and higher net credit losses incurred on the securitized credit card loans. These were partially offset by an increase in net interchange income and a higher level of fee-based revenue. For further discussion of Credit card income, see CS’s segment results on pages 29–32 of this Form 10-Q.

Other income declined from the third quarter and first nine months of 2006. The decrease from the first nine months of 2006 was driven by the absence of a $103 million gain in the second quarter of 2006, related to the sale of MasterCard shares in its initial public offering; and lower net gains on credit card securitizations. These were offset partially by higher gains on the sale of leveraged leases and education loans, increased income from automobile operating leases, and the absence of a loss related to auto loans transferred to the held-for-sale portfolio in the first quarter of 2006.

Net interest income rose from the third quarter of 2006, primarily from the following: higher trading-related Net interest income, due to a shift of Interest expense to Principal transactions revenue (related to certain IB structured notes to which fair value accounting was elected in connection with the adoption of SFAS 159); a higher level of credit card loans and fees; growth in liability and deposit balances, primarily in the wholesale businesses; and the impact of the Bank of New York transaction. These increases were offset partially by compression in Treasury’s net interest spread and a shift to narrower spread liability and deposit products. Net interest income in the first nine months of 2007 rose from the same period of last year, driven by the aforementioned items, with the exception of an improvement in Treasury’s net interest spread. These were offset partially by narrower spreads on credit card loans. The Firm’s total average interest-earning assets for the third quarter of 2007 were $1.1 trillion, up 15% from the third quarter of 2006. The increase was primarily a result of higher Trading assets — debt instruments, Available for sale securities, and Loans. The net interest yield on these

assets, on a fully-taxable equivalent basis, was 2.57%, an increase of 40 basis points from the prior year, partly reflecting the adoption of SFAS 159. The Firm’s total average interest earning assets for the first nine months of 2007 were $1.1 trillion, up 12% from the first nine months of 2006. The increase was also driven by the aforementioned items, partially offset by a decline in Interests in purchased receivables as a result of the restructuring and deconsolidation during the second quarter of 2006 of certain multi-seller conduits that the Firm administered. The net interest yield on these assets, on a fully taxable-equivalent basis, was 2.44%, an increase of 30 basis points from the prior year.

Provision for credit losses		Three months ended September 30,												Nine months ended September 30,
(in millions)		2007				2006				Change				2007				2006				Change
Provision for credit losses		$	1,785			$	812				120	%		$	4,322			$	2,136				102	%

The Provision for credit losses in the third quarter and first nine months of 2007 rose from the comparable prior-year periods. The increase from the third quarter of 2006 in the consumer Provision for credit losses was due to a net $306 million increase in the Allowance for loan losses due to higher estimated losses for home equity loans. The increase from the first nine months of 2006 in the consumer provision was due to: a net increase of $635 million in the Allowance for loan losses resulting from higher estimated losses for home equity loans; an increase in subprime mortgage loan balances; and an increase in credit card net charge-offs. Credit card net charge-offs for the nine months ended September 30, 2006 benefited following the change in bankruptcy legislation in the fourth quarter of 2005. The increase in the wholesale provision from the third quarter of 2006 reflected an increase in the Allowance for credit losses, primarily related to portfolio growth. The increase in the wholesale provision from the first nine months of 2006 primarily reflected an increase in the allowance due to portfolio activity and growth. For a more detailed discussion of the loan portfolio and the Allowance for loan losses, see the segment discussions for RFS on pages 21–28, CS on pages 29–32, and IB on pages 17–20, and Credit risk management on pages 51–62 of this Form 10-Q.

Noninterest expense
The following table presents the components of Noninterest expense.

		Three months ended September 30,												Nine months ended September 30,
(in millions)		2007				2006				Change				2007				2006				Change
Compensation expense		$	4,677			$	5,390				(13	)%		$	17,220			$	16,206				6	%
Occupancy expense			657				563				17				1,949				1,710				14
Technology, communications and equipment expense			950				911				4				2,793				2,656				5
Professional & outside services			1,260				1,111				13				3,719				3,204				16
Marketing			561				550				2				1,500				1,595				(6	)
Other expense			812				877				(7	)			2,560				2,324				10
Amortization of intangibles			349				346				1				1,055				1,058				—
Merger costs			61				48				27				187				205				(9	)
Total noninterest expense		$	9,327			$	9,796				(5	)		$	30,983			$	28,958				7

Total noninterest expense for the third quarter of 2007 was $9.3 billion, down by $469 million, or 5%, from the prior year. Expense decreased due to lower Compensation expense, primarily incentive-based, partially offset by investments across the business segments and acquisitions. For the first nine months of 2007, Total noninterest expense was $31.0 billion, up by $2.0 billion, or 7%, from the prior year, driven by higher Compensation expense, primarily incentive-based, as well as investments across the business segments and acquisitions.

The decrease in Compensation expense from the third quarter of 2006 was primarily the result of lower performance-based incentives, business divestitures and continuing business efficiencies. These declines were offset partially by additional headcount from the Bank of New York transaction, acquisitions and investments in the businesses; the classification of certain private equity carried interest from Principal transactions revenue; and the classification of certain loan origination costs (previously netted against revenue) due to the adoption of SFAS 159. Compensation expense for the first nine months of 2007 increased from the prior-year period, reflecting the aforementioned items, with the exception of performance-based incentives, which were higher in the current year period. These increases were offset partially by the absence of a prior-year expense of $459 million from the adoption of SFAS 123R. For a detailed discussion of the adoption of SFAS 123R see Note 9 on page 88 of this Form 10-Q.

The increases in Occupancy expense from the third quarter and first nine months of 2006 were driven by ongoing investments in the businesses; in particular, the retail distribution network, which includes the incremental expense from The Bank of New York branches. Partially offsetting the increase in Occupancy expense was continuing business efficiencies.

The increases in Technology, communications and equipment expense, when compared with the third quarter and first nine months of 2006, were due primarily to higher depreciation expense on owned automobiles subject to operating leases, and technology investments to support business growth. These increases were offset partially by continuing business efficiencies.

Professional & outside services rose from the third quarter and first nine months of 2006, reflecting higher brokerage expense and credit card processing costs resulting from growth in transaction volume. Also contributing to the increases were acquisitions and investments in the businesses.

Marketing expense was relatively flat compared with the third quarter of 2006. The decrease from the first nine months of 2006 was due to a reduction in credit card marketing expense.

Other expense decreased from the third quarter of 2006 due to a higher level of legal-related recoveries and lower legal expense, offset partially by business growth and investments in the businesses. For the nine-month period comparison, Other expense was higher due to increased net legal-related costs reflecting a lower level of recoveries and higher expense. Also contributing to the increase were business growth and investments in the businesses offset partially by the sale of the insurance business at the beginning of the third quarter of 2006, lower credit card fraud-related losses and continuing business efficiencies.

For a discussion of Amortization of intangibles and Merger costs, refer to Note 17 and Note 10 on pages 101–103 and 89, respectively, of this Form 10-Q.

Income tax expense
The Firm’s Income from continuing operations before income tax expense, Income tax expense and effective tax rate were as follows for each of the periods indicated.

		Three months ended September 30,								Nine months ended September 30,
(in millions, except rate)		2007				2006				2007				2006
Income from continuing operations before income tax expense		$	5,000			$	4,937			$	18,683			$	14,712
Income tax expense			1,627				1,705				6,289				4,969
Effective tax rate			32.5	%			34.5	%			33.7	%			33.8	%

The effective tax rate decrease for the third quarter of 2007 compared with the prior year third quarter was primarily attributable to a favorable resolution of a tax audit.

Income from discontinued operations
Income from discontinued operations was zero in all periods of 2007 compared with $65 million and $175 million in the third quarter and first nine months of 2006, respectively. Discontinued operations (included in the Corporate segment results) include the income statement activity of selected corporate trust businesses that were sold to The Bank of New York on October 1, 2006.

The Firm prepares its Consolidated financial statements using accounting principles generally accepted in the United States of America (“U.S. GAAP”); these financial statements appear on pages 68–71 of this Form 10-Q. That presentation, which is referred to as “reported basis,” provides the reader with an understanding of the Firm’s results that can be tracked consistently from year to year and enables a comparison of the Firm’s performance with other companies’ U.S. GAAP financial statements.

In addition to analyzing the Firm’s results on a reported basis, management reviews the Firm’s and the line-of-business results on a “managed” basis, which is a non-GAAP financial measure. The Firm’s definition of managed basis starts with the reported U.S. GAAP results and includes certain reclassifications that assume credit card loans securitized by CS remain on the balance sheet and present revenue on a fully taxable-equivalent (“FTE”) basis. These adjustments do not have any impact on Net income as reported by the lines of business or by the Firm as a whole.

The presentation of CS results on a managed basis assumes that credit card loans that have been securitized and sold in accordance with SFAS 140 still remain on the balance sheet and that the earnings on the securitized loans are classified in the same manner as the earnings on retained loans recorded on the balance sheet. JPMorgan Chase uses the concept of managed basis to evaluate the credit performance and overall financial performance of the entire managed credit card portfolio. Operations are funded and decisions are made about allocating resources, such as employees and capital, based upon managed financial information. In addition, the same underwriting standards and ongoing risk monitoring are used for both loans on the balance sheet and securitized loans. Although securitizations result in the sale of credit card receivables to a trust, JPMorgan Chase retains the ongoing customer relationships, as the customers may continue to use their credit cards; accordingly, the customer’s credit performance will affect both the securitized loans and the loans retained on the balance sheet. JPMorgan Chase believes managed-basis information is useful to investors, enabling them to understand both the credit risks associated with the loans reported on the balance sheet and the Firm’s retained interests in securitized loans. For a reconciliation of reported to managed basis of CS results, see Card Services segment results on pages 29–32 of this Form 10-Q. For information regarding the securitization process, and loans and residual interests sold and securitized, see Note 15 on pages 94–99 of this Form 10-Q.

Total net revenue for each of the business segments and the Firm is presented on an FTE basis. Accordingly, revenue from tax-exempt securities and investments that receive tax credits is presented in the managed results on a basis comparable to taxable securities and investments. This non-GAAP financial measure allows management to assess the comparability of revenues arising from both taxable and tax-exempt sources. The corresponding income tax impact related to these items is recorded within Income tax expense.

Management also uses certain non-GAAP financial measures at the segment level, because it believes these non-GAAP financial measures provide information to investors about the underlying operational performance and trends of the particular business segment and, therefore, facilitate a comparison of the business segment with the performance of its competitors.

The following summary table provides a reconciliation from the Firm’s reported U.S. GAAP results to managed basis.

Three months ended September 30,		2007
		Reported				Credit				Tax-equivalent				Managed
(in millions, except per share and ratio data)		results				card(b)				adjustments				basis
Revenue
Investment banking fees		$	1,336			$	—			$	—			$	1,336
Principal transactions			237				—				—				237
Lending & deposit-related fees			1,026				—				—				1,026
Asset management, administration and commissions			3,663				—				—				3,663
Securities gains			237				—				—				237
Mortgage fees and related income			221				—				—				221
Credit card income			1,777				(836	)			—				941
Other income			289				—				192				481
Noninterest revenue			8,786				(836	)			192				8,142
Net interest income			7,326				1,414				95				8,835
Total net revenue			16,112				578				287				16,977
Provision for credit losses			1,785				578				—				2,363
Noninterest expense			9,327				—				—				9,327
Income from continuing operations before income tax expense			5,000				—				287				5,287
Income tax expense			1,627				—				287				1,914
Income from continuing operations			3,373				—				—				3,373
Income from discontinued operations			—				—				—				—
Net income		$	3,373			$	—			$	—			$	3,373
Net income – diluted earnings per share		$	0.97			$	—			$	—			$	0.97
Return on common equity(a)			11	%			—	%			—	%			11	%
Return on equity less goodwill(a)			18				—				—				18
Return on assets(a)			0.91			NM				NM					0.87
Overhead ratio			58			NM				NM					55

Three months ended September 30,		2006
		Reported				Credit				Tax-equivalent				Managed
(in millions, except per share and ratio data)		results				card(b)				adjustments				basis
Revenue
Investment banking fees		$	1,416			$	—			$	—			$	1,416
Principal transactions			2,737				—				—				2,737
Lending & deposit-related fees			867				—				—				867
Asset management, administration and commissions			2,842				—				—				2,842
Securities gains			40				—				—				40
Mortgage fees and related income			62				—				—				62
Credit card income			1,567				(721	)			—				846
Other income			635				—				165				800
Noninterest revenue			10,166				(721	)			165				9,610
Net interest income			5,379				1,328				57				6,764
Total net revenue			15,545				607				222				16,374
Provision for credit losses			812				607				—				1,419
Noninterest expense			9,796				—				—				9,796
Income from continuing operations before income tax expense			4,937				—				222				5,159
Income tax expense			1,705				—				222				1,927
Income from continuing operations			3,232				—				—				3,232
Income from discontinued operations			65				—				—				65
Net income		$	3,297			$	—			$	—			$	3,297
Net income – diluted earnings per share		$	0.92			$	—			$	—			$	0.92
Return on common equity(a)			11	%			—	%			—	%			11	%
Return on equity less goodwill(a)			19				—				—				19
Return on assets(a)			0.98			NM				NM					0.95
Overhead ratio			63			NM				NM					60

Nine months ended September 30,		2007
		Reported				Credit				Tax-equivalent				Managed
(in millions, except per share and ratio data)		results				card(b)				adjustments				basis
Revenue
Investment banking fees		$	4,973			$	—			$	—			$	4,973
Principal transactions			8,274				—				—				8,274
Lending & deposit-related fees			2,872				—				—				2,872
Asset management, administration and commissions			10,460				—				—				10,460
Securities gains			16				—				—				16
Mortgage fees and related income			1,220				—				—				1,220
Credit card income			5,054				(2,370	)			—				2,684
Other income			1,360				—				501				1,861
Noninterest revenue			34,229				(2,370	)			501				32,360
Net interest income			19,759				4,131				287				24,177
Total net revenue			53,988				1,761				788				56,537
Provision for credit losses			4,322				1,761				—				6,083
Noninterest expense			30,983				—				—				30,983
Income from continuing operations before income tax expense			18,683				—				788				19,471
Income tax expense			6,289				—				788				7,077
Income from continuing operations			12,394				—				—				12,394
Income from discontinued operations			—				—				—				—
Net income		$	12,394			$	—			$	—			$	12,394
Net income – diluted earnings per share		$	3.52			$	—			$	—			$	3.52
Return on common equity(a)			14	%			—	%			—	%			14	%
Return on equity less goodwill(a)			23				—				—				23
Return on assets(a)			1.16			NM				NM					1.11
Overhead ratio			57			NM				NM					55

Nine months ended September 30,		2006
		Reported				Credit				Tax-equivalent				Managed
(in millions, except per share and ratio data)		results				card(b)				adjustments				basis
Revenue
Investment banking fees		$	3,955			$	—			$	—			$	3,955
Principal transactions			8,187				—				—				8,187
Lending & deposit-related fees			2,573				—				—				2,573
Asset management, administration and commissions			8,682				—				—				8,682
Securities (losses)			(578	)			—				—				(578	)
Mortgage fees and related income			516				—				—				516
Credit card income			5,268				(2,783	)			—				2,485
Other income			1,653				—				481				2,134
Noninterest revenue			30,256				(2,783	)			481				27,954
Net interest income			15,550				4,400				175				20,125
Total net revenue			45,806				1,617				656				48,079
Provision for credit losses			2,136				1,617				—				3,753
Noninterest expense			28,958				—				—				28,958
Income from continuing operations before income tax expense			14,712				—				656				15,368
Income tax expense			4,969				—				656				5,625
Income from continuing operations			9,743				—				—				9,743
Income from discontinued operations			175				—				—				175
Net income		$	9,918			$	—			$	—			$	9,918
Net income – diluted earnings per share		$	2.78			$	—			$	—			$	2.78
Return on common equity(a)			12	%			—	%			—	%			12	%
Return on equity less goodwill(a)			20				—				—				20
Return on assets(a)			1.02			NM				NM					0.97
Overhead ratio			63			NM				NM					60

(a)		Based upon Income from continuing operations.
(b)		Credit card securitizations affect CS. See pages 29–32 of this Form 10-Q for further information.

Three months ended September 30,		2007												2006
(in millions)		Reported				Securitized				Managed				Reported				Securitized				Managed
Loans – period-end		$	486,320			$	69,643			$	555,963			$	463,544			$	65,245			$	528,789
Total assets – average			1,477,334				66,100				1,543,434				1,309,139				62,971				1,372,110

Nine months ended September 30,		2007												2006
(in millions)		Reported				Securitized				Managed				Reported				Securitized				Managed
Loans – period-end		$	486,320			$	69,643			$	555,963			$	463,544			$	65,245			$	528,789
Total assets – average			1,429,772				65,715				1,495,487				1,297,344				65,797				1,363,141

 

The Firm is managed on a line-of-business basis. The business-segment financial results reflect the current organization of JPMorgan Chase. There are six major reportable business segments: the Investment Bank, Retail Financial Services, Card Services, Commercial Banking, Treasury & Securities Services and Asset Management, as well as a Corporate segment. The segments are based upon the products and services provided, or the type of customer served, and they reflect the manner in which financial information is currently evaluated by management. Results of these lines of business are presented on a managed basis. For further discussion of Business segment results, see pages 34–35 of JPMorgan Chase’s 2006 Annual Report.

Description of business segment reporting methodology
Results of the business segments are intended to reflect each segment as if it were essentially a stand-alone business. The management reporting process that derives business segment results allocates income and expense using market-based methodologies. For a further discussion of those methodologies, see Business Segment Results – Description of business segment reporting methodology on page 34 of JPMorgan Chase’s 2006 Annual Report. The Firm continues to assess the assumptions, methodologies and reporting classifications used for segment reporting, and further refinements may be implemented in future periods.

Segment Results – Managed Basis^(a)
The following table summarizes the business segment results for the periods indicated.

Three months ended																																						Return
September 30,		Total net revenue												Noninterest expense												Net income (loss)												on equity
(in millions, except ratios)		2007				2006				Change				2007				2006				Change				2007				2006				Change				2007				2006
Investment Bank		$	2,946			$	4,816				(39	)%		$	2,378			$	3,244				(27	)%		$	296			$	976				(70	)%			6	%			18	%
Retail Financial Services			4,201				3,555				18				2,469				2,139				15				639				746				(14	)			16				21
Card Services			3,867				3,646				6				1,262				1,253				1				786				711				11				22				20
Commercial Banking			1,009				933				8				473				500				(5	)			258				231				12				15				17
Treasury & Securities Services			1,748				1,499				17				1,134				1,064				7				360				256				41				48				46
Asset Management			2,205				1,636				35				1,366				1,115				23				521				346				51				52				39
Corporate(b)			1,001				289				246				245				481				(49	)			513				31			NM				NM				NM
Total		$	16,977			$	16,374				4	%		$	9,327			$	9,796				(5	)%		$	3,373			$	3,297				2	%			11	%			12	%

Nine months ended																																						Return
September 30,		Total net revenue												Noninterest expense												Net income (loss)												on equity
(in millions, except ratios)		2007				2006				Change				2007				2006				Change				2007				2006				Change				2007				2006
Investment Bank		$	14,998			$	13,973				7	%		$	10,063			$	9,655				4	%		$	3,015			$	2,665				13	%			19	%			17	%
Retail Financial Services			12,664				11,097				14				7,360				6,636				11				2,283				2,495				(8	)			19				24
Card Services			11,264				10,995				2				3,691				3,745				(1	)			2,310				2,487				(7	)			22				24
Commercial Banking			3,019				2,782				9				1,454				1,494				(3	)			846				754				12				18				18
Treasury & Securities Services			5,015				4,572				10				3,358				3,162				6				975				834				17				43				48
Asset Management			6,246				4,840				29				3,956				3,294				20				1,439				1,002				44				50				38
Corporate(b)			3,331				(180	)		NM					1,101				972				13				1,526				(319	)		NM				NM				NM
Total		$	56,537			$	48,079				18	%		$	30,983			$	28,958				7	%		$	12,394			$	9,918				25	%			14	%			12	%